Word: millers
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Dates: during 1970-1979
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...fact, a surprise surge in money growth was precisely what happened last spring. This is a big reason why inflation shows no signs of abating. Ironically, even as then Fed Chairman and now Treasury Secretary G. William Miller was proclaiming a clampdown on monetary growth and pointing proudly to double-digit nationwide interest rates as evidence that the Fed was making it costly to borrow funds, the money supply itself was about to explode...
...Miller's mistake had been to assume that the Fed's orchestration of the highest interest rates in five years would alone be sufficient to discourage borrowing and spending. Through the first half of 1979, business was actually slowing somewhat as a result of bad winter weather and the gasoline squeeze, which together put a crimp in consumer purchasing. The Fed even began to fear that its seemingly draconian interest rates were pushing the economy headlong into recession...
...truth was that when Miller left the Fed in August to become Carter's Treasury chief after the summary axing of Blumenthal, the Fed's monetary policy was in disarray. So strong has been the resulting expansionary momentum that even as investors and financial markets were reeling last week from Volcker's abrupt shift in Fed tactics, the central bank itself glumly announced that money growth for the previous week had been a too robust $2 billion. That was anywhere from two to four times what had been expected...
...change of strategy had been in the works since Sept. 29. On that date, Volcker and Treasury Secretary Miller met with their West German counterparts and Chancellor Helmut Schmidt in Hamburg as part of a series of continuing huddles that grew out of the now faltering dollar-rescue package of November 1978. The West Germans told the new Fed chief that any sort of Son of Rescue plan would now be simply unacceptable. If Washington wanted anything more than disdainful sympathy for its economic malaise, the Germans indicated, it would have to stage a sustained assault on inflation itself...
Previous chairmen had decidedly political leanings: Arthur Burns, appointed by Nixon, was known as a Republican, and Miller had been active in Democratic affairs as a businessman. Volcker, who is a Democrat, is resolutely nonpartisan. Observes Brimmer: "He's simply not going to tilt for or against the White House because of party affiliation. Paul's much more likely to maintain some distance...