Word: volckerism
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...during that meeting, reports TIME Washington Correspondent William Blaylock, that Volcker decided nothing short of decisive action would do: "Upon Volcker's return to Washington, following a brief appearance at an International Monetary Fund conference in Belgrade, he immediately instructed his staff to draw up a list of options open to the Fed. The short-term goal would be to prevent a further dollar slide abroad, but long term the objective would be to puncture the inflation psychology of the nation as a whole. As many as 20 staffers were ultimately involved in the brain-storming sessions, and economists from...
...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...
...week's end Volcker had the measures that he wanted and called a mid-morning meeting of the board's governors in the Fed's second-floor boardroom. There, against a backdrop of silk wall coverings and an enormous blue-and-gold map of the U.S., the governors mulled over their chairman's proposals for one hour, then two, then through lunch and on into the afternoon...
Admirers of the "Volcker package," is European central bankers are already calling the Fed's moves, praise it mainly for the promise it holds that the U.S. will be able at last to control the availability of credit, as opposed to just its cost. After a full decade of high inflation, economists are pretty much agreed that the levers that have traditionally been used to control the flow of money into the economy?namely, the key interest rates that the Fed manipulates?have failed. This is in large part because the traditional concepts of money itself are outdated...