Word: volckerism
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...most Americans, the Federal Reserve System, a mysterious world of money supply and discount rates, and the policies of its chairman, Paul Volcker, seem somewhat removed from everyday life. As TIME'S cover story this week makes clear, however, "Volckernomics," the Federal Reserve's anti-inflation policy, has resulted in unpredictable interest rates that affect everyone. Explaining the intricacies of monetary policy has been part of the job of Washington Correspondent David Beckwith, who helps report national economics for TIME. Says Beckwith: "Economics, Reaganomics and Volckernomics are to the early 1980s what Watergate was to the early 1970s...
Perhaps so, but powerful forces other than tight money alone will be working to keep interest rates high, no matter what Volcker does. In large part, the jump in interest rates over the past few years represents a belated catchup by the price of money with the rise of all other prices since the mid-1960s. Through years of high inflation, many interest rates?on mortgages, consumer loans, bank savings deposits?were held down by federal or state controls. Most of these controls have been dismantled...
...tell Paul Volcker about the anguish of high interest rates and a moribund economy. Whereas many top Government officials can often find themselves cushioned from the consequences of their actions as public servants, the chairman of the Federal Reserve has been feeling the direct and personal impact of his economic prescriptions virtually every day of his life for the past 2½% years...
...main cause of the current economic crisis. He tried to allay Wall Street worries that the Administration wants to subvert the Federal Reserve Board's policy of keeping a tight rein on the money supply, and thus refuel inflation. After a meeting with Fed Chairman Paul Volcker, Reagan used his press conference to call a halt to recent White House carping about the Reserve Board's independent stewardship of monetary policy. Said he: "I have confidence in the announced policies of the Federal Reserve Board. The Administration and the Federal Reserve can help bring inflation and interest rates...
...banks levy on corporate customers still hovers around 16½%, more than double the interest charge that prevailed in 1977. The high rates are partly the work of the Federal Reserve, which is trying to restrain inflation by reining in the growth of the money supply. Fed Chairman Paul Volcker told Congress last week that he would continue holding the line on money growth. He said that the real cause of high interest rates was growing Government deficits, which are soaking up an ever greater share of the funds available in financial markets. Volcker charged that current fiscal policy...