There are a lot of elements in play from the 1950s through the present, such as using the "fight against inflation" to justify keeping unemployed 5% of people who wanted to work. This coincided with long-term declining labor shares of income.
A de facto open borders policy for immigrants, who badly needed jobs.
Read "Trade Wars are Class Wars" by Michael Pettis for fresh, non-polemic insights into international trade. Short story: The nation that reduces labor share of income (and boosts investment) wins industrial location. There really is no such thing as "free," "fair" or "foul" international trade. Comparative advantage is an antique concept, so thoroughly are trade flows the result of government policies.
There are is another important angle, neither here nor there in the long-running Keynes v. monetarists fight, and that is property zoning. In a nutshell, property zoning has gotten chronically tighter, raising housing costs, to prohibitive levels along the West Coast, NYC, Boston, and several other markets.
The end result of all of the above is the reduction of middle-class living standards, in many regards now propped up by two working parents instead of just one.
Japan is another mystery. No matter how big their deficits or how much of the national debt is bought back by the Bank of Japan, they have minor deflation.
You’ll find you’ll have greater luck ringing people’s memory bell if you use the name he was known by - William McChesney Martin. He was canned by Tricky Dick early in Nixon’s first term in favor of Arthur Burns, who was more the Trickster’s kinda guy when it came to election year interest rates.
As for memory-holing WMM’s policies, they got lost in the decades of macro myth-making by Friedmanites and real business cycle types who laid stagflation at the feet of their Keynesian enemies (especially LBJ guns and butter) and claimed Volker’s experiments as their own victories, thereby “proving” monetary policy was where the action was and should remain. By the time we get to the 90s, supply side and read my lips had fossilized, so even automatic stabilizers had become for the GOP “encouraging dependency of the underclass.” It now required propitiating an unholy alliance between the bien pensant political media and the deficit gods to create elbow room for some badly needed domestic spending.
That’s the parochial US “sociology of knowledge” macro story. There’s a parallel, intertwined global financialization story that WMM didn’t have to deal with until the very end of his time at the Fed, when the Eurodollar market had just begun to be really significant.
From the end of the 60s we start seeing periodic Minsky moments at home, debt crises abroad (with US banks smack in the middle), and continual searching for exchange rate regimes that wouldn’t be subject to repeated dramatic revision - which together gave the global bond markets an especially strong whip hand well into the 90s at the earliest. The increased importance of finance, and its penchant for boom and bust, made interest and exchange rates and the Fed’s operations to limit damaging spillovers especially key, which placed even more power in Greenspan’s hands to ensure ongoing market confidence. Fiscal policy seemed safe to ignore, except as it might make difficulties for conducting monetary policy. Obviously not the circumstances during which WMM was Fed Chair.
Very interesting commentary.
There are a lot of elements in play from the 1950s through the present, such as using the "fight against inflation" to justify keeping unemployed 5% of people who wanted to work. This coincided with long-term declining labor shares of income.
A de facto open borders policy for immigrants, who badly needed jobs.
Read "Trade Wars are Class Wars" by Michael Pettis for fresh, non-polemic insights into international trade. Short story: The nation that reduces labor share of income (and boosts investment) wins industrial location. There really is no such thing as "free," "fair" or "foul" international trade. Comparative advantage is an antique concept, so thoroughly are trade flows the result of government policies.
There are is another important angle, neither here nor there in the long-running Keynes v. monetarists fight, and that is property zoning. In a nutshell, property zoning has gotten chronically tighter, raising housing costs, to prohibitive levels along the West Coast, NYC, Boston, and several other markets.
The end result of all of the above is the reduction of middle-class living standards, in many regards now propped up by two working parents instead of just one.
Japan is another mystery. No matter how big their deficits or how much of the national debt is bought back by the Bank of Japan, they have minor deflation.
You’ll find you’ll have greater luck ringing people’s memory bell if you use the name he was known by - William McChesney Martin. He was canned by Tricky Dick early in Nixon’s first term in favor of Arthur Burns, who was more the Trickster’s kinda guy when it came to election year interest rates.
As for memory-holing WMM’s policies, they got lost in the decades of macro myth-making by Friedmanites and real business cycle types who laid stagflation at the feet of their Keynesian enemies (especially LBJ guns and butter) and claimed Volker’s experiments as their own victories, thereby “proving” monetary policy was where the action was and should remain. By the time we get to the 90s, supply side and read my lips had fossilized, so even automatic stabilizers had become for the GOP “encouraging dependency of the underclass.” It now required propitiating an unholy alliance between the bien pensant political media and the deficit gods to create elbow room for some badly needed domestic spending.
That’s the parochial US “sociology of knowledge” macro story. There’s a parallel, intertwined global financialization story that WMM didn’t have to deal with until the very end of his time at the Fed, when the Eurodollar market had just begun to be really significant.
From the end of the 60s we start seeing periodic Minsky moments at home, debt crises abroad (with US banks smack in the middle), and continual searching for exchange rate regimes that wouldn’t be subject to repeated dramatic revision - which together gave the global bond markets an especially strong whip hand well into the 90s at the earliest. The increased importance of finance, and its penchant for boom and bust, made interest and exchange rates and the Fed’s operations to limit damaging spillovers especially key, which placed even more power in Greenspan’s hands to ensure ongoing market confidence. Fiscal policy seemed safe to ignore, except as it might make difficulties for conducting monetary policy. Obviously not the circumstances during which WMM was Fed Chair.