Paul Volcker? Is This The Carter Administration Revisited?
So far, I have more impressed than not with President-Elect Obama's appointments to his incoming administration. There are those I am not quite certain of, such as Hillary Clinton as Secretary of State, but that I'm willing to give a chance to see if they succeed or not.
This morning, as I read that Mr. Obama had selected Paul Volcker to head the Economic Recovery Advisory Board, I must admit that I was less impressed with this selection than any previous selections to this point.
Do we really need to reach back to a Carter administration appointee to advise Mr. Obama on the current economic crisis? Does anyone remember the economy under President Carter? Can you repeat the word, Stagflation?
Paul Volcker's greatest achievement as the head of the Federal Reserve was to attempt to stem inflationary pressures by ratcheting up interest rates to usurous levels. The Prime Rate reached into the double digits. This ultimately did bring inflation into check, but also resulted in a significant recession in the early 1980's and some of the highest unemployment rates since the Great Depression.
While watching a debate the other evening over the role of the Federal Reserve in the current economic crisis, the economists noted that the role of the Fed used to be to use interest rates to keep inflation levels low. Now, in our current situation, the old rule book (Paul Volcker's rule book, as it were) has been thrown out the window and the Fed is not having to create a new rule book on the fly.
So the question is- Is the appointment of Paul Volcker to head the Economic Recovery Advisory Board for Mr. Obama the wisest of choices? Definitely not. The only sense of relief I have with Volcker's appointment is that he wasn't tapped to be the new Chairman of the Federal Reserve.
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