Friday, February 24, 2006

Reaganomics Revisited: Beyond the Glow of Nostalgia

At the simplest factual level, it is not accurate that Reagan's tax policies were responsible for bringing inflation down, from an average rate of 8.2 per cent under Nixon, Ford and Carter, to 4.6 per cent under Reagan. The main force here was the stringent monetary policies imposed by then Federal Reserve Chair Paul Volcker. Volcker was appointed not by Reagan but by Jimmy Carter in 1979. Carter appointed Volcker because Wall Street made it clear to Carter that he had no choice. Almost immediately on taking office, Volcker returned the favor to Carter by imposing the most severe global recession since the 1930s, which then doomed Carter's chances for re-election in 1980.
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Related:
Bush’s Policies Don't Promote Growth
Cavuto falsely claimed real wages have increased

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