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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: LTK007 who wrote (82912)	8/13/2000 3:36:20 PM
From: Tommaso	Respond to of 132070

"Incumbent"? What incumbent? Recumbent might be more correct, though opportunities for recumbency have probably been much reduced by Monica et. al. Congress has the power to change the status of the Federal reserve, and it seems unlikely that a Republican Congress would pressure the Fed to help elect Gore. After watching the Fed sacrifice the country's best interests in 1998 to save a few highly-placed speculators, and after watching them literally print 50 billion dollars because of fear of a 19th-century-style bank run at the end of the Millennium, I have little confidence in their good judgment. But so far, the evidence is that they are doing the opposite of that so-called "wisdom" that assumes an election year means easy money.

To: LTK007 who wrote (82912)	8/14/2000 10:41:26 AM
From: Thomas M.	Read Replies (2) \| Respond to of 132070

It depends on the particular Fed chairman, on his ethics as well as his political power. Arthur Burns did goose the economy for Nixon, and damaged the Fed's credibility in so doing. Paul Volcker, on the other hand, crushed the economy in 1979, and in the process severely damaged Carter's reelection campaign. Tom

To: LTK007 who wrote (82912)	8/14/2000 5:34:21 PM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Double Nought, There is some history of the Fed going loose as a goose during the month's leading up to the election. However, there are two points that should be made. 1. AG has been loose since 1991, and there were only elections in some of those years. <g> My feeling is that he truly believes that wanton money and credit inflation at the expense of infrastructure investment is THE way to manage the economy. If so, he is totally out to lunch in the long run, though he has been successful in the short term. 2. The last time I remember the Fed not going loose at election time was when Reagan beat Jimmie Peanut. Nobody held a gun to Volker's head and, in fact, he kept tightening the first two years Reagan was in The White House. There are three huge problems with the coercion theory. The only real bullet the Presidency has in its Plastic Glock is the nomination of the Fed Chairman. True, that's a big bullet, but the independence of the Fed has, first of all, never been true. If the Fed director serves at the will and behest of the current President, he can hardly tell that man to take a hike. True, they are not directly answerable to Treasury, but there are all kinds of controls on them by both the Executive and Legislative branches. Then there is the concept that the fiction of Fed independence is extremely popular with Congress and the folks who vote for Congressmen. Any President who tried to formally end said fiction would be considered a tyrant by a majority of voters and he and his party would suffer more than the Fed. And, last of all, if the Fed kills the economy, the party he mangles with that move won't be bothering him much after the election. So, I basically think the Fed has a bias to be loose and a willingness to play games to keep the ins in. But I don't think the Fed is being coerced.