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Long forgotten today, given the near-hysteria and requisite orthodoxy on the American right that only tight money is sound policy and patriotic, is that the Reagan
White House tried to skin Fed Chief Paul Volcker alive back in 1984. And not just Volcker—they wanted to eviscerate the
Federal Reserve Board, and shift control of the money supply into the Oval Office. Inflation in 1984 had just dropped under 5 percent, and the Reaganauts wanted the Fed to print a lot more money, and keep the economy flourishing.
Secretary Regan mustered more than a few arguments. “The United States is the only country in the world that has a totally independent central bank,” he averred. The Fed was an errant oddball institution, obsessed with fighting inflation instead of promoting growth, the Reaganauts charged. Ergo, Volcker (originally an appointee of President
Jimmy Carter) was a loose cannon on the deck of macroeconomic
policy making.
Some Reagan hagiographers have tried to pooh-pooh Regan’s commentary as not truly part of the Reagan heritage, and cite Reagan’s gentlemanly public statements about Volcker as proof of the pudding. Indeed, “Reagan, The Inflation Fighter” is a subspecies of GOP monographs, written even by people who know better, such as GOP solon and Stanford University academic John Taylor. But the Reaganauts are engaging in Soviet-style revisionism.
Speaking before the National Association of Realtors in December 1984, President Reagan echoed the Regan assault on the Fed. “Let me assure you we are not pleased with the recent increases in interest rates,” said President Reagan. “And frankly there is no satisfactory reason for them.”
