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["Wendy" <crazygardens AT verizon.net>]

Thanks, Gene.  He didn't give a good explanation either.  He just blames it 
on Carter's policies without any further discussion.  I've always gotten the 
impression that there was some manipulation going on and it was an 
intentional play to discredit Carter and his administration.  Carter had a 
lot of enemies in big business especially the oil companies.  He was the 
only president that promoted fuel conservation and pushed for alternative 
energies.  Usually when inflation begins to increase, the fed cuts the prime 
to loosen up money.  During the Carter years, when inflation hit, the Fed 
increased the prime which only tightened money farther and fueled the 
inflation. It is also "funny" that as soon as Carter left office, Regan 
canned all of Carter's Alternative Energy and conservation programs and 
things settled out without much ado at all.  I can understand why Carter did 
not have much time for Greenspan and it had nothing to do with Ford.

Wendy

> On Sep 25, 2007, at 10:40 PM, Wendy wrote:
>
> > Gene,
> > Does Greenspan give any explanation as to what happened during the
> > Carter
> > administration?  I have yet to see a good explanation that would
> > cause the
> > sudden double-digit inflation and excessive hike in the prime.
>
> "Jimmy Carter had no use for me--we met on only a couple of occasions
> and never hit it off. (Of course, I'd been part of the Ford
> administration and he'd defeated Ford.) . . . .
>
> "The economy did not work in Carter's favor . . . .
>
> "It's not that Carter didn't try. His administration proposed no
> fewer than seven economic programs. But none was strong enough to
> contain what was fast becoming a crisis. . . Carter felt compelled to
> be all things to all people. So he'd propose new social programs
> while simultaneously trying to reduce the deficit, lower
> unemployment, and cut inflation . . . .
>
> "The Federal Reserve--by law independent of the White House--only
> seemed to mirror Carter's indecisiveness. My old mentor Arthur Burns
> and his successor, Bill Miller, kept trying to find a middle ground
> on monetary policy that would accommodate conflicting economic
> needs.  . . . From what I could see, that middle ground they were
> looking for didn't exist.
>
> "But I was in the minority."
>
> There are several pages on that period. Greenspan notes that
> inflation must be dealt with as a primary economic issue; if it is
> not, then it can get out of control, as it did then.
>
> Throughout the book he makes it apparent that there are often
> conflicts between what economists advise is best for the economy and
> what presidents do for political reasons. He is very high on Clinton
> because Clinton listened very carefully to economic advice and did
> what was often politically difficult but was best for the nation.
>
> Another condition I was not aware of is how fast the economy can
> change, either in acceleration or deceleration. If people get the
> idea that things are bad then they stop buying and the economy
> crumbles. It is not so much the facts as the feelings. One might say
> that in this regard, feelings create facts.
>
>
>
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