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Ronald Reagan pressure on Fed Chair Volcker worse than Trump attacks



reagan volcker
Ronald Reagan and Federal Reserve Chairman Ronald Reagan in


  • President Donald Trump’s public attacks on the Federal
    Reserve have been eye-catching.
  • But a new story from former Fed Chairman Paul Volcker about
    President Ronald Reagan. is perhaps even more shocking.
  • In a new memoir, Volcker recounts being privately ordered by
    Reagan’s chief of staff to not raise interest rates prior to the
    1984 election while Reagan was in the room.
  • Volcker was not planning to raise interest rates at the time,
    but said he was “stunned” by the direct violation of
    the Fed’s independence.

President Donald Trump has come under fire recently for breaking
with presidential traditions and
attacking the Federal Reserve
over their
recent interest rate hikes

But Trump’s
public tantrums
are nothing compared to a new recounting from
former Fed Chairman Paul Volcker, who recalled intense pressure
from President Ronald Reagan in the run up to the 1984 election.

In a new memoir,
according to The New York Times
, Volcker said he was called
to the White House to meet with Reagan and Chief of
Staff James Baker in the presidential

Volcker is best known for the “Volcker Shock,” a rapid increase
in interest rates in 1980 that helped tame the long-running
inflation problem from the 1970s while also contributing to the
recession that began in 1981.

It appeared that Reagan did not want a similar tightening cycle,
which would have choked off economic growth, prior to his
reelection campaign. According to Volcker, Reagan did not say a
word, but Baker delivered a strong message.

The president is ordering you not to raise interest rates
before the election,” Baker told Volcker.

Volcker did not plan on raising rates at the time, but the
then-Fed chair was “stunned” since the order was an affront to
the Fed’s political independence. Volcker also said he later
realized that the meeting was conducted in the library since
there was likely no recording equipment in the room like in the
Oval Office.

Reagan’s apparent intimidation also echoed former President

Richard Nixon’s disastrous pressure
on former Fed Chair
Arthur Burns to keep rates low, which is seen as one of the
reasons for the inflation of the 1970s.

The story also jumps out given Reagan’s public reluctance to
comment on Fed actions during his tenure.

For instance, when asked about Volcker’s shifts during a press
conference in 1982, Reagan replied: “‘I can’t respond to
that because the Federal Reserve System is autonomous.” In the
same press conference, Reagan said there was “no way I can
comment” on calls for Volcker’s resignation.

Trump has complained that the Fed’s current rates hikes are
“loco.” But while
Trump’s public outbursts
are a break with presidential norms,
the attacks have been easily
dismissed by current Fed Chairman Jerome Powell.
administration had publicly maintained the respect of the Fed’s

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