Paul Volcker's voodoo economics

Paul Volcker died this week.  He will go down in history as being the tallest Fed chair, and also the smoker of the smelliest cigars, but not much else. Financial writers of his obituary insist that his policies beat inflation in the 1980s.  They did no such thing.  Volcker was a prisoner of the real "voodoo economics," Keynesianism, especially the thoroughly discredited Phillips Curve, which posits low unemployment as the cause of inflation.  Keynes's followers have also long insisted that tax cuts cause inflation, another piece of nonsense. Volcker himself had sketchy academic credentials, becoming a Fed economist in the 1950s on the basis of a government degree from Harvard and never completed course work at the London School of Economics.  Naturally, he was an unquestioning follower of conventional liberal economics ever after, to the extent he maintained any consistent economic beliefs at all. When it became his turn to...(Read Full Post)
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