Wednesday, June 09, 2004

Some Dunce! The following passage is from William Greider's Secrets of the Temple (a book about the Federal Reserve). You may recall (Reagan critic) Greider ran an embarassing "expose" of David Stockman, President Ronald W. Reagan's director of OMB, in the Atlantic magazine. Please pay attention to the final paragraph in particular.
Ronald Reagan, ironically, had a surer grasp of the subject [monetary policy] than any of his senior political advisers -- ironic because, in most realms of government policy, Reagan was a passive executive, with a weak grasp of details. He often left both the particulars and the strategic choices to his circle of advisers. They worked out a consensus among themselves, then brought the decision to him for ratification. When it came to money, however, Reagan knew what he wanted and expressed it forcefully.
"Most of the major players in the White House -- Baker, Meese, Mike Deaver -- don't know much about monetary policy," one of their colleagues explained. "The President probably has the most developed understanding of any of them."
David Stockman elaborated the point:
The President has two metaphors he uses when he talks about monetary policy. One is "zooming the money supply," which meant money was too easy. "Pulling the string" meant it was too tight. The President doesn't have a lot of things right in his head. He is kind of selective about what facts he takes in, but one thing he really believes in deeply is anti-inflation. He used the same cliche over and over: "Inflation is like radioactivity. Once it starts, it spread and grows."
Ronald Reagan was a monetarist himself. That label had never been publically applied to him in all his years as a candidate (perhaps because most political reporters were oblivious to the distinction), but Reagan's campaign bromides clearly reflected his monetarist perspective. Inflation originated with the "printing press" money at the Federal Reserve, he said, and in order to brake inflation, the government must halt its excessive production of money.
This was the one thing that the President knows in detail [Stockman said]. He could take a piece of paper and draw a line tracing the money-supply growth all the way back to the sixties. He had one thing that he knew and he always made the same point about the Federal Reserve. The money supply "zoomed" in every election year -- flooding the economy with money," he said -- and then, after the election, the Fed "pulled the string" and the economy went into recession.

--Greider Secrets of the Temple: How the Federal Reserve Runs the Country (1987) at 329.

[BTW, the title of this post refers to Clark Clifford calling President Reagan an "amiable dunce." I am recalling Winston Churchill's address to the Canadian Parliament (December 30, 1941) where he noted some in France who said if England fought on, she would have "her neck wrung like a chicken" in three weeks. Churchill observed "Some chicken! Some neck!" Hear Churchill here in real audio.]

More Here is more on the Clifford quote from this site:
Only once in his long career did he step out of character, and that was when he referred to President Ronald Reagan as an "amiable dunce." The remark was made at a private dinner party but, unknown to Clifford, a tape recording had been made so that the hostess, who was ill with the flu and unable to come to her own party, could hear what was expected to be some sparkling conversation. Excerpts from that tape were published out of context.

Clifford explained his remark this way: "In the fall of 1982, President Reagan said he would cut taxes by $750 billion, substantially increase defense expenditures and balance the budget in the 1984 fiscal year. Those were public promises. I made a comment that if he would accomplish that feat, he'd be a national hero. If, on the other hand, it did not work out after such a specific and encouraging promise and commitment, I thought the American people would regard him as an amiable dunce."

Given the opportunity some time later to retract his remark, however, Clifford declined to do so.

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