Greenspan garners all the credit for the low interest rates
of the past 20 years. We believe the chart below proves otherwise. The Oil
shock in the 1st half of the 1970s gave way to inflation shock of the 2nd half.

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10 year Treasury 1974-2006, Constant Maturity
Volcker_versus_greenspan

Source: RCP, Economagic

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When Volcker was appointed Fed Chair, inflation was in the
double digits and growth was stagnant. He forced unpleasant medicine down the
gullet of the American economy, limiting the growth of the money supply and
abandoning interest rate targeting. Inflation, which had peaked at 13.5% in
1981, was down to 3.2 percent by 1983.

 

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Quote of the Day: 

“A wise observer of the economic scene once commented that
‘what can be left to later, usually is – and then, alas, it’s too late.’”

-Paul Volcker, Federal Reserve Chairman, 1979-87

Category: Federal Reserve, Fixed Income/Interest Rates

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

7 Responses to “Chart of the Week: 10 year Treasury 1974-2006”

  1. B says:

    Volcker is the last of the true He-men Woman Hater’s Club. Ain’t no sissified Fed quasi-politicians capable of such actions today. That’s why we’ll likely do a Mama Cass and choke on our gluttony.

    Anyone follow the derivatives markets? Today was an odd day. Extremely odd day. Makes me wonder if we are getting ready to give Bernanke a welcome-to-the-party present. Last time I saw this type of behavior was late December back in 63. Oh what a night. Actually late September of 2005 days before our mini sell off.

    Ok, three references to music in there. One is obvious. Care to crack the codes?

  2. Idaho_Spud says:

    Cool post B! Greenie ain’t no Volcker, that’s for sure… somehow I doubt he’d waffle about how bad a federal surplus would be for the economy :)

    REO Speedwagon
    Mamas and the Papas
    Frankie Valli and the Four Seasons

    What’s the prize?

  3. B says:

    You are too good for me! You win 5% of the net if I win the lottery and it is more than $30 million. lol. Next time I’m in the area, I’ll buy you lunch.

  4. PigInZen says:

    Paul Volcker is a personal hero of mine. Seriously.

  5. BC says:

    >Anyone follow the derivatives markets? Today was an >odd day.

    Could you elaborate on this?

  6. B says:

    I don’t have too many heros…………except my mom and grandfather………but I have to agree. Volcker was a great Fed Chairman. One who would never, ever have let the current dislocations get to this point without using his bully pulpit.

    He wrote an article in the Washington Post

    http://www.washingtonpost.com/wp-dyn/articles/A38725-2005Apr8.html

    Based on his outspoken comments in this article, it’s likely he would have shamed the Congress or President into dealing with some of our excesses before they got to this point. While it’s easier to be outspoken when you are the former Fed Chairman, so as not to have spooked markets, he would have likely made more of an impact.

    I’m hard on Greenie at times but the reality is he has to keep the economy going not do what all of the Greenie bears want him to do. Which is mostly crush the economy. Twisted psychology. The big beef I have with Greenspan is he is too tied into political dogma. He has never spoken clearly and forcefully before Congress in a public forum that would have put pressure on the politicians to quit playing with our future and deal with the problems.

  7. Theodore G. Fletcher says:

    OK, good points, but what about the derivative????