I’ve just finished Paul Volker’s “Keeping at It: The Quest for Sound Money and Good Government.” Perhaps too much minutiae for most readers, so here’s a synopsis.
Volker served as Chair of the Federal Reserve from 1979 to 1987. He’s also the understandably proud daddy of the Volker Rule.
He’s very concerned about 1. Citizens’ lack of faith in government, 2. The pernicious role of money in elections/lobbying, and 3. Inflation.
During the Carter administration, the now 91-year oversaw the steepest interest rate increase in US history. In our current era of low rates it’s hard to fathom the Fed could boost rates from 10.25% to 20% but that is exactly what Volker did 1979-1980.
At the time he was vilified for increasing unemployment and stoking recession. Now Volker's praised as a economic superhero.
While Volker’s views on leadership and plutocracy are not especially novel, his view on the Fed’s 2% inflation target is noteworthy.
Volker wrote “A 2 percent target, or limit, was not in my textbook years ago. I know of no theoretical justification.” He goes on to suggest that at the 2% target, prices increase nearly 50% over 20 years.
Based on his formidable experience, this is unjustifiable and bad policy. Yet as recently as December, 2% remains the unambivalent Fed mandate.
Weekly Update, Week ending February 22, 2019 The S&P 500 was up 65bps even as the Dow Jones added 59bps, the Russell 2000 increased 1.34% and the Nasdaq added 78bps.
As for US bonds, they gained 11bps.
Globally, the MSCI World Index added 1.03% and the Barclays Global Aggregate Bond Index gained 36bps.
The Euro Stoxx 50 added 90bps in local-currency (Euro) and 1.56% in USD. Meanwhile, the Topix was up 2.05% in local-currency (Yen) and 2.03% in USD.
