By SIMON CONSTABLE
Inflation is elevated. Tax cuts have energized the economy. And the president and Federal Reserve chief are locked in battle over interest rates.
Sound familiar?
While the challenge to the Fed’s independence isn’t an exact analog of today, where President Trump has repeatedly called on Fed Chief Jerome Powell and others to cut interest rates, it's what happened in 1965 as President Lyndon Johnson made an “unusual public expression of disapproval of the board’s action to increase interest rates by 0.5% point to 4.5%.
LBJ called the Fed Chairman and other top economic officials and laid into them. “You’ve got me in a position where you can run a rapier into me,” charged Johnson.
Many business leaders of the time seemed worried about inflation. “I approve of the increase” because “all signs indicate we are in a spiral of inflation,” one business leader said.
Others saw the president’s comments as simply political. “This [criticism] is just what you’d expect him to say,” said another business leader. “If the economy turns down, he can blame it on the Fed. If the economy continues doing well, everyone will forget.”
Ultimately, neither the Fed nor inflation backed down. READ MORE HERE.
