You know Watergate, but do you know
Fedgate? The more subtle scandal with more monetary policy and, arguably, much higher stakes.
In today's episode, we listen back through the Nixon White House tapes to search for evidence of an alarming chapter in American economic history: When the President of the United States seemingly flouted the norms of Fed Independence in order to pressure the Chair of the Federal Reserve Board into decisions that were economically bad in the long run but good for Nixon's upcoming election.
The tale of Nixon and his Fed Chair, Arthur Burns, has become
the cautionary tale about why Fed Independence matters. That choice may have started a decade of catastrophic inflation. And Burns' story is now being invoked as President-elect Trump has explicitly said
he'd like more control over the Federal Reserve.
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