
Macroeconomics 7: The Fed & Volcker's Socks
Planet Money Summer School
What's the Problem With Inflation?
In 1981, more than two years after that emergency meeting, people started to believe Volker. Inflation dropped to 9% then 7%, 6%, 4%. The Fed finally eased up. They let the amount of money in the economy grow a bit and the jobs came back. But it had been a bad recession.
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Speaker 2
Dear listeners, I'm going to pause there because that's probably the most important one minute of how to read the Bible you've ever heard. Okay, 10 seconds anyway. I mean, honestly, yeah, that is extraordinary. Now, right through this King's period, especially toward the end of the King's period, you've got these crazy characters who pop up and we call them prophets. And there were loads of them, some of whose writings we don't have, but some of whose writings we do have. So, you know, from Isaiah, the sort of the big, big prophets, right through to the little prophets, as it were, or not many of whose words are left to us. Who knows how little they were? But tell us about the prophets.
Speaker 1
Okay. So the prophecy comes into play in a different form in the middle of the monarchy period. So let's get into it with the monarchy period. Once we have kings, now God sets up the covenant with David, and that becomes an additional element of order through kings, God's order through God's chosen king. And so we have kingship, which is supposed to be an instrument of order, but it's still driven by covenant. And we find then the prophets begin as advisors to the king. We have people like Nathan, who advised David, Samuel. We have Elijah, Elisha, who were not appreciated advisors, but advisors nonetheless. But then we get to a point in the 8th century where change takes place. And now we start getting the prophets whose books, collections of oracles we have. And these are called the classical prophets. And these classical prophets are still talking about an ideal future Davidic king, because that's not what they've been experiencing. And that's connected to the covenant with David. But for the most part, they are champions of the covenant, God's covenant with Israel. So when they give indictment, here's what you're doing wrong, which they do a lot. Here's what you're doing wrong. That has to do with the covenant. When it talks about judgment, that has to do with the covenant curses. If they didn't remain faithful to the covenant, then God would bring judgment. They talk about instruction, and the instruction is always covenant-focused. And then they talk about future hope and restoration. And again, that God is still going to be faithful to his covenant people, even through judgment and punishment. So, these prophets are not predictors of the future. They are spokespersons for God. They are giving messages from God to try to bring the people to respond and become faithful to the covenant again so that God can carry out his plans and purposes. So, they're guardians of the covenant. They're champions of the covenant. They're proclaimers of God's plans and purposes, past, present, future. And we make a mistake if we think of them as, you know, predictors
Speaker 2
of the future.
The Federal Reserve plays a very important role in the economy. When things start to look uncertain, the central bank is tasked with stepping in to restore people's confidence in the economy. But how do they do it? On today's episode we dive deep on monetary policy and the role of the fed. |At this Summer School, phones ARE allowed during class... Check out this week's PM TikTok! | Listen to past seasons of Summer School here.
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