Arthur Burns, Mckesson Martin, Depression discussed on Coin Stories with Natalie Brunell


And the reality is there's a tension between those two that we always really need to think about. Yeah, well, so I mean, speaking to that, there is this call for if there's a crash for there to be a backstop, right? And that's what we've had. So I would say that it's understandable that there's this consensus that once it dips too low once this crash happens and we sort of see an unwinding or potential deflationary spiral, we have the lender of last resort, right? They will pivot again. It's inevitable. That's their job. Their job is to control the business cycle if it gets too hot or they need to do things. The inflation side or on the markets kind of getting too hot. They need to bring back stimulus. Pull back and when the markets are in stress or people are unemployment rising, they need to come back in. The reality is they did that in the 70s as well, right? That's people lampoon Arthur burns for pivoting too early, right? You don't really hear much about McKesson Martin. He did the same thing. But the reality is they pivoted because both cases, there was a major recession, right? And to be clear, the recession that Arthur burns faced was the biggest recession since The Great Depression. People don't really realize that. It was a long, bad recession. And so after raising ten and a half percent, he pivoted, right? Shocking with me and he got a recession inflation did come down from, I think it was 8 and a half percent. All the way down to 5, four and a half 5% sound familiar. And guess what? He pivoted because the recession was bad, but what happened, the second he pivoted, the underlying forces of inflation, the fiscal responses. Everything that was going on drove an inflation almost immediately back to 12 and a half, 14 and a half percent and went even higher. And so everybody blames him for pivoting too early, but their job is when you get a deep dark deep bad recession like that too pivot. To do and everybody says, well, Volcker was tougher. See, Volker knew that he couldn't pivot and whatever. Not really. He just, you know, he was in a situation where after he did it, the inflation didn't come back as strong, and he could, you know, he could deal with it.

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