“The traditional tools used by the Fed-
eral Reserve to control money and
credit expansion are a basic part of the
fight against inflation. But in present
circumstances, these tools need to be
reinforced so that effective constraint
can be achieved in ways that spread
the burden reasonably and fairly. I’m
therefore using my power under the
Credit Control Act of 1969 to autho-
rize the Federal Reserve to impose new
restraints on the growth of credit on
a limited and on a carefully targeted
basis. Under this authority the Federal
Reserve will first establish controls for
credit cards and other unsecured loans
but not for secured loans on homes,
automobiles, and other durable goods,
and second, to restrain credit exten-
sions by commercial banks that are
not members of the Federal Reserve
System and also by certain other
money market lenders.”
“I’d like to see another lowering of
interest rates. I think there’s room
to do that. I can understand people
worrying about inflation. But I don’t
think that’s the big problem now…I
think inflation appears to be pretty
well under control. I don’t think the
argument that lowering the rates will
stimulate the long-term—shoot the
long-term rates up—is valid anymore.
And so, yes, I’d like to see it come
down.”
Bill Clinton strongly signaled that his
relationship with the Fed would be promi-
nent going forward by his placement of
Fed Chairman Alan Greenspan at his first
State of the Union address in January 1993:
“The final aspect of our plan requires a
national monetary policy which does
not allow money growth to increase
consistently faster than the growth
of goods and services. In order to
curb inflation, we need to slow the
growth in our money supply. Now,
we fully recognize the independence
of the Federal Reserve System and will
do nothing to interfere with or under-
mine that independence. We will con-
sult regularly with the Federal Reserve
Board on all aspects of our economic
program and will vigorously pursue
budget policies that’ll make their job
easier in reducing monetary growth.” “Tongues began to wag when Federal
Reserve Chairman Alan Greenspan
appeared at President Clinton’s State
of the Union address sitting between
Hillary Rodham Clinton and Tipper
Gore. What on earth was the conser-
vative, Republican, inflation-fighting
Chairman of the nation’s central bank
doing sitting next to the wife of the
liberal, Democratic, growth-boosting
President? Startled financial analysts
and even some Fed officials wondered
why Greenspan would send such a
dramatic signal that he was making
common cause with Clinton. Simply
by sitting there, he appeared to be
sacrificing a slice of the Fed’s vaunted
independence…In early December,
when Clinton invited the Fed Chair-
man to fly to Little Rock, Arkansas,
to discuss economic policy issues, the
scheduled hour long session stretched
to 21/2 hours and included lunch. They
clearly had hit it off.”
George H.W. Bush speaking to The New
York Times in 1992: George W. Bush, arriving in Washing-
ton, DC after his contentious election,
Ronald Reagan’s first State of the Union
address in 1981:
20 FINANCIAL HISTORY | Fall 2019 | www.MoAF.org
similarly signaled the pivotal nature of
the Fed in his administration’s plans by
making his first stop a breakfast with then-
Chairman Alan Greenspan.
“Mr. Greenspan, who was welcoming
the fourth President to pass through
during his 13-year tenure, briefed Mr.
Bush on the state of the economy.
He may also have indicated whether,
as the stock market expects, he will
announce a loosening of the Fed’s
monetary policy by reducing interest
rates today. Mr. Bush was forthright
in his admiration for Mr. Greenspan,
who took the key job in 1987. He said,
laying his hand on the Chairman’s
shoulder: ‘I talked with a good man
right here. We had a very strong dis-
cussion about my confidence in his
abilities…’ For part of their breakfast
the two men were alone together, later
being joined by Vice President-elect
Dick Cheney and members of the
new administration’s prospective eco-
nomic team.”
Barack Obama’s public record shows
little by way of comments directed at
Federal Reserve officials or pertaining to
Fed policies, which seems surprising and
somewhat refreshing. In fact, though, cir-
cumstances precluded his doing so: with
the Fed Funds rate target set below 0.5%
Left: President George W. Bush announces the
nomination of Ben Bernanke as the new Federal
Reserve Chairman at a press conference on
October 24, 2005, as current Federal Reserve
Chairman Alan Greenspan looks on.
(Credit: Jim Watson)
Right: Federal Reserve Board Chairman Alan
Greenspan speaks to the press after being
reappointed by President George H.W. Bush
to a second four-year term. (Credit: Bettmann)