The case for Fed Independence in the Nixon Tapes

Planet Money

NPR

Business, News

4.6 • 29.8K Ratings

🗓️ 11 January 2025

⏱️ 32 minutes

🔗️ Recording | iTunes | RSS

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Summary

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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Transcript

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0:00.0	This message comes from Money for Couples, a new book and podcast that help you and your partner build and share financial vision.
0:08.3	Discover clear, actionable steps for spending and saving that bring you closer together.
0:13.5	Start your financial future today.
0:15.9	Search Money for Couples wherever you listen.
0:19.1	Just a heads up.
0:20.7	In this episode, a former president curses a few times.
0:25.1	This is Planet Money from NPR.
0:30.5	Secretly recorded audio from the White House.
0:34.6	Specifically, 1,527 hours of secretly recorded audio.
0:41.5	Yeah. By 2004, 1,500 hours of Oval Office visits, cabinet meetings, phone calls,
0:49.1	were now available for the public to listen to, the full unfiltered dump of the Nixon tapes.
0:55.8	Do you remember where you heard the announcement?
0:57.6	It was on the news.
0:59.0	This is economist Burton Abrams.
1:01.3	It was probably a newscast that talked about the Nixon tapes.
1:04.6	I said, this is what I've been waiting for.
1:06.7	Because obviously, everyone wants to know about the dirty details, Watergate, the nonsense, the corruption.
1:13.4	Well, everyone else was interested in Watergate. I was interested in monetary policy.
1:19.6	Popular man, I bet you were.
1:22.2	Yeah. See, ever since Burton Abrams was just a grad school whippersnapper, he had hoped that the Nixon tapes might solve a mystery that he'd been somewhat obsessed with, a mystery that begins with a famous economist named Arthur Burns.
1:36.6	Arthur Burns had a reputation of being an extremely cautious monetary economist who had written a book called Prosperity Without Inflation.
1:49.9	Prosperity without inflation.
	...

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