Rebirth 79: I opened a bank in the United States

Chapter 51 The Untrusted Volker
Carter's look is very exciting now.To use the meme of the future, it is "I sat up in shock in the dying sick, and the clown turned out to be myself".
While in New York, Carter got the best out of Vickers.As a result, in the blink of an eye, the Vickers Company, which suffered heavy losses due to its behavior of gathering wool, had to sell its flesh and blood, selling products at ultra-low prices in order to withdraw funds, and indirectly cheated itself.

"It's okay, it's okay, this Vickers company does this, I may know the reason. Let's talk about this later, you continue to talk about it, is there anything else?"

"Okay, there is one more thing that may require your attention, but don't worry too much. The chairman of the Federal Reserve has recently changed. Paul Volcker, who is now taking over, is said to be directly appointed by Carter. He turned out to be the Federal Reserve Bank of New York. The president of the bank, who worked in Chase Manhattan before. I heard that this person is a bit extreme. Now that he takes over the Fed, he may shrink the money supply, but next year is the election year. I don’t think it should be too exaggerated. After all He also has to consider the chair under his ass. I suggest that in the last six months, we reduce the loan scale to cope with the tight period during this period, what do you think?"

"Well, I agree. But I don't think he'll be pressured by the White House to increase the money supply, unlike you."

Carter nodded, agreeing to Goodman's proposal.Although the tightening of loans will reduce the bank's profitability, but considering the increasing bad debt rate in the future, Carter feels that this loss can still be borne, and it is better than borrowing money out to waste money.

It's just a pity that according to the restrictions on savings banks in the United States these years, he cannot invest deposits from depositors.Otherwise, if you put these deposits in the Magellan Fund, you can have a high enough income every year, which will not be lower than lending!

"I told you before that when I come back from my trip, I will tell you my plan. Now is the time. The inflation of these years, needless to me, you should be very clear about how exaggerated it is, right?"

"Of course, but I don't think Volcker can withstand the pressure of the White House. Maybe he was a radical when he was the governor, but from the moment he became the chairman of the Fed, he was a politician. For a politician, he himself The position under the buttocks is the most important thing!"

To what extent was inflation exaggerated in the United States in the 70s?In terms of the consumer price index, it was still 70 in 38.8, and it became 80 in 84.2.The consumer price index usually indicates the extent to which prices affect consumers, the average person.The larger the number, the more it shows that basic prices have a great impact on people's lives, that is, people who have increased prices can hardly bear it.

This may not be intuitive enough, so let's give another example.In the future, many people feel that the increase in prices is exaggerated, but even in 21 years when the price increase was very serious, the year-on-year increase was only 0.9%.By analogy, a relatively normal index increase of [-]% in ten years is about the same, but in the United States, it has increased by more than [-]% in ten years, which is two times the future price increase. More than ten times.

In Volker's former predecessor, the Burns era.That is, from 70 to 78, the average annual price increase exceeded 6.5%, and when Volcker's predecessor, William Miller, the increase was once more than 10%.Just such an increase method, if the economic development can keep up and the wage level rises, it may be fine, but the US economy is not in a period of great development now!

Then this is scary!When this data is changed to real life, it shows that in the first year, it sells things for 10 yuan, but in the second year it becomes 11, and in the third year it becomes 12.1.
With such basic information, combined with future insights, Carter became more and more convinced that Volker would be able to withstand the pressure.The reason is also very simple:
"Yes, what you said makes sense. But it's been ten years, hasn't it? Some things have to be done by someone. If he doesn't do it, there will be new Paulke and Roelke to do it."

Carter reached out and tapped the table, and said slowly:

"You can't do it, Goodman. Such a high increase for ten years is exaggerated. It's like a tumor on a human body. It will hurt if you cut it off, but if you don't cut it, it will grow back sooner or later. Your life. If the Fed continues to cater to the votes of politicians and flood the money supply, then we should pack up as soon as possible and prepare to leave this hopeless country.”

"While the dollar is still worth a little money, go to another place and start a new business. It will save money, and the money in our hands will become toilet paper, worthless pieces of paper."

"Why him? Everyone knows the truth, but so what? After so many years, Burns didn't do it, Miller didn't do it, why do you think Volker can do it? That Carter in Washington only Concerned about his votes for next year, as for the future you talk about, that is the future. As long as his tenure does not explode, who cares whether there will be a flood behind him?!"

Goodman understands what Carter said.But it may be that Americans have a natural distrust of government officials, or they know too much about the national conditions of the United States.He simply didn't want to believe that Volker could bet on his own future for the future of this country.

Contribute to the country, what kind of requests the country needs from you, is it just a scene of fooling those idiots on the street to become soldiers, okay? !How can people like them who deal with capital believe that Volcker, the majestic top bank president, will be passionate and charge forward for the United States?

"Then let's wait and see. At least, our current goals are the same, aren't we? I also intend to reduce the size of the loan. In the future, we will do the loan approval."

Carter smiled and did not refute Goodman's words.If he didn't know the future, Carter wouldn't believe that Volker is really so leveraged
Election years always have a different meaning to the United States.In a general election year, everyone from the president to the people can feel something different.For example, people will feel that their welfare has improved, and some people's headshots have been hung in the center of the city, and the square seems to be much more lively.

And for officials, an election year is a critical time to defend their faction.Otherwise, if another president comes up, can they still secure their positions?Volcker, the chairman of the Federal Reserve appointed by President Carter, will naturally be classified as Carter or the Democratic Party. He does not cater to Carter, relaxes monetary policy, and allows the people to get some benefits for a short time. That is not giving away votes Republican contender? !
When the Republican candidate comes to power, can he, the "Democratic" chairman of the Federal Reserve, still be able to secure his position?In public and private, don't say that Goodman doesn't trust him at this time, maybe no one in the entire United States believes him.

Even long-term treasury bonds, the interest rate has now risen by two percentage points, obviously, in the eyes of the issuer.Before the general election, Volcker, who was appointed as the chairman of the Federal Reserve at such a delicate time, was just a scapegoat launched by Carter to win votes for himself.

After the general election year, when the excessive currency issuance causes inflation to continue to rise, it can be launched to "apology". No matter what he said, everyone thinks that the currency that should be issued will still be issued, and the currency that should be increased will still be issued. Inflation still has to rise!

If the interest rate on long-term treasury bonds does not rise accordingly, no one will buy them at all. No one is a fool!

(End of this chapter)