Reply #159: the oil shocks of early 70's most definitely had a lot to do with the inflation later that decade [View All]

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it's true that the fed could have addressed the problems by hiking interest rates much earlier than volker did, but they responded to the situation by lowering them instead, which made the problem worse. but this wasn't one of those fed-generated problems (as under greenspan), this was an exogenous shock that the fed simply didn't address properly. carter appointed paul volker eventually took over as fed chair and jacked interest rates sky high, solving the problem (painfully) and dashing carter's re-election hopes.