The Jimmy Carter "malaise" - double digit unemployment with high interest rates - was created by Richard Nixon's price/wage controls, his ending of the dollar being linked to gold and his undue influence on the Fed to create easy money.
Carter, eventually actually addressed this problem by naming Paul Volcker Chairmen of The Federal Reserve System.
Here is where Ronald Reagan gets extraordinary credit. Volcker's methods of stabilizing unemployment and money supply were draconian, painful and necessary. He began to raise interest rates up to 20%. This lowered demand and resulted in even worse unemployment. For political reasons, Reagan could have fired Volcker. But he didn't. Volcker's Fed efforts eventually led to low interest rates and low unemployment.
Reagan - this part is lost on today's economic conservatives - drastically reduced marginal tax rates. Why was that important? 1. The top marginal tax rates were so high, there was no capital that could be accumulated. 2. By the time Reagan left office, the accumulation of capital funded the tech revolution, which led to the largest economic expansion in the history of the US.
Spin forward to the mythology of the great-Bill Clinton years. Clintons balanced budgets were the combined product of Bush 41's tax increase, GOP slashing of spending and the simple arithmetic, where wealth creation led to more tax revenue than tax expenditures.
Then there was the Clinton's systemic destruction of Glass-Steagall, which allowed banks to loan, to invest, to advise and to trade for themselves. What led to the Great Depression, which was fixed in 1933 by Glass-Steagall, was put back in place.
By the time of Bush 43, marginal tax rates were low. Bush 43 reduced them further. That didn't lead to increased economic activity/investment. But two costly wars, Medicare expansion and the tax cuts exploded the deficit.
All the while ... the dismantling of Glass-Steagall ... forced these big banks to go trolling for dysfunctional ways to produce returns on capital, that were not part of the steady-state macro-economics of the country. The mythical great Fed Chairman - Alan Greenspan made all of this worse with anti-Volcker easy monetary policy.
The result was 2007 - 2008.
The hero of handling this crisis - named by Bush 43 - was Ben Bernanke, Hank Paulson with Tim Geithner with Democratic support.
Obama 44 retained Bernanke and Tim Geithner. The solution wasn't a liberal solution. Rather the banks were injected with capital to maintain the world-wide flow of funds, they were allowed to retain their best talent with bonuses and 1/2 of Obama's stimulus was un-Democratic as well: tax cuts.
Dodd-Frank and the Consumer Protection Agency were voted in by the 2009-2010 Democratic majority. They currently serve as the only bandage on the existing tear of Glass-Steagall.
By leaving office, the Great Recession, was forgotten and the roles of all these important Americans.
Like Maslow's hierarchy of needs, I guess when everyone wasn't economically screwed, we moved up to "esteem" by 2016. Our polarization wasn't economic, it was who is a real American? The voters made that decision and you got Donald Trump.
God knows what is going to happen as a result of another deficit busting tax cut - which historically hasn't made sense since Reagan. God knows what is going to happen from made-up trade wars between allies - but historically that didn't end well in the 1920s. God knows what is going to happen when Glass-Steagall's bandage is ripped off - that didn't end well, as the reader can acknowledge.
June 1, 2018