Washington D.C. Distorts the Mind

The most remarkable thing about D.C. is that you regularly run into very bright people who seem to have a block about the evil things they do to stay in the good graces of those in power. In his memoir, Arthur Burns tells us what he once told President Nixon:

I informed the President as follows : (1) that his friendship was one of the three that has counted most in my life and that I wanted to keep it if I possibly could; (2) that I took the present post [Fed chairman] to repay the debt of an immigrant boy to a nation that had given him the opportunity to develop and use his brain constructively; (3) that there was never the slightest conflict between my doing what was right for the economy and my doing what served the political interests of RN.

Oh yeah, Burns really did great things for the country. Under the constant harangue of Nixon, urging Burns to print more money, Burns, from the time he joined the Fed in February 1970 to January 1978 when he left, increased M2 money supply from $586 billion to $1.3 trillion, an overall increase of 183%, a 20.2% annualized rate.

He brought the country to the brink of hyper-inflation, stopped only when Paul Volcker became Fed chairman and slammed on the money printing breaks, which resulted in short-tern interest rates climbing to over 20%.