SPOT PROFILE: G. William Miller

G. William Miller

 G. William Miller was Federal Reserve chairman early in the Jimmy Carter presidency.

Here is what  Steven Beckner, a former Federal Reserve analyst, said about him in Back from the Brink: The Greenspan Years:

Without question  [Miller was] the most partisan and least respected chairman in the Fed's history, this former Textron executive worked in tandem with fellow Carter appointee, Treasury Secretary W. Michael Blumenthal, in pursuit of monetary policies that were expansionist domestically and devaluationist internationally. The goals were to spur employment and exports, with little thought to the dollar's value. By early 1980, inflation was running at 14 percent per year.

From Wikipedia:

 Miller succeeded Arthur Burns as Fed Chairman in March 1978. He inherited a high inflation economy, still suffering from the increase in oil prices from OPEC. The change in the Consumer Price Index was 4.9% in 1976 and 6.7% in 1977.[29] In at least one speech, Miller identified inflation as the nation's primary domestic challenge since (in his view) it was the chief obstacle preventing full employment. Even so, he did not favor aggressive interest rate action that would jeopardize growth. For example, he supported the FOMC's continued policy of placing a tight target range around the federal funds rate that underpins much of the financial system. The modest increases in this target range during Miller's tenure did little to rein in inflation. In contrast, Miller's successor (Paul Volcker) supported more aggressive action (e.g. targeting a growth rate of monetary aggregates instead of a range for the federal funds rate, which allowed for larger and more rapid changes to the federal funds rate).] In fact, Miller repeatedly argued during his first year in office that a recession and higher unemployment would accelerate inflation further. Miller also described the economy as being in "great shape" despite the headwinds caused by inflation and other factors.

During Miller's tenure (and arguably in large part due to Miller's preferred policies), the dollar's value decreased substantially. In November 1978, only 11 months into his term, the dollar had fallen nearly 34% against the German mark and almost 42% against the Japanese yen, prompting the Carter administration to launch a "dollar rescue package" including emergency sales from the U.S. gold stock, borrowing from the International Monetary Fund, and auctions of Treasury securities denominated in foreign currencies.[36] This proved only a short-term fix; although temporarily steadying the dollar, it soon resumed its fall.The portmanteau stagflation, the combination of stagnation and inflation, was used increasingly during this time to describe the high rate of inflation, which failed to spur the economy. Even as the situation worsened, Miller insisted that contractionary policies like an overly aggressive interest rate increase would not fight inflation but rather encourage it while hurting the economy's growth.

Miller's restraint in fighting inflation caused distress among members of the Carter Administration itself. Treasury Secretary Blumenthal, Inflation Adviser Alfred Kahn, and Chief Presidential Economist Charles Schultze all advocated for increasing the interest rate prior to the April FOMC 1979 meeting, where Miller opposed such measures. Carter had to admonish his own staff over the press leaks used to carry on the dispute.

Miller's manner of running the Fed did not endear him to his peers or outside observers.

 Economic historians have generally considered Miller's short tenure unsuccessful. The high inflation that Miller did not rein in required harsh "shock therapy" treatment by his successor, Paul Volcker, to bring inflation under control. That action sent the U.S. economy into recession from 1980 to 1982.

-RW