Review of William Greider's The Choice of Wall Street
“The Choice of Wall Street,” is the title of the first chapter in William Greider’s 1987 book, “Secrets of The Temple: How the Federal Reserve Runs the Country.” This chapter is basically the story of how and why Paul Volcker was chosen to be the new Federal Reserve Chairman. It all started in 1979 when President Jimmy Carter took a trip to Camp David with his most trusted advisers, the purpose of which was to decide on the course of action that needed to be taken to regain popular support so that he had a chance to win the upcoming Presidential election. All of his advisers understood that the economy was his most pressing issue. Inflation was incredibly high and all attempts to curb it had been useless. The Fed Chairman position was open and Carter needed to find someone strong to fill it.
The Fed was supposed to be an entity that was separate from political persuasion. However, many Presidents select chairmen that they think they will have some control over. This is what makes Carter’s ultimate choice so interesting. After going over all of the candidates Carter ended up choosing Paul Volcker. Volcker, as most knew was a very independent person. He would not be the puppet of any President. Carter understood this quite well, but still thought that Volcker would be able to get a handle on inflation. Many said that Carter sacrificed his reelection to the Fed. This may or may not be true. What is true, however, is that Volcker did help to slow down inflation and get the economy back on track. The problem that the American people saw that President Carter did not see was that Volcker did this by helping out Wall Street and not Main Street.
Greider conveys many different points in this first chapter. This paper will analyze three of the most important.
- The competition between Wall Street, Main Street, and Pennsylvania Avenue.
- The impact of inflation on wealth and income.
- Indecision about the appointment of Paul Volcker.
The interaction between Wall Street, Main Street, and Pennsylvania Avenue can be a confusing one. Many times Pennsylvania Avenue, The Fed, has to make decisions that will either have a positive effect on Wall Street, the investment markets and it’s wealthy shareholders, or Main Street, individuals without large market investments. Also, many times the group that is not positively affected is negatively affected. As Greider stated they are many times at odds with each other. This occurs, because if The Fed helps out Wall Street they are only helping out the top 10 percent of the population. This is true because these people held 86 percent of the financial wealth according to Greider. By helping out this group The Fed was in effect making it more difficult for the other 90 percent of the people. However, if The Fed only worries about Main Street, Wall Street will be hurt. It may seem quite simple that The Fed should worry more about Main...