Maestro — Chapter 9

1. 1. President Clinton wanted Democratic appointees to the Fed as counterweights to Greenspan and existing Reagan/Bush appointees.
2. 2. Alan Blinder argued that aggressive deficit reduction could lower long-term interest rates, prompting Clinton to realize his reelection depended on the Fed and bond traders.
3. 3. Greenspan had Mullins conduct due diligence on Blinder, finding that Blinder had previously criticized Volcker for being too harsh on inflation.
4. 4. Blinder agreed to vote for a half-point rate hike in August 1994 only after Greenspan promised to issue a statement indicating the Fed would pause.
5. 5. At Jackson Hole, Blinder argued the Fed should equally prioritize maximum employment, not just price stability, causing media reports of a split with Greenspan.
6. 6. Greenspan remained silent during the media furor over Blinder's Jackson Hole speech, which Blinder interpreted as intentional manipulation.
7. 7. In November 1994, Greenspan pushed for a three-quarter-point rate hike, but Blinder argued for half a point, warning of overkill and a hard landing in 1996.
8. 8. Yellen warned at the November FOMC meeting that further tightening of 1.5 percentage points risked a hard landing in 1996, an election year.
9. 9. Greenspan suspected that productivity was rising faster than official statistics showed, based on CEO reports of falling prices despite rising profits.