In the News: CNBC

Merk Senior Economic Adviser William Poole tells CNBC how politicians like to play politics with the Fed

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Poole was a member of then-President Ronald Reagan's Council of Economic Advisers in 1983, when then-Fed Chairman Paul Volcker was extremely unpopular in the aftermath of a ruthless tightening of monetary policy meant to crush near hyper-inflation caused a deep, double-dip recession [cnbc explains] from 1980 to 1982.

Then-Senate Majority Leader Howard Baker criticized the Fed publicly, saying it should lower interest rates, and, in general, “get its boot off the neck of the economy.”

Poole recalls explaining to Baker that if he wanted rates lowered, he was going about it the wrong way. The Fed, he explained, had to remain apolitical and if it did what Baker wanted, right after getting publicly chastised by him, 'it would look like the central bank is bowing to political pressure,' something it could never do. At this point, Poole remembers, Baker saying, ’I know that, but it plays well on Main Street.’…"