Jimmy Carter: The First Reaganite (John Phelan, 2/08/25, EconLib)
Despite claiming ignorance of the causes of or remedies for rising inflation, he acted as though he did grasp that inflation was, in the popular formulation, “too much money chasing too few goods.”
If that was the problem, one half of the solution lay on the supply side by increasing the number of goods on which the money could be spent. To this end, Carter deregulated the airline, trucking, rail, and telephony industries. “These actions,” Susan Dudley writes, “allowed new entrants into the markets, increased efficiency, lowered prices, offered consumers more choices, and likely contributed to declining inflation.”
The other half of the solution lay on the demand side by reducing the amount of money. Carter appointed Paul Volcker chair of the Federal Reserve in 1978. “We needed a new approach,” Volcker wrote, “Put simply, we would control the quantity of money (the money supply) rather than the price of money (interest rates).” As money growth fell, interest rates soared. The economy shrank in 1980, and unemployment hit 7.2% but inflation would fall from 13.5% to 3.2% in 1983. By then, Carter was out of office and Reagan was cruising to a landslide reelection due to an economic boom thanks, in some small part, to Carter’s deregulatory and sound money policies.
Historians will not differentiate the presidencies from 1976 to 2016.