The Wrong Way And The Right Way To Fix The Fed

 Burns blamed inflationist policies for the situation, writing, "This cumulative and interacting process of rising wages, rising prices, and rising economic activity has gone on since the end of the war under the sheltering umbrella of the monetary and fiscal policies of government." Burns was very concerned with the "Threat of gradual or creeping inflation." In contrast to many economists then promoting creeping inflation as a means of stabilizing the economy and increasing economic growth, Burns wanted to "Stop the updrift of the price level" dead in its tracks.

McClenahan and Becker summed up Martin's views on monetary policy as follows: "He was a hawk on inflation because it represented to him so much else that might be wrong in the economy." Martin's and Burns's "Economic views were consonant" and Martin's "Counsel [was] valued highly" by Eisenhower.

Saulnier elaborated several "Imperatives of economic policy," the most important of which was anti-inflationism: "No other policy will work. It is not possible for government policy to favor inflation.... [T]he reaction to an explicitly inflationary strategy of policy can spell nothing but disruption and a setback for the economy's growth.... Government must show, through visible evidences of policy, that it will take all reasonable steps in its power to prevent inflation."

The necessity for the government to demonstrate a commitment to anti-inflationism gives rise to Saulnier's second imperative of economic policy, which is an "Essentially conservative" budget policy, featuring regular budget surpluses.

In an article published in 1950, Mises wrote: "The [Truman] administration is firmly committed to a policy which is bound to lower more and more the purchasing power of the dollar, it has proclaimed unbalanced budgets and deficit spending as the first principle of public finance, as a new way of life. While hypocritically pretending to fight inflation, it has elevated boundless credit expansion and recklessly increasing the amount of money in circulation to the dignity of a central postulate of popular government and economic democracy."

Mises proclaimed, "It is never too late for a nation to realize that inflation cannot be considered as a way of life and that it is imperative to return to sound monetary policies. In recognition of these facts the Administration and the Federal Reserve Authorities some time ago discontinued the policy of progressive credit expansion."

Even left-wing economic historian Anthony Campagna grudgingly conceded Eisenhower's successes: "In retrospect the recessions turned out to be mild ones but not because of enlightened economic policies. Thus the administration was lucky in that its policies do not appear to have hampered the recoveries, and it could claim credit for not overreacting.... Concern for inflation, balanced budgets and balances of payments all converged to give the administration an excuse for doing what it wanted to do anyway-as little as possible.... How successful was it in this endeavor? Judging from the lack of pressure to change them, the administration's economic policies must be judged at least partially successful."

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