In my previous post I wrote about the mistakes made by Arthur Burns after Nixon appointed him Chairman of the Federal Reserve Board. Here are the critical missteps of Burns’s unfortunate tenure.
1 Upon becoming chairman in January 1970, with inflation running at over 5% despite a modest tightening by his predecessor in 1969, Burns further tightened monetary policy, causing a downturn and a recession lasting the whole of 1970. The recession was politically damaging to Nixon, leading to sizable Republican losses in the November midterm elections, and causing Nixon to panic about losing his re-election bid in 1972. In his agitation, Nixon then began badgering Burns to loosen monetary policy.
2 Yielding to Nixon’s demands for an easing of monetary policy, Burns eased monetary policy sufficiently to allow a modest recovery to get under way in 1971. But the recovery was too tepid to suit Nixon. Fearing the inflationary…
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Utopia, you are standing in it! 
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