They all spoke out against efforts by William McChesney Martin, the Fed chairman, to raise interest rates. Martin famously asserted his independence and raised rates anyway; as he saw it, the job of the Federal Reserve was “to take away the punch bowl just as the party is getting good.” Truman called him a “traitor.”
When inflation struck in the 1970s, Richard Nixon understood the expectations created by Roosevelt’s Office of Price Administration. As a World War II-era inspector for the agency, Nixon had been horrified at the thought of bureaucrats checking up on the pricing decisions of private business, and he quit. Yet once in the White House, he didn’t hesitate to slap on price controls in response to the soaring cost of beef and gas.
Milton Friedman, the free-market economist, and other conservatives denounced Nixon’s response as heavy-handed — a message that his successor Gerald Ford absorbed. Instead of price controls, Ford distributed “Whip Inflation Now” buttons and called for budgetary austerity.
As American economic thinking fell under Friedman’s influence, the Roosevelt-Truman tools lost favor. With inflation reaching double digits in 1979, President Jimmy Carter appointed Paul Volcker to the Federal Reserve to use monetary policy to fight inflation. When Ronald Reagan came into office, he endorsed Mr. Volcker’s muscular move to raise interest rates and drive the economy into recession to fight inflation. Subsequent presidents have largely stuck to this approach of controlling inflation.
Amid a pandemic, Mr. Biden has shown a willingness to lean hard on corporate America and embrace New Deal-style tools to lighten inflationary pressures. Through his supply chain task force, he is working to reverse offshoring and outsourcing, expand domestic production and help the ports in Los Angeles stay open round the clock to ease the cargo pileup. His infrastructure bill will allocate billions to construct and operate coastal ports and inland waterways, further easing prices.
Mr. Biden has also warned the big four meat processors against anticompetitive practices that probably contributed to spiking prices, including squeezing out competitors. His administration has pledged to take more aggressive action on illegal price fixing and antitrust, while working to bring more transparency to cattle markets. Higher meat prices are “not just the natural consequences of supply and demand in a free market — they are also the result of corporate decisions to take advantage of their market power in an uncompetitive market, to the detriment of consumers, farmers and ranchers, and our economy,” his economic advisers Brian Deese, Sameera Fazili and Bharat Ramamurti recently wrote.
Through the Federal Trade Commission, Mr. Biden has called for an investigation into the prices set by large oil and gas companies and authorized the release of 50 million barrels of oil from the Strategic Petroleum Reserve to dampen OPEC’s ability to raise prices. He also met with the chief executives of Walmart, Mattel, Food Lion, Kroger and other companies to discuss their plans to overcome supply-chain problems and keep prices in check for the holidays.