Posted On: Wednesday - October 21st 2026 7:37PM MST
In Topics: Music Economics Inflation
Alt-Title: There will be no Volcker 2.0.
Paul Volcker was appointed FED Chairman by President Jimmy Carter in the Summer of 1979. His job, should he have chosen to accept it - and he did! - was to jack interest rates up toward the highest skyscrapers in NYC in order to bring down the high inflation of those times. I mean, instead of pushing a FED Chairman to lower the rates, so "My economy is GREAT!!", Presidents actually thought and cared about the economic future of America back 47 years ago. What a concept!
Four years back, Peak Stupidity discussed some aspects of the high inflation of the 1970s, including my buying into the delusional "wage-price spiral" canard, when the real reason was very simple, in Mister, we could use a man like Chairman Volcker again.... We waxed a little nostalgic there, as the Brandon-era talk of inflation brought back memories:
Just under 50 years later, older Americans may be feeling that Deja vu thing. It took long enough - as Peak Stupidity, with our Inflation topic key has long noted, real inflation since the mid-1990s has averaged 4-5%, not the 1-2% that our BLS green-eyeshade boys have been publishing for years. Now, we hear much more talk about "Hey, I just paid $7,99 for a pound of whatever. Can you believe that?!", and "I don't know why it's more, Sir. It's everything. Shit's goin' up."One of the investor guru type writers on Zerohedge has tried to make a graphical comparison between today's inflation and that of the late 1970s ("late" as in dead, I guess) including the price of gold too. The graph below is from "ASYMMETRIC RESEARCH"'s post The 1970s Inflation Chart Everyone's Sharing, and What It Means for Gold.
Sure, everyone's sharing this chart, including, at this point, Peak Stupidity. We don't fall for the investor guru nonsense, but there's a point to be made here.
Mr. RESEARCH* has slid 1967 to '83 inflation data 48 years later to line up with inflation starting in '15. He did the same for gold prices The absolute values are different between then and now, but it's the shape of the curves he's interested in selling us on. 17 years of data starting in '15 though, means he must project, yeah, sure, "model", the inflation and gold curves through 2031.
We modelled where CPI could head if the historical relationship held and we were indeed at the equivalent of September 1978. The model pointed to US inflation gradually rising over the following two years, reaching 12% and surpassing the 9% peak recorded in 2022.Spelling aside, that ain't modeling. That's making curves match by... matching them. Granted, the already existing parts of the inflation curves do match fairly well.
We are supposed to assume the inflation curves, hence the price of gold, will stay superimposed (but off in value). Yeah, look at that 1979, which should match 2027, though it looks like 2028. Oh, yeah, that's right. That's when Paul Volcker lit up the interest rate Estes model rocket. So, for the current inflation graph to match, do we just need another Paul Volcker, appointed by... well surely not Donald Trump? Even if Trump did that, here's what we explained 4 years back:
Our post title here is a trick. We CAN'T use a man like Chairman Paul Volcker again. As Peter Schiff knows and has explained, Ron Paul has also, and Peak Stupidity has many times on these web pages, the FED is between a rock and a hard place on interest rates. Keep the rates the same, and inflation goes up, up, up, up! (I've been shattered!) Raise them seriously (not 50 basis points*****, no, much more than 500 basis points), and the stock market crashes and the Federal Budget is seen to be the sham that it is (with more than half of tax receipts going to interest).There will be no repeat of 1979. Paul Volcker has left the building, and not just for lunch.
What a great sound! This is from 1996 and one of the best music albums of all time, Melon Collie and the Infinite Sadness. I forgot how fun this video was too, with nostalgia from, at that point only a couple of decades earlier. (See, I could have ridden in that tire in 1979, but not now, without upchucking material from the 1970s.)
The Smashing Pumpkins were:
Billy Corgan - vocals, guitars, drum machine, synthesizers.
James Iha - guitar, backing vocals.
D'arcy Wretzky - bass guitar, backing vocals.
Jimmy Chamberlin - drums.
Alan Greenspan - FED Chairman at the time.
* His real name is Rick Rule. I made the effort to check out his substack site. It's pretty. There may be something to his reporting, but it's not my thing...
Comments:
Moderator
Thursday - October 22nd 2026 11:38AM MST
PS: Ahaaaa, as soon as I looked at it, I realized this was from the Econ class (101 or 102) after they were already done with the basic S&D, elasticity, etc. Once the Government was involved, the class material went to hell, as does an economy. There should be a curve for that - the Coolidge Curve.
Moderator
Thursday - October 22nd 2026 11:35AM MST
PS: Thanks, Alarmist. I did have to look up the Phillips Curve, I gotta admit, but then I recalled it - just not the name.
The Alarmist
Thursday - October 22nd 2026 10:37AM MST
PS
Mr. Volcker was a director of one of the Investment Banks I worked for. One day, I was asked to make a presentation to the board, so I was waiting outside the boardroom, when he came wandering out to join me because he was excluded from a part of the meeting, so he looks at me and says, “I’m glad to see I’m not the only one doing nothing here.” I jokingly replied that the two of us sitting on that sofa was surely evidence that the Phillips Curve was dead. So he asked if I really believed in that nonsense.
The dude was a giant. Literally and figuratively.
Mr. Volcker was a director of one of the Investment Banks I worked for. One day, I was asked to make a presentation to the board, so I was waiting outside the boardroom, when he came wandering out to join me because he was excluded from a part of the meeting, so he looks at me and says, “I’m glad to see I’m not the only one doing nothing here.” I jokingly replied that the two of us sitting on that sofa was surely evidence that the Phillips Curve was dead. So he asked if I really believed in that nonsense.
The dude was a giant. Literally and figuratively.
Moderator
Thursday - October 22nd 2026 9:40AM MST
PS: That 9:38 comment was to Adam of course. I see now that the 2nd link was an enlargement. Thanks for this.
Moderator
Thursday - October 22nd 2026 9:39AM MST
PS: Your first (haven't gotten to the 2nd yet) conversation with AI has me thinking of a short post I've meant to write. But first, your blurb had the current weekly paycheck in terms of gold, but let me do it that other way.
$1,300/week is the average seasonally adjusted paycheck per a very quick search, so one can get just over one quarter oz of gold, maybe near 1/3 versus the 3 7/8 oz one could get in 1971!
I thought about the standard cost-of-living increases in wages that have been around since I remember. You may get them, you may not, but 2 things:
1) They aren't at the real inflation rate, so you're slowly losing, but after a while you've DEEPLY lost.
2) I know this even from myself, and I should know better, but there's that mindset that says "Hey, I'm making a LITTLE bit more at least. Three years from now I'll be making $x per hour which is really respectable.
No, and no. You've got to remember that you're getting paid less in real money for your work, even with your higher experience level AND, what might sound respectable only does to those who don't completely keep up.
$1,300/week is the average seasonally adjusted paycheck per a very quick search, so one can get just over one quarter oz of gold, maybe near 1/3 versus the 3 7/8 oz one could get in 1971!
I thought about the standard cost-of-living increases in wages that have been around since I remember. You may get them, you may not, but 2 things:
1) They aren't at the real inflation rate, so you're slowly losing, but after a while you've DEEPLY lost.
2) I know this even from myself, and I should know better, but there's that mindset that says "Hey, I'm making a LITTLE bit more at least. Three years from now I'll be making $x per hour which is really respectable.
No, and no. You've got to remember that you're getting paid less in real money for your work, even with your higher experience level AND, what might sound respectable only does to those who don't completely keep up.
Moderator
Thursday - October 22nd 2026 9:31AM MST
PS: Yes, I remember the more recent Jerry Garcia story, so let's hear about Alarmist and Paul Volcker again. (I know, I can look it up in the database, but I'd like to hear it again.)
Adam Smith
Thursday - October 22nd 2026 8:28AM MST
PS: Good evening, Mr. Alarmist!
I vaguely remember your Paul Volker story. (Not as well as I remember your Rush Limbaugh Jerry Garcia tie story, thoughbeit.)
Mr. Moderator,
Because this is an inflation post of sorts...
https://i.ibb.co/vxTK5Qtp/Average-Worker-Math-1971-vs-today-full.jpg
https://i.ibb.co/3mxzSxX6/Average-Worker-Math-1971-vs-today.jpg
Cheers! ☮️
I vaguely remember your Paul Volker story. (Not as well as I remember your Rush Limbaugh Jerry Garcia tie story, thoughbeit.)
Mr. Moderator,
Because this is an inflation post of sorts...
https://i.ibb.co/vxTK5Qtp/Average-Worker-Math-1971-vs-today-full.jpg
https://i.ibb.co/3mxzSxX6/Average-Worker-Math-1971-vs-today.jpg
Cheers! ☮️
The Alarmist
Thursday - October 22nd 2026 5:48AM MST
PS
The bulk of the coming inflation, supply constraint driven, is the kind that Fed rate policy can only make worse., but they have to raise rates to look like they are doing something.
I’ll have to tell you my Paul Volcker story (are you surprised I would have one?) some other time.
The bulk of the coming inflation, supply constraint driven, is the kind that Fed rate policy can only make worse., but they have to raise rates to look like they are doing something.
I’ll have to tell you my Paul Volcker story (are you surprised I would have one?) some other time.