The US Federal Reserve Bank had long enjoyed relative
independence in setting monetary policy, particularly with respect
to interest rates. Although not at the top of his neoliberal agenda,
Reagan’s commitment to monetary objectives was evident in his
re-appointment of Paul Volcker as Chairman of the Federal
Reserve in 1983 and his subsequent appointment of the wellknown
monetarist Alan Greenspan in 1987. Paul Volcker launched
an aggressive campaign against inflation which, by 1980, had
reached into the double digits. In response, Volcker aggressively
pressed for higher interest rates. By 1986, his monetarist measures
had cut inflation by nearly 50%. But this reduction came at a high
price for many Americans who found exorbitant interest rates
on mortgages and private loans a tough medicine to swallow.
Financing new homes or cars became almost impossible for
low- and middle-income earners. Impatient to reap the benefits of
their President’s neoliberal agenda, millions of Americans initially
directed their frustration at Reagan. As a result, his approval rating
plummeted to just below 50% before soaring to record highs
after the economy picked up in the mid-to-late 1980s.