Tell me, Dennis, exactly what can a president do about high interest rates?
The answer: nothing but appoint a new head of the Federal Reserve Board. Which is exactly what Jimmy Carter did in 1979.
While the Fed can succumb to political pressure, it can also thumb it's nose at attempts by the government to set interest rates, one of the main functions of the Fed.
After the oil price spirals of 1973 and 1974, inflation was rising, in 1974 at 12.5 %. The fed usually uses interest rate hikes to control inflation, which was then what Nixon appointee of Chairman of the Fed did. In1978 President Carter name William Miller to be chairman of the Fed and in the following year, Miller did nothing as interest rates closed in on 20%. (They never did reach 20% except in non-Fed regulated markets).
In 1979, Carter was fed up with Miller and named Paul Volcker to chair the Fed. More than anyone, including Carter and Reagan, Volcker tamed high interest rates while not allow inflation to spike. By the end of Reagan's first term, interest rates had gone up to 10%, but dropped rather quickly.
It was Volcker, not Reagan that saved the economy.
The inflation of the early 70s actually helped the Middle Class, Those who owned land or other real estate actually saw gains in net wealth due to the 70s inflation. I had land worth $24,000 in 1969 that sold for $84.000 in 1984. As did the high interest rates of the late 70s help others. I know a guy, one of the people who traded US dollars as it tanked in the late 1970s, who bought bonds at 15%. and 17%. All he did for the next 20 years was collect annual interest payment as he sailed his yacht between ports.
Since Greenspan was name Fed chair in 1987, the interest rates have been kept artifically low, hurting those who save. We continue to have artifically low interest rates and low inflation, although there are signs that inflation is making a comeback. It will be interesting to see what happens if it does.
Just as another poster mistook the fed as a branch of the US government, it's not. REad 'The Creature from Jekyll Island" if you want to ready a scary story.
Repeat: The president can do little about interest rates except replace the chairman of the Fed, which is exactly what Carter did. It was that new Carter-appoiinted chairman, Paul Volcker, who did what Reagan gets credit for.