mandates — “the economic goals of maximum employment and price stability”— as new information arrived.

Donald Kohn, a senior fellow at the Brookings Institution in Washington, was a Fed insider for 40 years, and retired as vice chair in 2010. With his inestimable guidance, I plunged into Fed history during the Volcker era.

I found an astonishing wealth of material, providing far more information than reporters had access to back then. In fact, while the current Fed provides vast reams of data, what goes on behind closed doors is better documented, in some respects, for the Volcker Fed.

That’s because transcripts of Fed meetings from that period were reconstructed from recordings that, Mr. Kohn said, “nobody was thinking about as they were talking because nobody knew about them or expected that this would ever be published, except, I guess Volcker.” By the 1990s, when the Fed began to produce transcripts available on a five-year time delay, Mr. Kohn said, participants in the meetings “were aware they were being recorded for history, so we became more restrained in what we said.”

So reading the Volcker transcripts is like being a fly on the wall. Some names of foreign officials have been scrubbed, but most of the material is there.

In a phone conversation, Mr. Kohn identified two critical “Volcker moments,” which he discussed at a Dallas Federal Reserve conference in June. “In both cases, the Fed moved in subtle ways and surprised people by changing its focus and its approach,” he said.

Congress, financial circles and academic institutions. Economics students may remember Milton Friedman saying: “Inflation is always and everywhere a monetary phenomenon.”

For Fed watchers, the change in the central bank’s emphasis had practical implications. Richard Bernstein, a former chief investment strategist at Merrill Lynch who now runs his own firm, said that back then: “You needed a calculator to figure out the numbers being released by the Fed. By comparison, now, there are practically no numbers. You just need to look at the words of Fed statements.”

The Fed’s methods of dealing with inflation are abstruse stuff. But its conversations about the problem in 1982 were pithy, and its decisions appeared to be based as much on psychology as on traditional macroeconomics.

As Mr. Volcker put it at a Federal Open Market Meeting on Oct. 6, 1979, “I have described the state of the markets as in some sense as nervous as I have ever seen them.” He added: “We are not dealing with a stable psychological or stable expectational situation by any means. And on the inflation front, we‘re probably losing ground.”

17 percent by March 1980. The Fed plunged the economy into one recession and then, when the first one failed to curb inflation sufficiently, into a second.

unemployment rate stood at 10.8 percent, a postwar high that was not exceeded until the coronavirus recession of 2020. But in 1982, even people at the Fed were wondering when the economy would begin to recover from the damage that had been done.

The fall of 1982 was the second “Volcker moment” discerned by Mr. Kohn, who was in the room during meetings. The Fed decided that inflation was coming down — although in September 1982, it was still in the 6 to 7 percent range. The economy was contracting sharply, and the extraordinarily high interest rates in the United States had ricocheted around the world, worsening a debt crisis in Mexico, Argentina and, soon, the rest of Latin America.

Fed meeting that October, when one official said, “There have certainly been some other problem situations” in Latin America, Mr. Volcker responded, “That’s the understatement of the day, if I must say so.”

Penn Square Bank in Oklahoma had collapsed, a precursor of other failures to come.

“We are in a worldwide recession,” Mr. Volcker said. “I don’t think there’s any doubt about that.” He added: “I don’t know of any country of any consequence in the world that has an expansion going on. And I can think of lots of them that have a real downturn going on. Obviously, unemployment is at record levels. It is rising virtually everyplace. In fact, I can’t think of a major country that is an exception to that.”

It was time, he and others agreed, to provide relief.

The Fed needed to make sure that interest rates moved downward, but the method of targeting the monetary supply wasn’t working properly. It could not be calibrated precisely enough to guarantee that interest rates would fall. In fact, interest rates rose in September 1982, when the Fed had wanted them to drop. “I am totally dissatisfied,” Mr. Volcker said.

It was, therefore, time, to shift the Fed’s focus back to interest rates, and to resolutely lower them.

This wasn’t an easy move, Mr. Kohn said, but it was the right one. “It took confidence and some subtle judgment to know when it was time to loosen conditions,” he said. “We’re not there yet today — inflation is high and it’s time to tighten now — but at some point, the Fed will have to do that again.”

The Fed pivot in 1982 had a startling payoff in financial markets.

As early as August 1982, policymakers at the central bank were discussing whether it was time to loosen financial conditions. Word trickled to traders, interest rates fell and the previously lackluster S&P 500 started to rise. It gained nearly 15 percent for the year and kept going. That was the start of a bull market that continued for 40 years.

In 1982, the conditions that set off rampant optimism in the stock market didn’t happen overnight. The Volcker-led Fed had to correct itself repeatedly while responding to major crises at home and abroad. It took years of pain to reach the point at which it made sense to pivot, and for businesses to start rehiring workers and for traders to go all-in on risky assets.

Today, the Fed is again engaging in a grand experiment, even as Russia’s war in Ukraine, the lingering pandemic and political crises in the United States and around the globe are endangering millions of people.

When will the big pivot happen this time? I wish I knew.

The best I can say is that it would be wise to prepare for bad times but to plan and invest for prosperity over the long haul.

I’ll come back with more detail on how to do that.

But I would try to stay invested in both the stock and bond markets permanently. The Volcker era demonstrates that when the moment has at last come, sea changes in financial markets can occur in the blink of an eye.

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Hispanic Population In Portland Is Growing Rapidly

A specific city in Oregon has seen a huge amount of growth in the Hispanic community.

It’s almost 7 o’clock at night and Rosa Ramirez has had a fruitful day. Today her sales were good, but Ramirez says it isn’t always this way.

Rosa Ramirez moved to Oregon from El Salvador. 

She sells pupusas that she makes at a market in Hillsboro, Oregon. It’s a traditional dish from her home country of El Salvador. 

Ramirez says she was pregnant when she almost died at a shooting during the civil war in her country.  

Her unborn child did not survive. Heartbroken, she left El Salvador in 1992. Oregon has been her home for the last 30 years.  

“When I came here there was almost no one who spoke Spanish. Only English, and it was difficult for me because I was a nanny, and I was working for people who only spoke English and then I started fighting with the language,” said Ramirez. 

She is one of the almost 600,000 Latinos living in the state. 

According to the 2020 Census, Oregon’s Latino population grew by more than 30% in the last ten years. 

Latinos are now the largest minority group in the state and their numbers have grown faster than the national rate in each of the last three decades. 

Maria Caballero Rubio is the executive director of Centro Cultural in Washington County.

“That just shows that we are making a mark and we are growing. And I think people are acknowledging that we are a growing population,” said Rubio.  

She has seen steady growth since her farmworker family settled in Washington County in 1969. They migrated from Durango, Mexico.

“Maybe eight years ago, the only flags we had up here were the Mexican flag, because a lot of people were from, [or] have their ethnicity from Mexico. And then we had the American flag. But then the more that we started having visitors, they would say to me, you know, ‘where’s my flag?’ so, we decided that we would bring in the flag for people who’ve come to visit,” said Rubio. 

Caballero says that the thriving Latino population is starting to rise out of the fields and into professional jobs. 

“We had jobs in farm work or we had farms, jobs in in landscaping and those kinds of things. But more and more, as our communities have stayed here and the next generations have grown up and they become educated, they are coming back as professionals,” she continued. 

More than half of Oregon’s Latino population is in three counties: Multnomah, Washington and Marion. There the Latino communities grew by at least 25% in the last decades. 

“We are becoming more visible now, I have to say. Ten years ago, you couldn’t find an elected official here in Washington County or the Portland metro area that was Latino,” said Rubio.  

In fact, Carmen Rubio became Portland’s first Latino city commissioner in 2020. She is Maria’s daughter.  

Maria says the younger population may cause a shift in politics as more become eligible to vote when they turn 18. 

NEWSY’S AXEL TURCIOS: There’s more representation in the Latino community, in the state legislature, city councils, more Latinos getting into office, representing these growing communities across the state. Will this last?

MARIA CABALLERO RUBIO: I think so. I think it will last. We’re going to move forward and we’re going to continue making change, you know, social and systems changes that need to happen because of the historic disenfranchisement of people of color. 

The state once legally banned Black people.

“But, you know, department heads and managers and, you know, police chiefs and all of those. I think that they have not — they have not taken steps to be more inclusive in terms of recruiting and making it more more available to people of color to apply it. That’s an area that we still lack,” said Rubio. 

The increase in the Latino population here in Oregon has also been propelled by new waves of migrants. One of those waves is Venezuelan migration, fleeing poverty and the government in their country. According to the American Community Survey, there are more than 1,400 Venezuelans living in the state of Oregon.

Giselle Rincon is the president and co-founder of Venezuela’s Voice in Oregon.

“Everybody’s struggling to find food, medical supplies or jobs, especially safety,” said Rincon. She says the new Venezuelan migrants are facing new challenges. 

“Mostly access to education, how to find a job, how to navigate the system, where to apply. Most of the Venezuelans are professionals and they want to help prosper the economy of Oregon.”

“I think our new generations are becoming more involved. They are, you know, getting an education,” said Jaime Miranda, the owner of M&M Marketplace. 

Back at the Hillsboro market, Miranda says he was one of only a few Mexican immigrants in his neighborhood when he moved from Chihuahua, Mexico in 1985. He was 10 years old.   

He went to college and has owned this Latino market for 22 years. He started it with only 12 vendors and now the establishment has 66.

TURCIOS: How do you think the new generations of Latinos are shifting culture here in Oregon? 

JAIME MIRANDA: You know, from migrant workers to people who are starting their businesses, own their homes, they are getting a career, an education. So, we are definitely shifting to that second generation where they are integrated, and they understand how to navigate the system and be part of the community as a whole. 

“Now you see more Hispanics than before. Before, you didn’t see any Hispanics. Hispanics were very rare to find here in Oregon,” said Ramirez. 

As for Rosa, she says she carries El Salvador in her heart, but she’s beyond grateful to the United States, a nation that gave her a new life and optimism about the next generation. 

Source: newsy.com

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