Paul A. Volcker, who helped shape American economic policy for more than six decades, and who will forever be etched in the history books for leading the Federal Reserve’s brute-force campaign to subdue inflation in the late 1970s and early ’80s, has died on Sunday in New York, the NYT reported. He was 92.
Volcker, a literally towering, he was known as "Tall Paul" at 6 foot 7 inches, "taciturn and somewhat rumpled figure", arrived in Washington as America’s postwar economic hegemony was beginning to crumble. He would devote his professional life to wrestling with the consequences, the NYT writes in its obit of the last US central banker to do the right thing.
Paul Volcker was the last of the great US central bankers. He was followed by such intellectual midgets as Alan Greenspan and Ben Bernanke who unleashed the now infamous cycle of Fed-inspired booms and busts, the outcome of which will have devastating consequences for the US economy and the world.
In recent years, Volcker was instrument in crafting the "Volcker Rule" which prohibited banks from engaging in prop trading, which however banks promptly circumvented by pretending that prop trading was, in fact, hedging.
More from the NYT below:
As a Treasury Department official under Presidents John F. Kennedy, Lyndon B. Johnson and Richard M. Nixon, Mr. Volcker waged a long, losing struggle to preserve the postwar international monetary system established by the Bretton Woods agreement.
As a senior Federal Reserve official from 1975 to 1987, in addition to battling inflation, he sought to limit the easing of financial regulation and warned that the rapid growth of the federal debt threatened the nation’s economic health.
In his last official post, as chairman of President Barack Obama’s Economic Recovery Advisory Board, formed in response to the 2008 financial crisis, he persuaded lawmakers to impose new restrictions on big banks — a measure known as the “Volcker Rule.”
Mr. Volcker interlaced his long stretches of public service with a lucrative career on Wall Street, most prominently as chief executive of the investment bank Wolfensohn & Company.
His reputation for austere integrity also made him a popular choice as an independent arbiter. In one instance he oversaw the reclamation of deposits that Swiss banks had failed to return to the families of Holocaust victims.
His defining achievement, however, was his success in ending an extended period of high inflation after President Jimmy Carter chose him to be the Fed’s chairman in 1979.
He prevailed by delivering shock therapy, driving the economy into a deep recession to persuade Americans to abandon their entrenched expectation that prices would keep rising rapidly.
The cost was steep. As consumers stopped buying homes and cars, millions of workers lost their jobs. Angry homebuilders mailed chunks of two-by-fours to the Fed’s marble headquarters in Washington. But Mr. Volcker managed to...