Former Federal Reserve Chairman Paul Volcker has died

Daniel Fowler
December 11, 2019

But 10 years later, Volcker's fierce independence may be the most relevant lesson of his tenure.

According to his office, Paul Volcker, the former chairman of the Federal Reserve who, in the early 1980s, raised interest rates to historic highs and triggered a recession while the price of the 39, double-digit inflation was canceled, died.

Volcker was appointed Fed chairman by Democratic president Jimmy Carter and reappointed by a Republican, Ronald Reagan. Volcker carried out massive credit tightening to contain the soaring prices, pushing interest rates up to around 20 percent.

Despite his personal austerity, Volcker served in lucrative positions on Wall Street in between his stints in public service, including an early career at Chase Manhattan bank.

Volcker was known best for using high interest rates to reverse decades of inflation. Home builders put postage stamps on bricks and on 2-by-4 wooden planks and mailed them to the Fed to protest how super-high interest rates had wrecked their businesses. Auto dealers sent him vehicle keys in coffins. Volcker left the Fed in 1987, succeeded by Alan Greenspan. Angry farmers, struggling with high debts, drove their tractors to Washington and blocked the headquarters of the Fed.

In the earlier stages of his career, Volcker served as Undersecretary of the Treasury for Monetary Affairs during the early 1970s, and he was subsequently president of the Federal Reserve Bank of NY, according to his resume page on Volcker Alliance's website. He was chair of Wolfensohn & Co., an investment firm, from 1988 to 1996.

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In 1999, he led a committee of Jewish groups and Swiss banks to resolve questions over unclaimed bank accounts of Holocaust victims, eventually brokering a $1.25bn agreement. The United Nations has charged him with investigating allegations of corruption in a United Nations program to provide food aid to Iraq.

Born on September 5, 1927 in Cape May, NJ, Paul Adolph Volcker, Jr. was a grandson of German immigrants; he was the youngest of four children and only son of his father, Paul Sr., and his mother, Alma (née Klippel). In 1951, he spent a year at the London School of Economics as a Rotary Foundation Fellow.

Volcker is survived by his son, James, his daughter, Janice, and his second wife, Anke Dening.

To help the United States economy recover from the 2008 crisis, he proposed what was called the Volcker rule that prevented banks from making high risk investments with the money from the depositors.

In 2009, Volcker began serving as a key financial adviser to President Barack Obama and faced a maelstrom of financial turmoil, government bailouts and the fallout from the deepest recession since the 1930s Great Depression. Volcker has called for restrictions on the ability of banks to trade on the financial markets with their own money, rather than that of their clients, and to invest in private equity funds and hedge funds. He dismissed claims that deregulated financial institutions deserved credit for coming up with innovative products and services.

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