It is with admiration for his work to radically curb inflation and lay the groundwork for the late 20th-century U.S. economic renewal that we note the passing of former Federal Reserve Chairman Paul Volcker.
In recent years, Mr. Volcker has been best known for the Volcker Rule, which, in the wake of the 2008 financial crisis, restricted how much proprietary capital “too-big-to-fail” financial institutions could put at risk through their trading operations. But that was just one of many accomplishments over Mr. Volcker’s 65-year career. As the Federal Reserve chairman during the late 1970s and 1980s, he helped curb inflation (which had been rising at a double-digit annual clip versus about 2% today) by raising interest rates as high as 22%. Although this policy led to a deep recession in 1981, for which Mr. Volcker was vilified, he was later hailed for leading the way to the robust, long-lasting economic expansion that followed. His concern about inflation became a chief benchmark for the Fed, along with employment trends, in setting interest rate policy.
In his memoir, “Keeping At It: The Quest for Sound Money and Good Government,” Mr. Volcker argued that public trust in government “requires critically needed reforms in our political process and leaders who can restore and preserve a consensus upon which our great democracy can depend.”
As perhaps the greatest public financier in U.S. history, Mr. Volcker never wavered in his convictions and prescriptions to strengthen the American political and financial system. The world should forever be in debt for his leadership and courage.
In his blog post “Volcker Rules!”, CBRE Chairman of Americas Research and Senior Economic Advisor Spencer Levy provides more insight into Mr. Volcker’s legacy.