Paul Volcker, the Federal Reserve board chairman who vanquished the inflationary upsurge that sapped the US's global prestige and power in the 1970s and early 1980s, has died at the age of 92.
Volcker died on Sunday, according to the Volcker Alliance, a good government advocacy group founded by the former central banker.
A committed public servant and a towering figure in every sense – he stood 6ft 7in tall – Volcker served under multiple presidents from John F Kennedy to Barack Obama and earned a reputation for probity and dogged policymaking even in the face of political storms.
Dollar
Following his nomination to be Fed chairman by Jimmy Carter in 1979, he was tasked with arresting the Great Inflation that was taking price growth towards double-digit levels and pressuring the dollar on foreign exchange markets.
His arrival on the Fed’s board in August 1979 came as the US faced not only an economic crisis at home but a foreign policy crisis in the Middle East, and as the US was humiliated by revolutionary Iran’s seizure of the US embassy in Tehran, undermining confidence in its leadership of the western alliance.
It was Volcker’s great achievement that, ignoring the political election cycle, he persuaded the Fed’s governors to adopt a pragmatic new anti-inflationary monetary strategy, within weeks of taking office.
His continued pursuit of the fight against inflation into the 1980s laid the foundations for a dramatic recovery in the US economy. The US has not since suffered from an inflationary upsurge akin to the one Volcker conquered.
Volcker’s later work included investigating the UN’s Oil-for-Food programme and service on Mr Obama’s Economic Recovery Advisory Board in the aftermath of the financial crisis. During that period he advocated for tougher regulatory reform, and helped pave the way for the adoption by Congress of the so-called Volcker rule, which aimed to rein in risk-taking by major banks.
While he could come across as gruff, with a low, growly voice, Volcker was a warm man with a dry sense of humour who inspired steadfast loyalty among subordinates. He was unexcited by money, preferring fly-fishing and crossword puzzles. In public appearances he was found wreathed in smoke from inexpensive cigars.
Internationalist
Volcker was also a committed internationalist, and a believer in the positive global role the US could play. He wrote in 1992 that the days of a so-called Pax Americana were past. But he added: “My sense is that other nations – old allies and new democracies alike, the now-rich and the still-struggling – will still welcome a constructive lead from the United States.”
Jay Powell, the current Fed chairman, said in a statement that he was deeply saddened by Volcker's death: "He believed there was no higher calling than public service. His life exemplified the highest ideals - integrity, courage, and a commitment to do what was best for all Americans. His contributions to the nation left a lasting legacy."
“He was a genuine statesman - a man of personal courage and rectitude,” said American economist Ted Truman, who served under Mr Volcker in the 1980s as the Fed’s director of the division of international finance. “He had strong principles - low inflation, fiscal discipline, sound banking, and respect for public service.”
Thomas Ross, president of the Volcker Alliance, said: “Paul A Volcker was a giant among American public servants. He was a man of great courage and integrity who committed most of his working life to the public good.”
“He believed in the importance of an effective government to our democracy. He cared deeply about the future of America and those who serve in our government.” – Copyright The Financial Times Limited 2019
