Paul Volcker
Paul Volcker is an American economist who was appointed by President Carter in 1979 to be the 12th Chairman of the Federal Reserve of the United States (the Fed). He was reappointed by President Reagan and served as chairman until August of 1987. During his time as the Chairman of the Fed, Volcker is credited with ending the high levels of inflation that the United States experienced during the 1970s and early 1980s . Volcker was also appointed as the chairman of the Economic Recovery Advisory Board under President Obama from 2009 to 2011.
Paul Volcker
Paul Volcker was the 12th Chairman of the Federal Reserves. He became known for decreasing inflation during the early 1980s.
Benefits During Volcker's Tenure
During his time as chairman, Paul Volcker led the Federal Reserve board and helped to end the stagflation crisis of the 1970s. The inflation rate had remained high throughout the 1970s, while the growth rate was slow and the unemployment was high. When he became chairman in 1979, inflation was high and peaked in 1981 at 13.5%. However, due to the work of Volcker and the rest of the board, the inflation rate dropped to 3.2% by 1983.
Volcker raised the federal funds target rate from 11.2% in 1979 to 20% in June of 1981. The unemployment rate became higher than 10% during this time as well. The economy was restored by 1982 as a result of the tight-money policy put in place by the Fed. Volcker chose to enact a policy of preemptive restraint during the economic upturn which increased the real interest rates. Volcker's policy also pushed the President and Congress to adopt a plan to balance the budget. Volcker's tenure as the chairman of the Federal Reserve resulted in sound monetary and fiscal integrity that achieved the goal of price stability.
Consequences From Volcker's Tenure
Despite his level of success in certain areas, Volcker's Federal Reserve board drew some of the strongest political attacks and protests in the history of the Federal Reserve. The protests were a result of the negative effects that the high interest rates had on the construction and farming industries. Nobel laureate Joseph Stiglitz explained "Paul Volcker, the previous Fed Chairman known for keeping inflation under control, was fired because the Reagan Administration didn't believe he was an adequate deregulator. "
Despite the protests, Paul Volcker was respected for the work that he did while he was the chairman of the Federal Reserve. Congressman Ron Paul was a harsh critic of the Fed, but he commented about Volcker by saying, "If I had to name a Federal Reserve chairman that did a little bit of good, that would be Paul Volcker. " Volcker received the U.S. Senator John Heinz Award for Greatest Public Service by an elected or Appointed Official in 1983.