Former head of US Fed Paul Volcker dies

Paul Volcker, the towering former Federal Reserve chairman who tamed US inflation in the 1980s and decades later inspired tough Wall Street reforms in the wake of the global financial crisis, died on Monday at the age of 92, according to his daughter Janice Zima. Volcker, who Zima said had been suffering from prostate cancer, was the first to bring celebrity status to the job of US central banker, serving as chairman of the Federal Reserve from 1979 to 1987. As with the man who succeeded him, Alan Greenspan, Volcker could soothe or excite financial markets with just a vague murmur. In 2018, he published a memoir, Keeping at It: The Quest for Sound Money and Good Government and expressed concern about the direction of the federal government and the loss of respect for it. "The central issue is we're developing into a plutocracy," he told the New York Times in October 2018. "We've got an enormous number of enormously rich people that have convinced themselves that they're rich because they're smart and constructive. And they don't like government and they don't like to pay taxes." In 2009, Volcker began serving as a key financial adviser to President Barack Obama and faced a maelstrom of financial turmoil, government bailouts and fallout from the deepest recession since the 1930s Great Depression. In working to help the US economy recover from the 2008 crisis, he proposed what became known as the Volcker rule that restricted banks from making high-risk investments with depositors' cash. Since Donald Trump, who favours fewer regulations, became president in 2017, the rule has been under review. In 2018 when President Donald Trump regularly attacked the Fed as "crazy" for raising interest rates, Volcker advised Chairman Jerome Powell to simply ignore the criticism. Volcker, who slammed the economy's brakes like no other Fed chair, also absorbed his share of barbs from lawmakers in the 1980s. But he faced down both that criticism and, ultimately, inflation that had spiked higher than any point since the 1940s. "Without Paul Volcker's toughness and guts, we may never have broken the grip of rising inflation and declining productivity that plagued the United States during the 1970s," former Securities and Exchange Commission chairman Arthur Levitt wrote in the foreword of a Joseph Treaster's 2004 biography Paul Volcker: The Making of a Financial Legend . Many have credited that effort for setting the stage for steady economic growth and a long bull market that since the early 1990s brought prosperity to millions of Americans. Yet critics say he also pushed the United States into an unnecessarily severe recession in 1981-82. Volcker was appointed Fed chairman by a Democratic president, Jimmy Carter, and then reappointed by a Republican, Ronald Reagan. He was only a few months into the job when on October 6, 1979, he announced a 1-point rise in the discount interest rate to an all-time high of 12 percent. Other borrowing costs followed and the prime rate climbed to a record 20.5 per cent by May 1981. Unemployment rose to 11 percent and the country was steeped in economic malaise. Yet between 1980 and 1983, inflation fell from nearly 15 percent to less than 3 percent. Volcker's inflation-slaying action spurred massive protests, with farmers blockading the Fed's headquarters with tractors, and builders famously mailing him a wooden 2x4 to show their lumber was no longer needed. One U.S. senator demanded that he take his "boot off the neck of the economy." Volcker, however, later conceded he had made a mistake by ordering such a major squeeze on credit, telling Reuters in 1987 that if he could, "I would have played it different." Born on September 5, 1927, in Cape May, New Jersey, Volcker was educated at Princeton, Harvard and the London School of Economics. He was an undersecretary at the Treasury Department during the Nixon administration and president of the Federal Reserve of New York before taking over the Fed chairmanship.

Former head of US Fed Paul Volcker dies

Ex-central bank chairman credited with taming high inflation rates in the 1980s