The Last Central Banker With Balls

[Balls as in courage and bravery.  Exemplified in the quote,  “Margaret Thatcher was Ronald Reagan with balls.”  Don’t get all PC on us now!]

As a graduate student, I interviewed at the Federal Reserve Board in the Eccles Building on Constitutional Avenue (entrance on 20th Street) as a junior economist.  This was way before the exceptionally tight security now ubiquitous in government buildings.  I had worked at other Federal government agencies but never experienced the tight security upon entering those buildings as I did at the Fed that day.

Upon arriving upstairs for my interviews, I asked one of the economists why such tight security?   He responded something to the effect,

When Paul Volcker raised interest rates to near 20 percent to wring inflation from the economy, farmers and other disgruntled citizens were caught wandering the halls of the Federal Reserve Board with guns looking for the Fed Chairman. 


Paul Volcker had some brass ones and realized, and it was central to his policy that short-term pain would result in long-term gains, such as a thirty-year plus bond bull market, for example.

Mr. Volcker’s legacy contrasts sharply with the central bankers of today, who panic when, say,  the S&P500 drops 2 percent, which will almost surely result in the opposite of the Volcker monetary policy precept, i.e., trading short-term gains for long-term pain. It is already evident with the accelerating and now acute wealth inequality.

He was an intellectual monetary giant, honest and spoke what was on his mind until his last days.


“I’m not good,” said Mr. Volcker, 91, the former Federal Reserve chairman, who came to prominence after he used shockingly high interest rates to help end the runaway inflation of the late 1970s and early ’80s. Long one of finance’s wise men, he has been sick for several months.

But he would rather not talk about himself. Instead, Mr. Volcker wants to talk about the country, the economy and the government. And if he had seemed lethargic when I arrived, he turned lively in his laments: “We’re in a hell of a mess in every direction,” he said.  – NY Times

RIP,  Paul Volcker.  Still wishing President Obama appointed you Treasury Secretary as we would be in a much better place.

But at root, Paul was a public servant — someone who truly believed in the honor of serving others. His scorn was reserved solely for those who corrupted institutions or put their own selfish interests above the good of society.  – Christine Harper, Bloomberg


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