Paul Volcker

The Honorable Paul Adolph Volcker (born September 5, 1927 in Cape May, New Jersey), is best-known as the Chairman of the Federal Reserve ("Fed") under United States Presidents Jimmy Carter and Ronald Reagan (from August 1979 to August 1987).

Volcker's Fed is widely credited with ending the United States' stagflation crisis of the 1970s by limiting the growth of the money supply, abandoning the previous policy of targeting interest rates. Inflation, which peaked at 13.5% in 1981, was successfully lowered to 3.2% by 1983 and has remained low ever since[1]. The change in policy contributed to the significant recession the US economy experienced in the early 1980s, which included the highest unemployment levels since the Great Depression. The stabilization of the price level has apparently been a success.

Volcker's undergraduate education was at Princeton University; he graduated in 1949. He earned a M.A. in political economy from Harvard University in 1951 and then attended the London School of Economics from 1951 to 1952 as a Rotary Foundation Ambassadorial Fellow - perhaps the most prestigious scholarship to be awarded on a global basis.

In 1952 he joined the staff of the Federal Reserve Bank of New York as a full-time economist. He left that position in 1957 to become a financial economist with the Chase Manhattan Bank. In 1962 he joined the U.S. Treasury Department as director of financial analysis, and in 1963 he became deputy under-secretary for monetary affairs. He returned to Chase Manhattan Bank as vice-president and director of planning in 1965.

From 1969 to 1974 Mr. Volcker served as under-secretary of the Treasury for international monetary affairs. He played an important role in the decisions surrounding the US decision to suspend gold convertibility in 1971, which resulted in the collapse of the Bretton Woods system. In general he acted as a moderating influence on policy, advocating the pursuit of an international solution to monetary problems. After leaving the US Treasury, he became president of the Federal Reserve Bank of New York from 1975 to 1979, leaving to take up the chairmanship of the Federal Reserve in August 1979.

In 1975 he had become a senior fellow in the Woodrow Wilson School of Public and International Affairs at Princeton University. After leaving the Federal Reserve in 1987 he became chairman of the prominent New York investment banking firm run by James D. Wolfensohn, who later was to become president of the World Bank.

In April 2004, the United Nations assigned him to research possible corruption in the Iraqi Oil for Food program. In the report summarising the research, Volcker criticized Kojo Annan, son of UN Secretary-General Kofi Annan, and the Swiss company Cotecna Inspection SA, Annan's employer, for trying to conceal their relationship. Volcker was a director of the United Nations Association of the United States of America from 2000-2004 prior to being appointed to the Independent Inquiry by Kofi Annan.

He is the current Chairman of the Board of Trustees of the Washington-based body, the Group of Thirty and is a member of the Trilateral Commission. He has received honorary degrees from a number of institutions, including Notre Dame, Princeton, Dartmouth, New York University, Fairleigh Dickinson, Bryant College, Adelphi, Lamar University, Bates College in 1989, Rensselaer Polytechnic Institute in 2005, and Brown University in 2006.

See also: monetary exchange equation, Phillips curve.

Further reading

• Paul Volcker: The Making of a Financial Legend, Joseph B. Treaster, New York: Wiley, 2004.

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External links

• The Independent Inquiry Committee into The United Nations' Oil-for-Food Program
• Time for Paul Vocker to Resign from the Oil-for-Food Program A critical article on the Heritage Foundation Website.