William L. Silber

The continuing economic crisis is not solely a matter of money - it also relates to a lack of trust. The reputations of many institutions and figures lie ruined, rubble on the fields of history.

For example - as hard to believe as it is now, the Federal Reserve was created separate from the government (despite the name), so as to prevent the influence of political parties from influencing monetary policy, and to remain an impartial and advisory body to prevent economic instability. This has not been done very well recently. Before that, however-

Enter Paul Volcker.



This very technical biography examines the bulk of Volcker's time in public life. He served under five presidents, and Chairman of the Fed from 1979-1987. In the early 1970s, he had managed the floating currency rates between the dollar and the yen, managing a shocking devaluation of the dollar to boost external trade. In 1971, when Nixon ended gold convertibility and effectively ended the Bretton Woods system, he had served as a sort of financial diplomat, encouraging international approaches to the new idea of floating exchange rates.

His most remarkable achievement was ending the period of 'stagflation' of the late 1970s. Inflation, which had reached a peak of some 13% in 1981, fell to ~3% by 1983. Of course, Reagan kicked him out in 1987 and replaced him with Greenspan, because he was not enough of a de-regulator.

In recent years, after the 2008 collapse, there was a major push for financial and monetary reform.

The 'Volcker Rule' which was a major showpiece of this reform, and was largely named so for political clout. The eternally cautious Volcker was displeased with it, and wanted at least the equivalent of the Glass-Steagall Act to be reinstated - limiting interaction between banks and securities/hedge funds/speculator firms. Investment on that scale with too much of other peoples' money is too dangerous.

Volcker is a rare bird in Washington - having a good head for economics, a good mix of pragmatism and caution, and a refusal to adhere to any sort of ideological dogma.

This is a very thick description of monetary policy, filled with goodies for policy wonks. The tone is extremely positive, almost worshiping. I've yet to find a reasoned alternative, though. Even Ron Paul likes this guy.

Hopefully my rambling will serve as a not entirely inadequate introduction.… (more)