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Keeping At It: The Quest for Sound Money and Good Government
The extraordinary life story of the former chairman of the Federal Reserve, whose absolute integrity provides the inspiration we need as our constitutional system and political tradition are being tested to the breaking point.
As chairman of the Federal Reserve (1979-1987), Paul Volcker slayed the inflation dragon that was consuming the American economy and restored the world's faith in central bankers. That extraordinary feat was just one pivotal episode in a decades-long career serving six presidents.
Told with wit, humor, and down-to-earth erudition, the narrative of Volcker's career illuminates the changes that have taken place in American life, government, and the economy since World War II. He vibrantly illustrates the crises he managed alongside the world's leading politicians, central bankers, and financiers. Yet he first found his model for competent and ethical governance in his father, the town manager of Teaneck, NJ, who instilled Volcker's dedication to absolute integrity and his "three verities" of stable prices, sound finance, and good government.
As chairman of the Federal Reserve (1979-1987), Paul Volcker slayed the inflation dragon that was consuming the American economy and restored the world's faith in central bankers. That extraordinary feat was just one pivotal episode in a decades-long career serving six presidents.
Told with wit, humor, and down-to-earth erudition, the narrative of Volcker's career illuminates the changes that have taken place in American life, government, and the economy since World War II. He vibrantly illustrates the crises he managed alongside the world's leading politicians, central bankers, and financiers. Yet he first found his model for competent and ethical governance in his father, the town manager of Teaneck, NJ, who instilled Volcker's dedication to absolute integrity and his "three verities" of stable prices, sound finance, and good government.
304 pages, Hardcover
First published October 30, 2018
About the author
Paul A. Volcker
32 books40 followersPaul A. Volcker (1927-2019) was Founder and Chairman of the Volcker Alliance. He was Chairman of the Federal Reserve under Presidents Jimmy Carter and Ronald Reagan from 1979 to 1987.
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Displaying 1 - 30 of 98 reviews
December 24, 2018
I remember watching Paul Volcker on T. V. during the seventies when he was Chairman of the Federal Reserve. He stood 6’7” and towered above everyone. This book is Volcker’s memoir. He stated he never planned on writing a memoir but recent changes in society and government have triggered him to do so.
The book is well written and researched. Volcker states he wants people to understand why and how The Volcker Rule, which is part of the Dodd-Frank regulatory legislation, came about to protect the public. As most readers are aware, the regulation has been continually chipped away at. Volcker is apolitical and has served every administration since Eisenhower.
I particularly enjoyed his comments about the Schools such as the John F. Kennedy School of Government at Harvard and the Woodrow Wilson School of Public and International Affairs at Princeton. Volcker has dedicated his life to public service. I found the book interesting not only about his life but also his insights into our current monetary situation. I enjoyed this book and learned a great deal.
I read this as an audiobook downloaded from Audible. The book is ten hours six minutes. John Bedford Lloyd does a good job narrating the book. Lloyd is an actor and has won several Earphone Awards for audiobook narration. I noted that Lloyd is 6’5’’ inches tall. It caught my eye as Volcker is 6’7”.
The book is well written and researched. Volcker states he wants people to understand why and how The Volcker Rule, which is part of the Dodd-Frank regulatory legislation, came about to protect the public. As most readers are aware, the regulation has been continually chipped away at. Volcker is apolitical and has served every administration since Eisenhower.
I particularly enjoyed his comments about the Schools such as the John F. Kennedy School of Government at Harvard and the Woodrow Wilson School of Public and International Affairs at Princeton. Volcker has dedicated his life to public service. I found the book interesting not only about his life but also his insights into our current monetary situation. I enjoyed this book and learned a great deal.
I read this as an audiobook downloaded from Audible. The book is ten hours six minutes. John Bedford Lloyd does a good job narrating the book. Lloyd is an actor and has won several Earphone Awards for audiobook narration. I noted that Lloyd is 6’5’’ inches tall. It caught my eye as Volcker is 6’7”.
August 20, 2020
I just finished reading Paul Volcker's Keeping At It: The Quest for Sound Money and Good Government. Volcker was the chairman of the Federal Reserve Bank of America from 1979-1987. In this memoir, written along with the journalist Christine Harper, Volcker recounts his extraordinary life and prolonged career in the public service. Volcker is known for restoring the world's faith in central bankers. But his most notable accomplishment as Fed Chair was solving the roaring inflation rates in the American economy at the time. His contribution to the field of economics and banking is the so-called "Volcker Rule". The Rule simply prohibits banks from using customer deposits for their own profit. It also won't let them own, invest in, or sponsor hedge funds, private equity funds, or other trading operations for their own use. It protects depositors from the types of speculative investments that led to the 2008 financial crisis. The Volcker Rule is inputted in the Dodd-Frank Wall Street Reform Act. The book is written with classic humour and wit. The best and most insightful parts, however, are his recommendations for achieving a sound monetary system, efficient public service and ethical governance. Highly recommended for policymakers.
November 10, 2018
Humility is not a strength of any fed chairman and so it is with Volcker. There is no “rethinking” of his hawkish inflationary actions and he even doubles down to say that we should still be very worried about it. That’s just not a supported position these days—but When you invent a hammer that works against a particular nail, it’s all you see.
The most interesting tidbits are his points about teaching at the Wilson public policy school. In sum, he thinks we don’t teach it the way it needs to be taught. It’s too rigid and I don’t don’t focus on stewardship anymore. Probably right, but I’d love to hear more about what it was that he found to be so good about the way he managed the fed vs now.
There were points where I really disagreed with him: he’s totally opposed to DOJ going after Arthur Anderson and Enron (he happened to work for AA); he’s super into the current capital regime, and he is all about austerity and debt. But he’s 90 so maybe this can be read as an interesting historical memoir
The most interesting tidbits are his points about teaching at the Wilson public policy school. In sum, he thinks we don’t teach it the way it needs to be taught. It’s too rigid and I don’t don’t focus on stewardship anymore. Probably right, but I’d love to hear more about what it was that he found to be so good about the way he managed the fed vs now.
There were points where I really disagreed with him: he’s totally opposed to DOJ going after Arthur Anderson and Enron (he happened to work for AA); he’s super into the current capital regime, and he is all about austerity and debt. But he’s 90 so maybe this can be read as an interesting historical memoir
October 25, 2018
I’m honored (and a little surprised) to be the first to leave feedback for Paul Volcker’s memoir, KEEPING AT IT. This book was originally scheduled for release next month, but due to Volcker’s declining health, the release date has been moved to October 30. I received an advance reading copy through NetGalley in exchange for an unbiased review. All opinions expressed are my own.
Ninety-one-year-old Volcker, the former chairman of the Board of Governors of the Federal Reserve System from 1979-1987, is a somber reminder that very few dedicated public servants like him remain. Therefore, when someone who is widely known as a banking legend, decides to write a memoir because he is concerned about the changes that have taken place in society, government, and the economy, people would be wise to pay attention. In his biography, he laments, “We have for some time been experiencing a breakdown in the effective governance of the United States” and blames “polarization between (and even within) political parties, accompanied by the ever-growing influence of highly concentrated wealth” for “paralyzing key elements of public policymaking…” He also believes that “attacks on the press and on science" or "on any kind of expertise or established fact ... have hampered our capacity to lead.”
Some parts of the book can get a little dry unless you’re an economist (I’m not), but it is an informative read for anyone interested in government, politics, and public affairs or anyone interested in learning more about banking and the Federal Reserve. Volcker shares how he ended up working at the Fed (he started at the FRB of NY), the issues and dilemmas he faced in his role as chairman (specifically, severe inflation in the ‘80s which he is credited with getting under control although his methods were controversial), and what he did with his time after he handed over the reins to his successor, Alan Greenspan. I thought his life after the Fed was the most interesting part of the book. He was 60 when he retired, but he went on to have a “second” career doing many things, one of which was founding the nonpartisan Volcker Alliance to help rebuild trust in government and encourage people to pursue public service careers.
Details about his personal life are also scattered throughout the story, which add some humor. When he was young, he asked his mother why they didn’t have a Chris-Craft boat like their neighbor, and she responded, “They have a mortgage. We don’t.” He writes, “There in six words was the definitive expression of the Volcker family fiscal instincts. They have stayed with me all my life.” The final chapter of the book does an excellent job of summarizing his life, career, and explaining the legacy he hopes to leave behind. It also sets out three key lessons learned from decades of working with both Republicans and Democrats. He calls them the three verities – stable prices, sound finance, and good government. If you don’t read anything else in the book, read the last chapter. It is very good.
Ninety-one-year-old Volcker, the former chairman of the Board of Governors of the Federal Reserve System from 1979-1987, is a somber reminder that very few dedicated public servants like him remain. Therefore, when someone who is widely known as a banking legend, decides to write a memoir because he is concerned about the changes that have taken place in society, government, and the economy, people would be wise to pay attention. In his biography, he laments, “We have for some time been experiencing a breakdown in the effective governance of the United States” and blames “polarization between (and even within) political parties, accompanied by the ever-growing influence of highly concentrated wealth” for “paralyzing key elements of public policymaking…” He also believes that “attacks on the press and on science" or "on any kind of expertise or established fact ... have hampered our capacity to lead.”
Some parts of the book can get a little dry unless you’re an economist (I’m not), but it is an informative read for anyone interested in government, politics, and public affairs or anyone interested in learning more about banking and the Federal Reserve. Volcker shares how he ended up working at the Fed (he started at the FRB of NY), the issues and dilemmas he faced in his role as chairman (specifically, severe inflation in the ‘80s which he is credited with getting under control although his methods were controversial), and what he did with his time after he handed over the reins to his successor, Alan Greenspan. I thought his life after the Fed was the most interesting part of the book. He was 60 when he retired, but he went on to have a “second” career doing many things, one of which was founding the nonpartisan Volcker Alliance to help rebuild trust in government and encourage people to pursue public service careers.
Details about his personal life are also scattered throughout the story, which add some humor. When he was young, he asked his mother why they didn’t have a Chris-Craft boat like their neighbor, and she responded, “They have a mortgage. We don’t.” He writes, “There in six words was the definitive expression of the Volcker family fiscal instincts. They have stayed with me all my life.” The final chapter of the book does an excellent job of summarizing his life, career, and explaining the legacy he hopes to leave behind. It also sets out three key lessons learned from decades of working with both Republicans and Democrats. He calls them the three verities – stable prices, sound finance, and good government. If you don’t read anything else in the book, read the last chapter. It is very good.
February 11, 2019
Volcker shares his full career, even the less historically significant work he did after stepping down from being Fed Chairman under Carter and Reagan. He also had some interesting experience setting policy under Nixon, in particular the decision to get the dollar off the gold standard.
In the 1950's and 1960's, American exports couldn't keep up with imports + US govt spending abroad. This negative balance of payments was financed through foreign entities holding dollar-denominated US government debt. Bretton-Woods required that this debt could be paid back in gold, which foreign countries increasingly chose to do, eroding our gold supply, as memorialized by the Triffin Dilemma. Volcker was part of the team that advised Nixon to change the nature of our debt to no longer be reimbursable in gold, which allowed for the dollar to finally weaken.
More exciting was the 15% inflation (and 18% home mortgage rates!!!) that Volcker stemmed under Carter by implementing a new tool: flexing bank reserve requirements. Previously, the Fed was only managing inflation through changing interest rates via buying and selling treasuries, but inflation could also be stemmed through controlling the quantity of money and not just its price.
One crazy moment that would have been totally explosive if reported on was Reagan's attempts at influencing Volcker's policy making. It turns out that Volcker once met with Reagan and his chief of staff Jim Baker in a White House room without recording equipment, and Reagan ordered Volcker not to raise interest rates in the run-up to his next election. This was ordered to Volcker via Jim Baker, who spoke for Reagan to allow for plausible deniability. It's funny to think that I've read some op-ed's worrying that Trump might attempt this today.
Beyond history lessons, there's some interesting opining on the state of affairs today.
In particular, Volcker is still far more concerend about inflation than deflation, and thinks that we're too cavalier about our inflation target setting today. I suppose he's wrong until he's very, very right. Specifically, Volcker believes the Fed's current 2% inflation target AND limit seems poorly conceived, due to the fact that "no price index can capture down to 0.25% or 0.1% the real change in consumer prices... How did central bankers fall into the trap of assigning such weight to tiny changes in a single statistic, with all of its inherent weakness?" Volcker's biggest concern is not that we can't be accurate, but that our false belief in accuracy will motivate us to "fine tune" the economy with this faulty statistic, trying to let it "run hot" on 3%, say, when we want a slight stimulus, and that getting away from us.
He also spends a fair amount of time criticizing the World Bank, Milton Freidman's monetarism, and CEO pay: "Do the CEOs of today's top banks, or other financial institutions, really contribute 5-10x as much in price-adjusted terms to the success of their institutions or the economy as their predecessors did 40 years ago? I have my doubts."
One interesting rule of thumb Volcker enumerates...Sovereign nationas typically want
1. Full control of their own monetary and fiscal policies
2. The benefits of the free flow of capital across national boundaries
3. Stable, predictable foreign exchange rates.
Only 2 of 3 are possible. Japan and Anglophone countries do 1&2, 2&3 are done in Eurozone countries, and 1&3 is done by China
In the 1950's and 1960's, American exports couldn't keep up with imports + US govt spending abroad. This negative balance of payments was financed through foreign entities holding dollar-denominated US government debt. Bretton-Woods required that this debt could be paid back in gold, which foreign countries increasingly chose to do, eroding our gold supply, as memorialized by the Triffin Dilemma. Volcker was part of the team that advised Nixon to change the nature of our debt to no longer be reimbursable in gold, which allowed for the dollar to finally weaken.
More exciting was the 15% inflation (and 18% home mortgage rates!!!) that Volcker stemmed under Carter by implementing a new tool: flexing bank reserve requirements. Previously, the Fed was only managing inflation through changing interest rates via buying and selling treasuries, but inflation could also be stemmed through controlling the quantity of money and not just its price.
One crazy moment that would have been totally explosive if reported on was Reagan's attempts at influencing Volcker's policy making. It turns out that Volcker once met with Reagan and his chief of staff Jim Baker in a White House room without recording equipment, and Reagan ordered Volcker not to raise interest rates in the run-up to his next election. This was ordered to Volcker via Jim Baker, who spoke for Reagan to allow for plausible deniability. It's funny to think that I've read some op-ed's worrying that Trump might attempt this today.
Beyond history lessons, there's some interesting opining on the state of affairs today.
In particular, Volcker is still far more concerend about inflation than deflation, and thinks that we're too cavalier about our inflation target setting today. I suppose he's wrong until he's very, very right. Specifically, Volcker believes the Fed's current 2% inflation target AND limit seems poorly conceived, due to the fact that "no price index can capture down to 0.25% or 0.1% the real change in consumer prices... How did central bankers fall into the trap of assigning such weight to tiny changes in a single statistic, with all of its inherent weakness?" Volcker's biggest concern is not that we can't be accurate, but that our false belief in accuracy will motivate us to "fine tune" the economy with this faulty statistic, trying to let it "run hot" on 3%, say, when we want a slight stimulus, and that getting away from us.
He also spends a fair amount of time criticizing the World Bank, Milton Freidman's monetarism, and CEO pay: "Do the CEOs of today's top banks, or other financial institutions, really contribute 5-10x as much in price-adjusted terms to the success of their institutions or the economy as their predecessors did 40 years ago? I have my doubts."
One interesting rule of thumb Volcker enumerates...Sovereign nationas typically want
1. Full control of their own monetary and fiscal policies
2. The benefits of the free flow of capital across national boundaries
3. Stable, predictable foreign exchange rates.
Only 2 of 3 are possible. Japan and Anglophone countries do 1&2, 2&3 are done in Eurozone countries, and 1&3 is done by China
January 27, 2019
This book was good in the sense of reading a memoir of someone who committed an atrocious set of acts is good.
It gives an excellent window into Volcker--a man who seems to think he was always on the correct side of everything. He betrays little to no interest in the destructive role his policies played to the economy in general, or everyday people in particular. Do I sound mad? Well, here is how a leader at the Los Angeles Salvation Army described the economic climate that Volcker enabled:
"We're getting desperate calls here...And we don't know what to tell them. People are losing their homes. Their utilities are being turned off. We don't have the funds to help them. No private agency in the city does."
While Volcker excoriates lobbyists and financial speculation, he seems to betray no recognition that it is his friends and peers in the banking and consulting world who do this work.
Also, he married his secretary.
It gives an excellent window into Volcker--a man who seems to think he was always on the correct side of everything. He betrays little to no interest in the destructive role his policies played to the economy in general, or everyday people in particular. Do I sound mad? Well, here is how a leader at the Los Angeles Salvation Army described the economic climate that Volcker enabled:
"We're getting desperate calls here...And we don't know what to tell them. People are losing their homes. Their utilities are being turned off. We don't have the funds to help them. No private agency in the city does."
While Volcker excoriates lobbyists and financial speculation, he seems to betray no recognition that it is his friends and peers in the banking and consulting world who do this work.
Also, he married his secretary.
April 1, 2022
This was a decent though frequently frustrating memoir of Volcker's professional life (with only very brief mentions of his loved ones).
However, I read it with the hope of learning more about why/how Volcker made particular decisions regarding things such as inflation and instead just learned about the things he did without any depth in the reasoning. This is only briefly covered in the last chapter, out of order with the chronology of his life because he's advocating continuing anti-inflationary tactics.
I think this memoir would mostly be interesting to people current on their economics and monetary policy, as opposed to those whom, like me, are very rusty on these topics.
However, I read it with the hope of learning more about why/how Volcker made particular decisions regarding things such as inflation and instead just learned about the things he did without any depth in the reasoning. This is only briefly covered in the last chapter, out of order with the chronology of his life because he's advocating continuing anti-inflationary tactics.
I think this memoir would mostly be interesting to people current on their economics and monetary policy, as opposed to those whom, like me, are very rusty on these topics.
January 29, 2019
Excellent source of history. Volcker's commentary on the current state of our government/politics/society are spot on.
December 30, 2020
What a read!
This book covers at least half a century of the US financial history. From the Bretton woods agreement to the subsequent Nixon shock - the inflation rise underlined by excessive war spending - prime rates reaching its peak, followed by the 1982 recession – the financial crisis of 2008 and finally the Volcker Rule embedded in the Dodd Frank legislation /of which resembles a more updated version of the Glass Steagall act carried out after the great depression in 1930s/. One can gain a clear understanding of how the Federal reserve and US treasury operates as well as the establishment of some critical financial institutions - both international and domestic.
Aside from narrating an informative background on financial history, he also focuses on bringing light to good governance, stable prices, and sound finance - the 'Three Verities' as he calls it. His overall judgement and philosophy on public services ('Thou shall not gamble with the public's money' is a good example) was evidently inherited by his father - a municipal manager in Teaneck, NJ. He is remembered not only as a devoted public official, but also named most renowned among the long line of Fed chairs.
The memoir of the "inflation tamer" Paul Volcker is a definite must read for those in economics, finance and for those who also serve in public offices by means of ethical guidelines.
This book covers at least half a century of the US financial history. From the Bretton woods agreement to the subsequent Nixon shock - the inflation rise underlined by excessive war spending - prime rates reaching its peak, followed by the 1982 recession – the financial crisis of 2008 and finally the Volcker Rule embedded in the Dodd Frank legislation /of which resembles a more updated version of the Glass Steagall act carried out after the great depression in 1930s/. One can gain a clear understanding of how the Federal reserve and US treasury operates as well as the establishment of some critical financial institutions - both international and domestic.
Aside from narrating an informative background on financial history, he also focuses on bringing light to good governance, stable prices, and sound finance - the 'Three Verities' as he calls it. His overall judgement and philosophy on public services ('Thou shall not gamble with the public's money' is a good example) was evidently inherited by his father - a municipal manager in Teaneck, NJ. He is remembered not only as a devoted public official, but also named most renowned among the long line of Fed chairs.
The memoir of the "inflation tamer" Paul Volcker is a definite must read for those in economics, finance and for those who also serve in public offices by means of ethical guidelines.
January 5, 2020
An excellent history and candid discussion of financial policy, decisions and actions during his long career. Volcker's book provides a window into his decision process and actions. Unlike many memoirs, he gives credit to many of his mentors. A rare occurrence.
He inherited an economy with unprecedented inflation in the early 1980s created by the successive OPEC oil shocks of the 1970s. I witnessed how this period of rapid inflation destroyed my parents financial plans for retirement. Words from our political leaders were not solving the problem and Paul had the courage to take action. The medicine was not welcome but the results have been long lasting.
History shows he was always, at any age, willing to commit his time and talent to address a financial crisis - inflation, international fraud, credit and trading. He was a voice of reason with knowledge and experience who was willing to address our nation's political, economic and financial challenges. I didn't always welcome or agree with his views - but he brought valuable 'real world' perspective to the national economic and political conversation. He will be missed.
He inherited an economy with unprecedented inflation in the early 1980s created by the successive OPEC oil shocks of the 1970s. I witnessed how this period of rapid inflation destroyed my parents financial plans for retirement. Words from our political leaders were not solving the problem and Paul had the courage to take action. The medicine was not welcome but the results have been long lasting.
History shows he was always, at any age, willing to commit his time and talent to address a financial crisis - inflation, international fraud, credit and trading. He was a voice of reason with knowledge and experience who was willing to address our nation's political, economic and financial challenges. I didn't always welcome or agree with his views - but he brought valuable 'real world' perspective to the national economic and political conversation. He will be missed.
November 6, 2018
Answering the call from an early rising Georgia peanut farmer.
With an early career in the institutions that upheld the Bretton Woods system of fixed exchange rates and gold-backed reserves, Paul Volker was a key actor in the transition to a more dynamic system. The critical element was the preservation of trust in the dollar and the banking system. The shift of a very rigid industry to a radically uncertain future and the emphasis on the importance of core values make this a very timely book.
The focuses on the importance of public service and fighting corruption. It seems to draw out the values of a previous time. Those values may be the values of the future.
With an early career in the institutions that upheld the Bretton Woods system of fixed exchange rates and gold-backed reserves, Paul Volker was a key actor in the transition to a more dynamic system. The critical element was the preservation of trust in the dollar and the banking system. The shift of a very rigid industry to a radically uncertain future and the emphasis on the importance of core values make this a very timely book.
The focuses on the importance of public service and fighting corruption. It seems to draw out the values of a previous time. Those values may be the values of the future.
November 5, 2018
If you view my average ratings, most books I give are 5 stars (I've vetted what I'm going to read so as to eliminate the fluff), but what a man and what a life. Known as the man who slayed inflation, Paul Volcker is notorious for being one of the most ethical public servants in our history who would stay true to central bank independence and go against the wishes of US Presidents for the good of the country. I recommend this to anyone with interest in US government and central banking.
November 12, 2019
Fascinating and a good read
A fascinating overview of macroeconomic and central banking developments over the last 30 or 40 years from a man who was central to them. In addition, this book is written in a very pleasant and legible style, and even non-economists will understand some of the problems facing Volcker in his long and distinguished career.
A fascinating overview of macroeconomic and central banking developments over the last 30 or 40 years from a man who was central to them. In addition, this book is written in a very pleasant and legible style, and even non-economists will understand some of the problems facing Volcker in his long and distinguished career.
May 22, 2021
Quick read. Conflicted about this one. He admits to a lot of his mistakes and the mistakes of his era without going into enough detail. He's right that heterodox economists today are to rigid and risk adverse. I wish he would spend an entire chapter talking about inflation.
April 23, 2019
With growing global economic concern in 2018-19 this book is a must read to "average people" to understand what is going on in the world of finance
January 4, 2020
One of my heros. A great story of Volcker who sadly just passed away. His life, through his actions, was a great example about how to make things better.
November 7, 2023
Gives exceptional firsthand intuition and analysis into how central banking affects the core tenets of international finance: why countries can only have two of the three between stable exchange rates, monetary policy independence, and free capital flows; why Bretton Woods couldn't have worked for a growing economy due to the Triffin Dilemma and a vicious cycle of trade deficits; why a weak dollar matters for trade exports and capital inflows.
Then he draws lessons for the macroeconomy too: using tools like QE (for the money supply) vs discount rate (for the interest rate); requiring regular stress tests for banks to prevent another financial crisis; why it's bad that too much consumption and a large deficit is financed by floods of foreign capital; why he agrees with Warren Buffet that derivatives carry dangers that are currently latent and therefore require strong internal controls and adequate capital; how triggering credit controls can backfire and lead to people paying off cards which leads to a decrease in money supply and interest rates.
In sum, a very comprehensive memoir from a man who's probably seen it all, from the Great Depression to the creation of derivatives to the current economy, though he admits he knows far less about the private sector than he should - this is the only part lacking in the book I think. But his personal experience and deep understanding of the balance between inflation, unemployment, and interest rates is clearly on display here, and he spins it all together into a wonderful story.
Then he draws lessons for the macroeconomy too: using tools like QE (for the money supply) vs discount rate (for the interest rate); requiring regular stress tests for banks to prevent another financial crisis; why it's bad that too much consumption and a large deficit is financed by floods of foreign capital; why he agrees with Warren Buffet that derivatives carry dangers that are currently latent and therefore require strong internal controls and adequate capital; how triggering credit controls can backfire and lead to people paying off cards which leads to a decrease in money supply and interest rates.
In sum, a very comprehensive memoir from a man who's probably seen it all, from the Great Depression to the creation of derivatives to the current economy, though he admits he knows far less about the private sector than he should - this is the only part lacking in the book I think. But his personal experience and deep understanding of the balance between inflation, unemployment, and interest rates is clearly on display here, and he spins it all together into a wonderful story.
December 18, 2022
I read this hoping to get some depth on the fed decision to raise interest rates into the double digits to tame inflation in the early 80s, but really that was only lightly touched upon, and instead the book was more a "then I did this" memoir without an overarching focus. Thoughts:
- When your life is a decision between Princeton, Harvard, Oxford, the big banks and the fed, odds are you aren't going to have a damn clue about what life is like for normal people
- Volcker seems to have it out for CitiBank. Is it because Citi was uniquely inclined to criminality, or because Volcker worked for Chase a couple times?
- Seems the world could have charted a very different monetary course if the 1971 Camp David meeting had ended with gold convertibility intact, just with a higher $ peg. Since then it's nothing but fiat and the "full faith and confidence" of governments that deserve neither
- Giving it 3 stars because there's no reason to hate it, but that I've forgotten a high percentage of the book <2 months later is not exactly a glowing recommendation
- When your life is a decision between Princeton, Harvard, Oxford, the big banks and the fed, odds are you aren't going to have a damn clue about what life is like for normal people
- Volcker seems to have it out for CitiBank. Is it because Citi was uniquely inclined to criminality, or because Volcker worked for Chase a couple times?
- Seems the world could have charted a very different monetary course if the 1971 Camp David meeting had ended with gold convertibility intact, just with a higher $ peg. Since then it's nothing but fiat and the "full faith and confidence" of governments that deserve neither
- Giving it 3 stars because there's no reason to hate it, but that I've forgotten a high percentage of the book <2 months later is not exactly a glowing recommendation
October 22, 2023
He sentido mucho interés por Paul Volcker y su gestión de las finanzas internacionales en la secretaria del tesoro y la reserva federal.
Es un libro útil para entender el contexto económico de los años 70-80 y las duras, pero necesarias posturas para contrarrestar los períodos de ralentización del crecimiento y la excesiva inflación. Un paradigma económico similar al que nos enfrentamos en la actualidad y relevante para América Latina donde ojalá no sea otra "década perdida".
Este libro ilustra que los ciclos economicos son a su vez ciclos políticos, donde se hace homenaje a la vida del buen servidor público para garantizar buenos procesos públicos y funcionamiento institucional. A su vez, es una crítica a los bajos incentivos que existen para entrar y hacer carrera en la tecnocracia pública y se lanzan algunas propuestas desde lo regulatorio y multilateral.
Es un libro útil para entender el contexto económico de los años 70-80 y las duras, pero necesarias posturas para contrarrestar los períodos de ralentización del crecimiento y la excesiva inflación. Un paradigma económico similar al que nos enfrentamos en la actualidad y relevante para América Latina donde ojalá no sea otra "década perdida".
Este libro ilustra que los ciclos economicos son a su vez ciclos políticos, donde se hace homenaje a la vida del buen servidor público para garantizar buenos procesos públicos y funcionamiento institucional. A su vez, es una crítica a los bajos incentivos que existen para entrar y hacer carrera en la tecnocracia pública y se lanzan algunas propuestas desde lo regulatorio y multilateral.
August 3, 2019
This was a decently solid entry of financial history, especially in regards to the Federal Reserve. But its also very dry, not as deep as it should have been, and too focused on managing his own reputation.
Considering I am just starting out in getting to know the world of finance, what I do know is Paul Volcker played it fairly safe and did not write anything that objectionable. (Although, for some bizarre reason he didn't feel Enron or Arthur Anderson deserved to be punished legally beyond the primary perpetrators, despite its well known wide spread fraud.)
Overall, a non-essential book unless you are determined to learn about the Fed, are contemplating entering service, or, like me, are trying to read any decent book regarding finance and its history you can find.
Considering I am just starting out in getting to know the world of finance, what I do know is Paul Volcker played it fairly safe and did not write anything that objectionable. (Although, for some bizarre reason he didn't feel Enron or Arthur Anderson deserved to be punished legally beyond the primary perpetrators, despite its well known wide spread fraud.)
Overall, a non-essential book unless you are determined to learn about the Fed, are contemplating entering service, or, like me, are trying to read any decent book regarding finance and its history you can find.
March 23, 2023
A must read if you want some historical background on the man who solved stagflation in the 1980s (very relevant in 2023).
December 9, 2018
Memoir and economic history covering many of the postwar economy's major moments. Filled with Volcker's core values: virtue (in the ancient Roman sense), commitment to serving others and to the values of good government, and his 3 key principles of 1) stable prices (reflecting the lessons of life in a high inflation world), 2) sound money (independence of Fed, structure and efficiency of regulatory / oversight framework to adequately stabilize the entire financial system), 3) good government (Hamilton credo - good management is key to good policy).
Foundational belief in the values of public service - career of Volcker's father as the Teaneck, NJ city manager and his successes there - sense that people respected public servants.
Early experiences: Princeton (thesis on importance of price stability), LSE, NY Fed (early debates like bills only doctrine - how far out the curve could CB buy / risk interference with Treasury debt management roles?), research at Chase (old style commercial bank). Interactions with economic schools of thought early in career - Hansen (suspicious), Friedman (too rigid). Treasury: work on JFK tax policy, defense of Bretton Woods (Roosa: moral nature of policy of US support for world economy), gold sustainability a key threat to US. Return to Treasury under Nixon, responsibility to coordinate international monetary affairs with US domestic policy - and deep disappointment of end of BW system he had spend much of career defending). NY Fed presidency and view of Latin American crisis - Citi's Walter Wriston: 'countries don't go bankrupt.' View of the economy (before Federal Reserve Act amended to dual mandate) - confusion between needs to promote growth / fight inflation, indecision, stagflation.
Fed: Carter's malaise speech, need for new directions, interview with Volcker (emphasized independence of Fed, need to attack inflation head on, tighter rates than Miller). Need for new approach (end of incrementally tighter rates) and something more drastic - control quantity rather than price of money via targeting commercial bank reserves held at Fed; commitment to follow through (did not revisit policy even when short term rates went through targeted upper bounds). Difficulties of political interference - Carter credit controls responsible for a brief recession (and offsetting benefits of monetary program). Public credibility important - 'lashed to the mast' approach. Early grumblings from within Reagan administration but general support - inflation under control by 1982. Awkward meeting with Reagan in 1984 - 'order' not to raise rates. Dealing with financial instability (Penn Central, Continental Illinois, S&Ls) - basic lessons of unstable borrowing/lending, Latin American debt (longer lessons: missed opportunities for reform, bad economic discipline, lost opportunities and consequences now). Coordination with Baker Treasury - Plaza Accord on FX rates in 1985 (little support from Volcker), Louvre in 1987 (practical breakdown in coordinated fiscal/monetary policy across economies) - no silver bullet to international monetary discipline. Bank recaps and capital standards - leverage ratio vs risk based approaches (Basel).
Post Fed life: Wolfensohn (private benefits, turned down shady seeming business), Princeton (reflections on failure of Woodrow Wilson school - venue for policy debates, not management training for government), committees and boards. Seen as an independent figure with integrity: Holocaust restitution from Swiss banks, UN oil for food, World Bank corruption, accounting standards, Obama crisis advisory board. Financial reform and Volcker Rule - institutions can't gamble with money that has taxpayer backing.
Inflation targeting is a made up approach! Nothing magical about 2%, encouraging any inflation can be harmful, deflation is a risk that only exists when the system truly breaks down - i.e. overstated.
Foundational belief in the values of public service - career of Volcker's father as the Teaneck, NJ city manager and his successes there - sense that people respected public servants.
Early experiences: Princeton (thesis on importance of price stability), LSE, NY Fed (early debates like bills only doctrine - how far out the curve could CB buy / risk interference with Treasury debt management roles?), research at Chase (old style commercial bank). Interactions with economic schools of thought early in career - Hansen (suspicious), Friedman (too rigid). Treasury: work on JFK tax policy, defense of Bretton Woods (Roosa: moral nature of policy of US support for world economy), gold sustainability a key threat to US. Return to Treasury under Nixon, responsibility to coordinate international monetary affairs with US domestic policy - and deep disappointment of end of BW system he had spend much of career defending). NY Fed presidency and view of Latin American crisis - Citi's Walter Wriston: 'countries don't go bankrupt.' View of the economy (before Federal Reserve Act amended to dual mandate) - confusion between needs to promote growth / fight inflation, indecision, stagflation.
Fed: Carter's malaise speech, need for new directions, interview with Volcker (emphasized independence of Fed, need to attack inflation head on, tighter rates than Miller). Need for new approach (end of incrementally tighter rates) and something more drastic - control quantity rather than price of money via targeting commercial bank reserves held at Fed; commitment to follow through (did not revisit policy even when short term rates went through targeted upper bounds). Difficulties of political interference - Carter credit controls responsible for a brief recession (and offsetting benefits of monetary program). Public credibility important - 'lashed to the mast' approach. Early grumblings from within Reagan administration but general support - inflation under control by 1982. Awkward meeting with Reagan in 1984 - 'order' not to raise rates. Dealing with financial instability (Penn Central, Continental Illinois, S&Ls) - basic lessons of unstable borrowing/lending, Latin American debt (longer lessons: missed opportunities for reform, bad economic discipline, lost opportunities and consequences now). Coordination with Baker Treasury - Plaza Accord on FX rates in 1985 (little support from Volcker), Louvre in 1987 (practical breakdown in coordinated fiscal/monetary policy across economies) - no silver bullet to international monetary discipline. Bank recaps and capital standards - leverage ratio vs risk based approaches (Basel).
Post Fed life: Wolfensohn (private benefits, turned down shady seeming business), Princeton (reflections on failure of Woodrow Wilson school - venue for policy debates, not management training for government), committees and boards. Seen as an independent figure with integrity: Holocaust restitution from Swiss banks, UN oil for food, World Bank corruption, accounting standards, Obama crisis advisory board. Financial reform and Volcker Rule - institutions can't gamble with money that has taxpayer backing.
Inflation targeting is a made up approach! Nothing magical about 2%, encouraging any inflation can be harmful, deflation is a risk that only exists when the system truly breaks down - i.e. overstated.
July 29, 2021
It is apparently possible to live 91 years, write a memoir looking back at those 91 years, and then fail to engage in any real critical reflection about the major choices in your life.
Just as a book, it's not particularly well structured. If you are reading a memoir of Paul Volcker, you are almost certainly interested in his eight years running the free world's economy as Fed chair. Chapters 8-10 cover that period. There are sixteen chapters, an intro and an epilogue. Only 3/18 of the book's sections are on the only thing anyone reading it will care about. Even his time as undersecretary of the Treasury negotiating America's exit from the gold standard only gets one chapter (though one that's more introspective and useful than the sections on his more-consequential period at the Fed).
Somehow Volcker managed six chapters about his post-Fed life, only one of which covers his work on financial regulation under Obama. The whole section feels like a narrative CV: "I investigated Swiss banks' stocks of gold stolen from Holocaust victims! I was on some corporate boards! I would like to thank the following people for their help during this period."
It would have been unreasonable to expect a full Robert McNamara/Fog of War reckoning with Volcker's choices as chair. But it seems like a minimum requirement that he reckon with those choices somehow. Volcker consciously engineered two recessions, sending unemployment into the double digits for the first time since the Great Depression. He, like most economists, believes he did the right thing and broke the back of inflation. But he refuses to treat his then-critics as anything but corrupt special interests (unions being the worst of all) who he definitively proved wrong. Then it's on to talking about how Jim Wolfensohn was a fun boss to work for in the 90s. I'm sure he was but truly, who cares?
Obviously you have to read this if you're studying Volcker or the Volcker shock or the rightward turn in world politics since the 1970s — and there are some interesting tidbits in here, from Volcker's enthusiastic support for Ronald Reagan's crushing of the air traffic controllers' union, to his frankly meanspirited mockery of people like Lawrence Ball who want to raise average inflation to 4 from 2 percent. Volcker was temperamentally conservative in a "inflation is per se immoral and a vice to be expunged" kind of way, and the book is useful in illustrating that.
But otherwise, this is a book with multiple chapters of ruminations about how the tradition of public service and government work is being lost by a new generation of young people (especially at Volcker's alma mater Princeton) who go into finance and consulting instead — written by someone who hopped between Wall Street and government his entire career. It's a book by someone who until his death was unwilling to examine the contradictions in his life.
Just as a book, it's not particularly well structured. If you are reading a memoir of Paul Volcker, you are almost certainly interested in his eight years running the free world's economy as Fed chair. Chapters 8-10 cover that period. There are sixteen chapters, an intro and an epilogue. Only 3/18 of the book's sections are on the only thing anyone reading it will care about. Even his time as undersecretary of the Treasury negotiating America's exit from the gold standard only gets one chapter (though one that's more introspective and useful than the sections on his more-consequential period at the Fed).
Somehow Volcker managed six chapters about his post-Fed life, only one of which covers his work on financial regulation under Obama. The whole section feels like a narrative CV: "I investigated Swiss banks' stocks of gold stolen from Holocaust victims! I was on some corporate boards! I would like to thank the following people for their help during this period."
It would have been unreasonable to expect a full Robert McNamara/Fog of War reckoning with Volcker's choices as chair. But it seems like a minimum requirement that he reckon with those choices somehow. Volcker consciously engineered two recessions, sending unemployment into the double digits for the first time since the Great Depression. He, like most economists, believes he did the right thing and broke the back of inflation. But he refuses to treat his then-critics as anything but corrupt special interests (unions being the worst of all) who he definitively proved wrong. Then it's on to talking about how Jim Wolfensohn was a fun boss to work for in the 90s. I'm sure he was but truly, who cares?
Obviously you have to read this if you're studying Volcker or the Volcker shock or the rightward turn in world politics since the 1970s — and there are some interesting tidbits in here, from Volcker's enthusiastic support for Ronald Reagan's crushing of the air traffic controllers' union, to his frankly meanspirited mockery of people like Lawrence Ball who want to raise average inflation to 4 from 2 percent. Volcker was temperamentally conservative in a "inflation is per se immoral and a vice to be expunged" kind of way, and the book is useful in illustrating that.
But otherwise, this is a book with multiple chapters of ruminations about how the tradition of public service and government work is being lost by a new generation of young people (especially at Volcker's alma mater Princeton) who go into finance and consulting instead — written by someone who hopped between Wall Street and government his entire career. It's a book by someone who until his death was unwilling to examine the contradictions in his life.
November 28, 2018
Paul Volcker knocks the ball out of the park through his autobiography, published at the advanced age of 90. There’s something endearing about Volcker’s style: he comes off as a chip off the old block, approachable, a wise and simple man.
Fiscal standards became unbridled proceeding August 1971 when the last vestige of the US Dollar Gold Convertibility Standard was dismantled by fiat. The money supply grew like never before and it eventually set off a wave of price inflation in major markets including the price of gasoline and cost of borrowing. Geopolitical events unraveling in the Middle East weren’t helping, and the US Dollar itself risked being speculated into oblivion.
Paul Volcker may be considered “The Fed’s Last Hawk”. As chief of the Fed, he administered the medicine necessary to extinguish the United States’ epoch of inflation, or as he termed it, the Great Inflation. As the newly appointed Chairman of the Fed in 1979 with the inflation rate over 13 percent, Volcker wasted no time, immediately raising interest rates. His mission: “lead a war against inflation.”
“I suppose if some Delphic oracle had whispered in my ear that our policy would result in interest rates of 20 percent or more, I might have packed my bags and headed home.”
Indeed, at its peak: “the rate on three-month Treasury bills eventually exceeded 17 percent, the commercial bank prime lending rate peaked at 21.5 percent, and, most sensitively, mortgage rates surpassed 18 percent. Those rates had never been seen before in our financial history.” The unemployment rate proceeded to creep over ten percent, and a wave of bankruptcies pounded the Savings & Loans lending industry, crippling the economy into recession as the wicked chimera of stagflation roared.
Stagflation is the economic phenomenon where price inflation and economic recession intersect. As a central banker, it is the most difficult balancing act, a central banking conundrum: do you raise the interest rate to combat inflation, or do you lower it to combat the recession? If you raise it to calm prices, you also cause the cost of borrowing to go up. If you lower it to stimulate financial facilities, money supply growth continues and the price level never ceases to increase.
History proved Volcker right. Leading the Fed, his aggressive approach against inflation got prices under control, despite the severe market disruptions it caused. This then set the stage to combat the recession, and by the end of his term in 1987 both inflation and unemployment were normalized.
“Now the environment is quite different. The generation with direct experience of stagflation is passing on.”
Fiscal standards became unbridled proceeding August 1971 when the last vestige of the US Dollar Gold Convertibility Standard was dismantled by fiat. The money supply grew like never before and it eventually set off a wave of price inflation in major markets including the price of gasoline and cost of borrowing. Geopolitical events unraveling in the Middle East weren’t helping, and the US Dollar itself risked being speculated into oblivion.
Paul Volcker may be considered “The Fed’s Last Hawk”. As chief of the Fed, he administered the medicine necessary to extinguish the United States’ epoch of inflation, or as he termed it, the Great Inflation. As the newly appointed Chairman of the Fed in 1979 with the inflation rate over 13 percent, Volcker wasted no time, immediately raising interest rates. His mission: “lead a war against inflation.”
“I suppose if some Delphic oracle had whispered in my ear that our policy would result in interest rates of 20 percent or more, I might have packed my bags and headed home.”
Indeed, at its peak: “the rate on three-month Treasury bills eventually exceeded 17 percent, the commercial bank prime lending rate peaked at 21.5 percent, and, most sensitively, mortgage rates surpassed 18 percent. Those rates had never been seen before in our financial history.” The unemployment rate proceeded to creep over ten percent, and a wave of bankruptcies pounded the Savings & Loans lending industry, crippling the economy into recession as the wicked chimera of stagflation roared.
Stagflation is the economic phenomenon where price inflation and economic recession intersect. As a central banker, it is the most difficult balancing act, a central banking conundrum: do you raise the interest rate to combat inflation, or do you lower it to combat the recession? If you raise it to calm prices, you also cause the cost of borrowing to go up. If you lower it to stimulate financial facilities, money supply growth continues and the price level never ceases to increase.
History proved Volcker right. Leading the Fed, his aggressive approach against inflation got prices under control, despite the severe market disruptions it caused. This then set the stage to combat the recession, and by the end of his term in 1987 both inflation and unemployment were normalized.
“Now the environment is quite different. The generation with direct experience of stagflation is passing on.”
November 14, 2018
I expected more from this book. Volcker has a long record of public service, most notably, perhaps, as Chairman of the Federal Reserve appointed by Carter, where he solved the problem of "stagflation" and ended America's period of highest inflation. He served the public for the better part of six or seven decades with occasional stints in private business.
I was hoping to learn more about the crises he worked on. I can list many of them, but can't tell you exactly what he did to fix them. After reading this, I still can't. He covers the stagflation issue in a short handful of pages, telling us who he met with and what the problems were, but not going into any detail about the solutions.
If you didn't know who he was or were unaware of the highlights of his career, this book does a good job of listing them and telling who were his allies and foes. As such, it's not a bad place to make a list of events that are worthy of further study. (Such a list might simply be constructed from a template: "The Volcker Blank"; fill in the blank: The Volcker Committee, The Volcker Conference, The Volcker Rule, The Volcker Alliance, The Volcker Group, and so on.) And the final chapter gives a nice, concise look at his overarching philosophy.
He talks very little about his personal history and his family. That's fine, I guess, but I think a little more about his family life can help us better understand him as a person. Most of us are not entirely professional creatures: our non-professional activities can often inform our philosophies.
The book includes an index and end notes, but no bibliography.
I was hoping to learn more about the crises he worked on. I can list many of them, but can't tell you exactly what he did to fix them. After reading this, I still can't. He covers the stagflation issue in a short handful of pages, telling us who he met with and what the problems were, but not going into any detail about the solutions.
If you didn't know who he was or were unaware of the highlights of his career, this book does a good job of listing them and telling who were his allies and foes. As such, it's not a bad place to make a list of events that are worthy of further study. (Such a list might simply be constructed from a template: "The Volcker Blank"; fill in the blank: The Volcker Committee, The Volcker Conference, The Volcker Rule, The Volcker Alliance, The Volcker Group, and so on.) And the final chapter gives a nice, concise look at his overarching philosophy.
He talks very little about his personal history and his family. That's fine, I guess, but I think a little more about his family life can help us better understand him as a person. Most of us are not entirely professional creatures: our non-professional activities can often inform our philosophies.
The book includes an index and end notes, but no bibliography.
January 29, 2020
An interesting read for people well-grounded in economic history. Volcker assumes a baseline knowledge about the economic developments in the last 100 years in the US. That said, he dismisses much of what underpins the modern economy - like computerised trading at the FOMC - as harmful. I fear this is representative of a certain discomfort with that which he was unaccustomed to. Moreover, his glowing review of Alan Greenspan (who contributed to the dismantling of regulation that contributed to the global financial crisis) and somewhat unkind remarks on Janet Yellen (who implemented the lion's share of Volcker's proposed reforms and oversaw an impressive and stable recovery) has hints of internalised bias. Though he served in a different era, he hardly mentions any female colleagues in a positive light, even when discussing the resounding success of the CFPB (spearheaded by Elizabeth Warren, who goes unmentioned).
His plea for a spirit of public management will likely fall on deaf ears. The institutions he talks about have evolved, and his career could not be replicated in this day. What he calls "econometrics" is considered mainstream economics now, and without his pedigree it's hard to make a difference in the economic institutions of the country anymore. That said, few public sector officials have enacted institutional reform as effectively as Volcker, so perhaps his plea will inspire others - I know it certainly gave me some determination.
His plea for a spirit of public management will likely fall on deaf ears. The institutions he talks about have evolved, and his career could not be replicated in this day. What he calls "econometrics" is considered mainstream economics now, and without his pedigree it's hard to make a difference in the economic institutions of the country anymore. That said, few public sector officials have enacted institutional reform as effectively as Volcker, so perhaps his plea will inspire others - I know it certainly gave me some determination.
January 25, 2021
Paul Volcker’s life/autobiography/ story shows us in exquisite details exactly how the economy functions and what the role of the Federal Reserve is. What the hierarchy is and how one can defy certain odds to make a dent in history. It is amazing how one person can be quite so opportune as Paul Volcker, though he grasped at every little opportunity that presented itself. The lesson from this book is not only the ins and outs of the global financial systems and the Federal reserve. But to me it was how when problems are considered globally especially within the financial sector, the mighty United States can do only so much and would require support from other players within the global financial hierarchy. It was especially evident when the book turns to talk about the Breton woods conference.
Furthermore, it was truly insightful that how smaller countries who command less respect can turn the tides of certain decisions in their favor by carefully maneuvering the international landscape.
Overall, it was an amazing book that got me more and more interested in the financial system and global economy. But I feel obliged to point out that you require a certain amount of knowledge about economy and finance in order to fully comprehend what the book has to offer.
Furthermore, it was truly insightful that how smaller countries who command less respect can turn the tides of certain decisions in their favor by carefully maneuvering the international landscape.
Overall, it was an amazing book that got me more and more interested in the financial system and global economy. But I feel obliged to point out that you require a certain amount of knowledge about economy and finance in order to fully comprehend what the book has to offer.
November 22, 2020
To me this book confirmed how Paul was a man of principle and had strong ideas on how people working for the government should go about their work.
Obviously a highly intelligent man he has a record to show it.
However, it also seems he was the last of the breed. His successors all opted to turn a blind eye to the overseas dollar market which has since become the monster that can no longer be prevented from taking down the worldwide economy. Central banking shouldn't have evolved into 'psychology only' practice.
Honored to be Paul's personal salmon fishing guide up in the icelandic north east, i had him hanging on ropes from cliff tops, acting as his 'personal wading stick' and being the 'worst guide possible' as he himself put it. Happy to be part of his adventures and i know he was too.
Obviously a highly intelligent man he has a record to show it.
However, it also seems he was the last of the breed. His successors all opted to turn a blind eye to the overseas dollar market which has since become the monster that can no longer be prevented from taking down the worldwide economy. Central banking shouldn't have evolved into 'psychology only' practice.
Honored to be Paul's personal salmon fishing guide up in the icelandic north east, i had him hanging on ropes from cliff tops, acting as his 'personal wading stick' and being the 'worst guide possible' as he himself put it. Happy to be part of his adventures and i know he was too.
September 30, 2023
In this memoir, Volcker shares his full career as the Fed Chairman under Carter and Reagan, as well as his prior public & private sector experiences building up to his chairmanship (eg, decision to get the dollar off the gold standard)
During the 1950's ~ 1960's, American exports couldn't keep up with imports and the US govt spending abroad. This negative balance of payments was financed through foreign entities holding dollar-denominated US government debt. Bretton-Woods required that this debt could be paid back in gold, which foreign countries increasingly chose to do, eroding our gold supply. Volcker was part of the team that advised Nixon to change the nature of the US debt to no longer be reimbursable in gold, which allowed for the dollar to finally weaken.
More exciting was the 15% inflation (21% at peak) that Volcker stemmed under Carter by implementing a new tool: controlling money supply by flexing banks’ reserve requirements. Previously, the Fed was only managing inflation through changing interest rates via buying and selling treasuries, but inflation could also be stemmed through controlling the quantity of money and not just its price
Volcker will be a figure of controversy. His ‘war on inflation’ appropriately blended the economic theory with people’s psychology, and by standing pat on the strong protest by the homebuilders, auto dealers, etc. he curbed inflation down to 4%, and the US has not had a severe inflation issue ever since. That said, extreme actions are bound to generate unexpected problems, and the ‘too big to fail’ bailouts to Chrysler and the regional banks in the 1980s could’ve increased moral hazard among the American corporations. While the memoir itself was a bit dry and redundant (with due respect to an old man’s way of sharing wisdom), the book itself helped me explore a figure that has left legacy to how the Fed controls / works with the politics, and ultimately affects the lives of people in the world
During the 1950's ~ 1960's, American exports couldn't keep up with imports and the US govt spending abroad. This negative balance of payments was financed through foreign entities holding dollar-denominated US government debt. Bretton-Woods required that this debt could be paid back in gold, which foreign countries increasingly chose to do, eroding our gold supply. Volcker was part of the team that advised Nixon to change the nature of the US debt to no longer be reimbursable in gold, which allowed for the dollar to finally weaken.
More exciting was the 15% inflation (21% at peak) that Volcker stemmed under Carter by implementing a new tool: controlling money supply by flexing banks’ reserve requirements. Previously, the Fed was only managing inflation through changing interest rates via buying and selling treasuries, but inflation could also be stemmed through controlling the quantity of money and not just its price
Volcker will be a figure of controversy. His ‘war on inflation’ appropriately blended the economic theory with people’s psychology, and by standing pat on the strong protest by the homebuilders, auto dealers, etc. he curbed inflation down to 4%, and the US has not had a severe inflation issue ever since. That said, extreme actions are bound to generate unexpected problems, and the ‘too big to fail’ bailouts to Chrysler and the regional banks in the 1980s could’ve increased moral hazard among the American corporations. While the memoir itself was a bit dry and redundant (with due respect to an old man’s way of sharing wisdom), the book itself helped me explore a figure that has left legacy to how the Fed controls / works with the politics, and ultimately affects the lives of people in the world
May 4, 2024
Paul Volcker - The Man who Beat Inflation - was the Fed Chairman during 1979-1987 and under his leadership the US central bank, facing extremely high double digit inflation, resorted to tight monetary policy that slowed the economy sharply and ultimately brought inflation back under control. He is also credited for leading investigations and unearthing the corruption in the UN run - Iraq Food for Oil Program. After the Global Financial Crisis of 2008, he assisted the US Government in formulating reforms for safeguarding the financial system and introduced the “Volcker Rule”. His autobiography “Keeping At It” is an interesting and informative read and covers his entire career and the multiple challenges he faced as a Treasury Under Secretary for monetary affairs, as NY Fed President and as Fed Chairman and later as head of several investigative commissions. Given the recent inflationary episode globally, the chapters in the book covering his fight against inflation are fascinating. He also faced failing businesses and collapsing banks, and was actively involved in FDIC led takeovers of banks, handling the Savings & Loans Associations Crisis, and worked closely with the US Treasury during the Latin American debt crisis.
I recommend this book to everyone who wants to read about how to keep on doing your job with integrity and impartiality.
The current Fed Chairman Jerome Powell is an admirer of Paul Volcker and has been saying repeatedly that the Fed is “Keeping At It”. He wants to be remembered as the central banker who also beat inflation. Will the disciple attain the same status as the master?
I recommend this book to everyone who wants to read about how to keep on doing your job with integrity and impartiality.
The current Fed Chairman Jerome Powell is an admirer of Paul Volcker and has been saying repeatedly that the Fed is “Keeping At It”. He wants to be remembered as the central banker who also beat inflation. Will the disciple attain the same status as the master?
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