Paul Volcker, who served as chairman of the Federal Reserve from 1979 to 1987 and helped shape some of the nation’s most important economic policies, had died at age 92.
Volcker served under presidents Jimmy Carter and Ronald Reagan, according to CNBC, and fought inflation with interest rates of 22%.
Volcker also helped create President Barack Obama's economic advisory board and then the Volcker rule, according to The Hill, which sought to rein in commercial banks by prohibiting them from making risky investments that led to the 2007 financial collapse.
Carter appointed Volcker Fed chairman in August 1979. Besides nationwide gasoline shortages and the Iranian hostage crisis, Carter’s presidency was also plagued by crippling inflation rates.
Volcker took charge of the Fed when the U.S. economy was slipping into runaway inflation, according to the Associated Press. Consumer prices skyrocketed 13% in 1979 and then by the same amount again in 1980.
Volcker pushed the Fed’s benchmark interest rate from 11% to a record 20% by late 1980 to try to slow the economy’s growth and shrink inflation.
By January 1980, a recession had begun, followed by an even more dramatic downturn in July 1981 which lasted for 18 months and sent unemployment up more than 10%.
Eventually, though, inflation receded and the Fed began lowering interest rates. The rebounding economy led to Reagan’s landslide reelection in 1984.
But the American economy began a downward turn under Reagan’s successor, George H.W. Bush. The economy arguably was the most important issue of the 1992 election, which led to Bush’s defeat at the hands of former Arkansas governor Bill Clinton.
Credit: J. Scott Applewhite
Credit: J. Scott Applewhite
The 2007 financial crisis under President George W. Bush helped propel Obama into the Oval Office.
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