8 ms·

Paul Volcker has died

208 points by kaboro 7y ago

notkaiho 7y ago
Not just waging war on inflation, but being the name behind the Volcker Rule, which prohibits banks from making certain speculative investments, and arguably inhibits some of the worst excesses of "casino capitalism"
deleted 7y ago
[deleted]
aazaa 7y ago
A good account of Volcker's tenure at the Fed can be found in "Secrets of the Temple" by William Greider.
notlukesky 7y ago
“In 2009 Paul Volcker, berating a banking industry that had taken finance to the brink of disaster, quipped that “the ATM has been the only useful innovation in banking for the past 20 years”. From: https://www.ft.com/content/052f9310-5738-11e7-80b6-9bfa4c1f83d2 https://www.ft.com/content/052f9310-5738-11e7-80b6-9bfa4c1f8...
SkyMarshal 7y ago
Volcker taught the world how central banks should reconcile their multiple, sometimes conflicting mandates to effectively manage monetary policy. When he became chairman of the US Federal Reserve in 1980, the US was suffering from stagflation, or stagnation + inflation, which economists previously believed was impossible to have at the same time. The fear was that solving stagnation by lowering interest rates would drive higher inflation, possibly hyperinflation, but conversely that raising interest rates to solve inflation would exacerbate the stagnation, possibly into a depression. Volcker showed that focusing on and killing inflation by raising interest rates, even to extreme levels (briefly up to ~20%), you end both inflation and stagnation. For one reason, low, steady, predictable inflation, better enables businesses to plan, hire and invest. And that has been central bank policy ever since (though they arguably mistakenly deviated from it under the latter part of Greenspan’s tenure). As Bernanke said, “He personified the idea of doing something politically unpopular but economically necessary.” It’s rare to have such an impact on one’s field, especially under such adverse circumstances.
- peisistratos 7y ago
  > Volcker showed that focusing on and killing inflation by raising interest rates, even to extreme levels (briefly up to ~20%), you end both inflation and stagnation. Another thing jacked up was the unemployment rate - to 11%. Bad for the people doing the work and creating the wealth, good for the heirs receiving dividends from the expropriated surplus time if those who work. Jacking the interest rate up to ~20% so that unemployment goes to 11% is not a stroke of genius, it's just something no one was politically capable of doing beforehand.
- lame-robot-hoax 7y ago
  A history lesson in why it’s incredibly important for the Fed to stay independent and not bow to political pressures from the president.
- Ididntdothis 7y ago
  With stuff like this I always wonder if Volcker had such a great insight or if he was just lucky to have things come together at the right time. Greenspan was also considered a genius until he wasn't.
  - everybodyknows 7y ago
    >was just lucky to have things come together at the right time. Yes. In one interview Volcker recalls having told Carter "Yes, I can end inflation. But if I do, you won't get re-elected". Carter: "Do it anyway." (Can't find the reference now, anyone know it?) From a few years back: https://fortune.com/2015/10/31/paul-volcker-jimmy-carter-donald-trump/ https://fortune.com/2015/10/31/paul-volcker-jimmy-carter-don... Lots of people knew what had to be done, but Jimmy Carter was the rare sort of electee who would act in the country's best interests, even to the ruin of his own career.
    - ls612 7y ago
      And credit to Reagan for following through with it, and not just dismissing it as his predecessor's failed policy. Even through the 1982 recession that Volcker caused, which finally brought inflation down below 10% and almost cost him re-election.
setpatchaddress 7y ago
And now, a word from scrooge: https://twitter.com/matthewstoller/status/1204057385662320641 https://twitter.com/matthewstoller/status/120405738566232064...
- telesilla 7y ago
  Thank you for posting this. While reading the obit I kept thinking, there is no way this guy could have been able to do what he did without having the backing of the neoliberal system.
- glitchc 7y ago
  A damning indictment of the man. Thank you for sharing this counter-point analysis.
anm89 7y ago
Paul was one of the very few people I consider to be a hero in this world. He had an unbelievable ability to stand up to the existing power structure by convincing people he had a better plan and then executing to perfection. I don't know if it would be possible to have another Volcker in the central banking world these days but we certainly need one.
cletus 7y ago
Maybe I'm the only one who feels this way but... If you have to explain who someone is, is their obituary really a news story? Everybody dies, some tragically young while others such as Mr Volcker lived long lives. There problem is that often these obits ends up being used to further some agenda (although I don't get that sense here.
- pc86 7y ago
  Many here don't know who he was (I didn't) but nobody outside of our circles care about Paul Graham or Linus Torvalds, either. I'm sure almost every IB associate in NYC knows who Volcker is. Whether I know them specifically or not, I think a former Fed chairman dying qualifies as news.
  - deleted 7y ago
    [deleted]
- munk-a 7y ago
  It's a bit weird to say "Welp, I've done a lot, all done now - never going to come back into the fray." because it can be often followed with, "Wait what's that? You need help suddenly!? Well, here i come!" So it's unclear when to really dig into someone's accomplishments and share the interesting bits, that's why so many such investigations happen after death. I've always personally viewed obituaries of interesting people as more of a "Hey, here's some really interesting stuff you may have forgotten or may not have lived through" as a sort of starting point to dig a bit deeper into the interesting things - than a memorial, I'm sure the family and close friends appreciate the article highlighting his public history, but for most folks it only serves as a knowledge gateway.
- uptown 7y ago
  Everybody dies. The lasting impact of those who die lasts longer for some than others.
- buboard 7y ago
  Agree. I was thinking ... HN's audience has gotten too old, and reddit's audience is too young. what's the middle way?
rb808 7y ago
My view isn't full of praise. My family was really affected by the recession he caused. The recession was brutal and lots of people never worked again - it caused a lot of pain and despair. Everyone talks about how taming inflation is so wonderful. Taming mostly benefited the wealthiest - as interest rates have tumbled asset prices have soared in value. Ever since working people's salaries have stagnated. Ironically now people are worried about deflation.
- claudeganon 7y ago
  Well said. As setpatchaddress highlighted downthread, Volker was responsible for undoing the socioeconomic order the New Deal put in place, setting the stage for our new gilded age and all the political and economic chaos that has come with it: https://mobile.twitter.com/matthewstoller/status/1204057385662320641 https://mobile.twitter.com/matthewstoller/status/12040573856...
  - pcurve 7y ago
    Seems like you are getting downvoted and I don't really understand why. You expressed your view in a civil way and linked to an interesting tweet.
- big_chungus 7y ago
  Your experience is anecdotal, and whether inflation helps or hinders is still up for debate by economists [0]. Remember that many of the poorest do not keep assets in banks, let alone in stocks or other assets that appreciate or keep pace with inflation. Every recession causes pain, and no one man can cause a recession. I doubt we'll ever have enough data to determine if a given policy during a past recession helped or hindered. [0] https://fivethirtyeight.com/features/inflation-may-hit-the-poor-hardest/ https://fivethirtyeight.com/features/inflation-may-hit-the-p...
- ajna91 7y ago
  If this[1] is to be believed, Volcker intentionally targeted working people's salaries. > Volcker said that the prosperity of the 1950s and 1960s was a "hall of mirrors" and that the "standard of living of the average American must decline." > Volcker angered Reagan officials by keeping interest rates too high. When they complained he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” 1. https://twitter.com/matthewstoller/status/1204065262695256064 https://twitter.com/matthewstoller/status/120406526269525606...
iwintermute 7y ago
https://www.youtube.com/watch?v=mMN17uBzCw4 https://www.youtube.com/watch?v=mMN17uBzCw4 Very insightful interview with Ray Dalio
- rb808 7y ago
  Thanks, its great to see a dedicated public servant. Here is the link to his foundation. https://www.volckeralliance.org/ https://www.volckeralliance.org/
neonate 7y ago
http://archive.is/g1cf5 http://archive.is/g1cf5
w1nst0nsm1th 7y ago
Negative interest rates take over the world, Volcker dies... I can't help but see a connection here.
bitxbit 7y ago
Volcker is overrated in my view. There is a good reason why so many people on Wall Street hold him in highest regard. I believe his perceived success enabled irresponsible monetary policies over the past 30 years. This is how we ended up with a 3% bound on a ten-year and trapped into perpetuity.
everybodyknows 7y ago
From his recent memoir: '... erosion in what Alexander Hamilton insisted at the very beginnings of the republic would be the true test of government: “its aptitude and tendency to produce a good administration.”' 'We embarked on long, unnecessary, and ultimately unwinnable wars far from home. We failed to recognize the costs of open markets and rapid innovation to sizable fractions of our own citizenry. We came to think that inventive financial markets could discipline themselves.' Free preview, here: https://www.publicaffairsbooks.com/titles/paul-volcker/keeping-at-it/9781541788299/#module-whats-inside https://www.publicaffairsbooks.com/titles/paul-volcker/keepi...
PatrickVolk 7y ago
I thought it was Patrick Wolkerding. Holy Damn, Slackware, or the emotion of Slack, can never die. RIP other dude. Who is Paul Volcker. RIP my unknown extgenious. RIP.

208 points by kaboro 7y ago

Not just waging war on inflation, but being the name behind the Volcker Rule, which prohibits banks from making certain speculative investments, and arguably inhibits some of the worst excesses of "casino capitalism"

deleted 7y ago

[deleted]

aazaa 7y ago

A good account of Volcker's tenure at the Fed can be found in "Secrets of the Temple" by William Greider.

notlukesky 7y ago

“In 2009 Paul Volcker, berating a banking industry that had taken finance to the brink of disaster, quipped that “the ATM has been the only useful innovation in banking for the past 20 years”. From: https://www.ft.com/content/052f9310-5738-11e7-80b6-9bfa4c1f83d2 https://www.ft.com/content/052f9310-5738-11e7-80b6-9bfa4c1f8...

SkyMarshal 7y ago

Volcker taught the world how central banks should reconcile their multiple, sometimes conflicting mandates to effectively manage monetary policy. When he became chairman of the US Federal Reserve in 1980, the US was suffering from stagflation, or stagnation + inflation, which economists previously believed was impossible to have at the same time. The fear was that solving stagnation by lowering interest rates would drive higher inflation, possibly hyperinflation, but conversely that raising interest rates to solve inflation would exacerbate the stagnation, possibly into a depression. Volcker showed that focusing on and killing inflation by raising interest rates, even to extreme levels (briefly up to ~20%), you end both inflation and stagnation. For one reason, low, steady, predictable inflation, better enables businesses to plan, hire and invest. And that has been central bank policy ever since (though they arguably mistakenly deviated from it under the latter part of Greenspan’s tenure). As Bernanke said, “He personified the idea of doing something politically unpopular but economically necessary.” It’s rare to have such an impact on one’s field, especially under such adverse circumstances.

peisistratos 7y ago
> Volcker showed that focusing on and killing inflation by raising interest rates, even to extreme levels (briefly up to ~20%), you end both inflation and stagnation. Another thing jacked up was the unemployment rate - to 11%. Bad for the people doing the work and creating the wealth, good for the heirs receiving dividends from the expropriated surplus time if those who work. Jacking the interest rate up to ~20% so that unemployment goes to 11% is not a stroke of genius, it's just something no one was politically capable of doing beforehand.
lame-robot-hoax 7y ago
A history lesson in why it’s incredibly important for the Fed to stay independent and not bow to political pressures from the president.
Ididntdothis 7y ago
With stuff like this I always wonder if Volcker had such a great insight or if he was just lucky to have things come together at the right time. Greenspan was also considered a genius until he wasn't.
- everybodyknows 7y ago
  >was just lucky to have things come together at the right time. Yes. In one interview Volcker recalls having told Carter "Yes, I can end inflation. But if I do, you won't get re-elected". Carter: "Do it anyway." (Can't find the reference now, anyone know it?) From a few years back: https://fortune.com/2015/10/31/paul-volcker-jimmy-carter-donald-trump/ https://fortune.com/2015/10/31/paul-volcker-jimmy-carter-don... Lots of people knew what had to be done, but Jimmy Carter was the rare sort of electee who would act in the country's best interests, even to the ruin of his own career.
  - ls612 7y ago
    And credit to Reagan for following through with it, and not just dismissing it as his predecessor's failed policy. Even through the 1982 recession that Volcker caused, which finally brought inflation down below 10% and almost cost him re-election.

setpatchaddress 7y ago

And now, a word from scrooge: https://twitter.com/matthewstoller/status/1204057385662320641 https://twitter.com/matthewstoller/status/120405738566232064...

telesilla 7y ago
Thank you for posting this. While reading the obit I kept thinking, there is no way this guy could have been able to do what he did without having the backing of the neoliberal system.
glitchc 7y ago
A damning indictment of the man. Thank you for sharing this counter-point analysis.

anm89 7y ago

Paul was one of the very few people I consider to be a hero in this world. He had an unbelievable ability to stand up to the existing power structure by convincing people he had a better plan and then executing to perfection. I don't know if it would be possible to have another Volcker in the central banking world these days but we certainly need one.

cletus 7y ago

Maybe I'm the only one who feels this way but... If you have to explain who someone is, is their obituary really a news story? Everybody dies, some tragically young while others such as Mr Volcker lived long lives. There problem is that often these obits ends up being used to further some agenda (although I don't get that sense here.

pc86 7y ago
Many here don't know who he was (I didn't) but nobody outside of our circles care about Paul Graham or Linus Torvalds, either. I'm sure almost every IB associate in NYC knows who Volcker is. Whether I know them specifically or not, I think a former Fed chairman dying qualifies as news.
- deleted 7y ago
  [deleted]
munk-a 7y ago
It's a bit weird to say "Welp, I've done a lot, all done now - never going to come back into the fray." because it can be often followed with, "Wait what's that? You need help suddenly!? Well, here i come!" So it's unclear when to really dig into someone's accomplishments and share the interesting bits, that's why so many such investigations happen after death. I've always personally viewed obituaries of interesting people as more of a "Hey, here's some really interesting stuff you may have forgotten or may not have lived through" as a sort of starting point to dig a bit deeper into the interesting things - than a memorial, I'm sure the family and close friends appreciate the article highlighting his public history, but for most folks it only serves as a knowledge gateway.
uptown 7y ago
Everybody dies. The lasting impact of those who die lasts longer for some than others.
buboard 7y ago
Agree. I was thinking ... HN's audience has gotten too old, and reddit's audience is too young. what's the middle way?

rb808 7y ago

My view isn't full of praise. My family was really affected by the recession he caused. The recession was brutal and lots of people never worked again - it caused a lot of pain and despair. Everyone talks about how taming inflation is so wonderful. Taming mostly benefited the wealthiest - as interest rates have tumbled asset prices have soared in value. Ever since working people's salaries have stagnated. Ironically now people are worried about deflation.

claudeganon 7y ago
Well said. As setpatchaddress highlighted downthread, Volker was responsible for undoing the socioeconomic order the New Deal put in place, setting the stage for our new gilded age and all the political and economic chaos that has come with it: https://mobile.twitter.com/matthewstoller/status/1204057385662320641 https://mobile.twitter.com/matthewstoller/status/12040573856...
- pcurve 7y ago
  Seems like you are getting downvoted and I don't really understand why. You expressed your view in a civil way and linked to an interesting tweet.
big_chungus 7y ago
Your experience is anecdotal, and whether inflation helps or hinders is still up for debate by economists [0]. Remember that many of the poorest do not keep assets in banks, let alone in stocks or other assets that appreciate or keep pace with inflation. Every recession causes pain, and no one man can cause a recession. I doubt we'll ever have enough data to determine if a given policy during a past recession helped or hindered. [0] https://fivethirtyeight.com/features/inflation-may-hit-the-poor-hardest/ https://fivethirtyeight.com/features/inflation-may-hit-the-p...
ajna91 7y ago
If this[1] is to be believed, Volcker intentionally targeted working people's salaries. > Volcker said that the prosperity of the 1950s and 1960s was a "hall of mirrors" and that the "standard of living of the average American must decline." > Volcker angered Reagan officials by keeping interest rates too high. When they complained he would pull “out his card on union wages” and note that inflation would not come down permanently until labor “got the message and surrendered.” 1. https://twitter.com/matthewstoller/status/1204065262695256064 https://twitter.com/matthewstoller/status/120406526269525606...

iwintermute 7y ago

https://www.youtube.com/watch?v=mMN17uBzCw4 https://www.youtube.com/watch?v=mMN17uBzCw4 Very insightful interview with Ray Dalio

rb808 7y ago
Thanks, its great to see a dedicated public servant. Here is the link to his foundation. https://www.volckeralliance.org/ https://www.volckeralliance.org/

neonate 7y ago

http://archive.is/g1cf5 http://archive.is/g1cf5

w1nst0nsm1th 7y ago

Negative interest rates take over the world, Volcker dies... I can't help but see a connection here.

bitxbit 7y ago

Volcker is overrated in my view. There is a good reason why so many people on Wall Street hold him in highest regard. I believe his perceived success enabled irresponsible monetary policies over the past 30 years. This is how we ended up with a 3% bound on a ten-year and trapped into perpetuity.

everybodyknows 7y ago

From his recent memoir: '... erosion in what Alexander Hamilton insisted at the very beginnings of the republic would be the true test of government: “its aptitude and tendency to produce a good administration.”' 'We embarked on long, unnecessary, and ultimately unwinnable wars far from home. We failed to recognize the costs of open markets and rapid innovation to sizable fractions of our own citizenry. We came to think that inventive financial markets could discipline themselves.' Free preview, here: https://www.publicaffairsbooks.com/titles/paul-volcker/keeping-at-it/9781541788299/#module-whats-inside https://www.publicaffairsbooks.com/titles/paul-volcker/keepi...

PatrickVolk 7y ago

I thought it was Patrick Wolkerding. Holy Damn, Slackware, or the emotion of Slack, can never die. RIP other dude. Who is Paul Volcker. RIP my unknown extgenious. RIP.