Sina, Dec. 9 (Xinhua)-- Volcker loved to smoke cigars when he was alive. He is 6 feet 7 inches tall and is known as "tall Paul" (Tall Paul). He was appointed chairman of the Federal Reserve by former President Carter in August 1979 and was re-appointed by former President Ronald Reagan in 1983 and served until 1987. Before he was first appointed chairman of the Federal Reserve in 1979, he was known for his ability to curb inflation.
Volcker's 22% interest rate helped curb inflation in the United States, a move that dealt a heavy blow to manufacturing, agriculture and real estate, but led the way to economic expansion over the next two decades.
Years after the "Great Recession", Mr Volcker also led the Economic recovery Advisory Council (Economic Recovery Advisory Board) of former US President Barack Obama and pushed for the eponymous "Volcker Rule" to rein in commercial banks from the risky investments that led to the 2007 financial crisis.
Volcker was a cigar smoker. He was 6 feet 7 inches tall and was known as Tall Paul. He was appointed chairman of the Federal Reserve by former President Carter in August 1979 and was re-appointed by former President Ronald Reagan in 1983 and served until 1987. Before he was first appointed chairman of the Federal Reserve in 1979, he was known for his ability to curb inflation.
A few months before he first became chairman of the Federal Reserve, Mr Volcker told a meeting of the FOMC in 1979: "in terms of future economic stability, inflation is likely to cause us the most problems and cause the biggest recession."
In 1965, under Lyndon Johnson, the former US president, the US inflation rate was only 1 per cent; by March 1980, it had soared to 14.8 per cent. In an effort to curb rising prices, the Federal Reserve under Volcker raised the federal funds rate and tightened the money supply. Subsequently, in July 1981, the interest rate used by banks and credit unions to provide overnight loans to other deposit-taking institutions reached a record 22.36%. By contrast, from December 2008 to December 2015, during the financial crisis and its aftermath, the interest rate was only 0% to 0.25%. Shortly after becoming chairman of the federal reserve, Volcker raised the discount rate by 0.5%-a move that would have been seen as a considerable shock today.
One of Volcker's biggest concerns before his death was to change the minds and actions of those who thought prices would continue to rise rapidly.
"We are dealing with the inflationary momentum that has been created for decades, as well as the way people think and behave." Volcker told the National Press Club (National Press Club) in September 1981. "about half of the working population-that is, people under the age of 35-have never experienced price stability in their work experience. We are used to living with and adapting to inflation and expect higher inflation in the future. As a result, we unwittingly activate the power to keep it running. "
In the two years after the Fed's benchmark interest rate peaked, inflation fell sharply below 3 per cent, ending a period known as "Great Inflation".
But at the same time, high interest rates have also had a suffocating impact, plunging the US economy into recession. Before the economic crisis of 2007-09, the 1981-82 recession was the worst in the United States since the Great Depression (Great Depression). In 1982, the unemployment rate in the United States reached 10.8%-that is, one in ten of the working population could not find a job-and the unemployment rate is still the highest since 1940.
"without his bold change in monetary policy and his determination to persist in painful years, the US economy would have continued to spiral." William William Poole, former chairman of the St. Louis Fed, wrote in an eulogy written in advance in 2005. Volcker reversed the erroneous policies of his predecessor [Fed chairman] and laid the foundation for the long-term economic expansion of the 1980s and 1990s. "