Tuesday, December 10, 2019

Paul Volcker dies - The champion of monetary pragmatism

Paul Volcker, the monetary policy pragmatist, died yesterday. He may be our greatest central banker given he broke the back of high inflation in the early 1980's. He solved the problem not with innovation or a wave of monetarism, but with the will to raise rates until inflation was under control. He showed what it means to be an independent central banker that follows core objectives.

The will or mental toughness to deal with the policy problems that others would have avoided is the hallmark of his greatness. This willingness to do what was called for although not always asked for was seen throughout his dealing with domestic monetary policy and with international financial affairs. While not perfect, he was in last decade able to do the unpalatable through pushing forward the Volcker Rule. 

He was a central banker's banker and we can only hope there will be another Paul Volcker when the time is needed.  

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