PAUL VOLCKER’S legend is almost as grand and imposing as his physical personage, all six feet and seven inches of it. In 1979 President Jimmy Carter chose him to run the Federal Reserve and tackle America’s high inflation. Mr Volcker acted with grim determination, tightening monetary policy even as the economy sank into deep recession and beleaguered Americans pleaded for relief. Eventually he not only routed inflation, but also won a hard-earned credibility for the Fed that would help successors keep inflation stable. Mr Volcker himself recounts the story in a new memoir, “Keeping At It”, which calls on central banks to resist the siren song of loose money. But the book also invites readers to reconsider his legacy, and to ask whether central bankers have drawn the right lessons from the legend of Chairman Volcker.
The recessions and disinflation of the early 1980s proved a watershed both for macroeconomics and the practice of…
