Keeping At It

Volcker chaired the Federal Reserve from 1979 to 1987 and wrote this memoir with Christine Harper near the end of his life. It covers his career at Treasury, at the New York Fed and at the Federal Reserve Board, and his subsequent work on financial regulation.

The central episode is the disinflation. Volcker raised the federal funds rate above twenty percent in 1981, which produced the deepest recession since the 1930s, unemployment above ten percent, farm and construction sector collapse, and death threats and public protests directed at him personally. He held the position, inflation fell from around thirteen percent to around three, and the credibility established shaped monetary policy for decades. His account of the decision explains the reasoning: inflation expectations had become embedded in wage and price setting, incremental tightening had failed repeatedly through the 1970s, and only a demonstration that the central bank would accept the cost would change expectations.

He also covers the closing of the gold window in 1971, at which he was present as a Treasury official, the Latin American debt crisis, and his later work including the Volcker Rule restricting proprietary trading by banks. His general position is that sound money, sound finance and competent public administration are the preconditions for everything else, and he is direct about his view that all three deteriorated.

The book is a memoir by a person with a reputation to defend, though Volcker is unusually candid about mistakes. It is not an analysis of monetary policy and readers wanting that should go elsewhere. The account of what it cost to hold the position is the most valuable material.