Archives of “Group of Thirty” tag

rss

Former Fed chairman Paul Volcker dies at 92

  
  Analysis
#  #  #  #  #  #  #

The man who conquered inflation dies

The man who conquered inflation dies
Paul Volcker has died of cancer at 92, the New York Times reports.
Volcker led the Fed from 1979-1987 in a particularly difficult time characterized by runaway inflation and currency instability. He began working at the Treasury Department under JFK and was chairman of Obama’s Economic Recovery Advisory Board.
Late in his life he was known for the ‘Volcker rule’; a measure that prohibited banks from making risky trades with their own funds, something that contributed to the financial crisis and bank bailout of 2008.
However his defining legacy was tackling the persistent and runaway inflation of the 1970s and 1980s by raising interest rates as high as 20.0% in 1980. That triggered a recession the next year but ended the era of double digit inflation and kicked off the great moderation — a +30 year period of generally falling borrowing costs and interest rates.

Mario Draghi's Favorite Joke

  
Education, Humour
#  #  #  #  #  #  #  #  #  #

In his latest “What Next in The Global Economy” note, Morgan Stanley economist Joachim Fels passes along the following little story about Mario Draghi:

 Who said central bankers have no sense of humour? During a recent dinner at Frankfurt’s Senckenberg Museum (the home of Germany’s most extensive collection of dinosaurs) Mario Draghi told the crowd his favourite joke:

A man needs a heart transplant. Says the doctor: “I can give you the heart of a five-year old boy.” “Too young.” “How about that of a forty-year old investment banker?” “They don’t have a heart.” “A seventy-five year old central banker?” “I’ll take it.” “But why?” “It’s never been used!”

I like the joke, and not only because I consider myself an economist working for an investment bank rather than an investment banker. Mario Draghi’s joke conveys a simple but important message: central banking is about making rational, cool-headed and unemotional decisions in often difficult circumstances. In the 15 years of its existence as the keeper of the euro, the ECB led by Mario Draghi and his predecessors Jean-Claude Trichet and Wim Duisenberg has had to make a lot of difficult decisions in difficult circumstances. A few of these decisions were questionable (though typically only with the benefit of hindsight), such as the rate cut in April 1999 or the rate hikes in July 2008 and in April and July 2011. Most of the other ECB decisions were just right or even hugely successful – just think of Mario Draghi’s announcement in July 2012 to “do whatever it takes” to safeguard the euro. (more…)

Go to top