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Box seats at the Fed's finest hour,
This review is from: Volcker: The Triumph of Persistence (Hardcover)
Rather than a biography, this book is a blow-by-blow account of Volcker's life as a public servant. It is truly gripping. If you enjoyed books like "Too Big to Fail" and "Lords of Finance" or even "Barbarians at the Gate," beware of picking it up, you will not rest until you have finished it.
I sure couldn't.
While I was at it, I managed to pick up some international economic history. I already knew, for example, that by the end of the sixties the US was running out of gold to stand behind the convertibility of the dollar: at the parities to gold of the dollar and the Deutschemark, for example, people in the US were finding it irresistible to "buy VW Beetles instead of Buicks." But I had no idea that it was Volcker's idea to rattle France and Germany with the threat of a free-float to force the 15% devaluation of the dollar which he deemed adequate to stop the run on the Treasury's gold. Or that the 8% devaluation that was negotiated as a compromise (with Valery Giscard d'Estaing and Helmut Schmidt, no less) was the beginning of the end for Bretton Woods because it caused tremendous instability while proving inadequate to achieve its primary goal. Or that the stab in the back came from the UK! Volcker basically was the midwife for the end of Bretton Woods, but in his heart he wanted it to continue. That's what the book alleges, at any rate, and I have every reason to believe it.
Somehow, the author, who is clearly in Volcker's thrall, deems this to have been a success. Regardless, you cannot help falling for Volcker too. The principal theme of the book is that Volcker was a tireless, persistent and highly principled pragmatist. The first example, which I mention above, is probably the only questionable example, the rest are good enough for me.
Further down in the book you learn how a less principled pragmatist, Nixon, forced the Fed to keep rates inappropriately low so he could win the 1972 election, how Volcker's most famous policy decision, a surprise change of focus to the money supply (as opposed to interest rates) was designed to combat the expectations of ever-rising inflation, how the policy famously won the day, how it cost Carter his presidency, how Reagan almost failed to reappoint Volcker and how James Baker undermined him. Volcker also gets credit for the now forgotten Gramm-Rudman-Hollings legislation, which kind of, sort of put a bit of a break on government spending. And he actually comes under criticism for planting the seeds of "too big to fail" when Continental Illinois was saved. The Volcker rule gets a chapter too, and the author tells us how he played a role, stuff that simply does not fit in here, but hey...
You also find out a hell of a lot about the people involved. How much Volcker respected Martin, how much he learned from Connally, how he played Kissinger, how friendly he was with Burns, how he sparred with Friedman, what tattoo can be found where on George Schultz's body. You can't help marvel at how little Volcker was prepared to earn relative to what he could have done, how much his family had to sacrifice as a result, and you can't help wonder where we'd be now if he had not been succeeded by Alan Greenspan.
Overall, this is a tremendous book. You get the horse's mouth account of what was comfortably the Fed's finest hour, and that alone warrants a five star rating. If that leaves you a bit despondent about where we find ourselves today, that's probably also part of the author's intention.
Before I forget: the Paul Volcker described in this book shall be reading this. Hi there Paul, you rock!