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Volcker to Head New Obama Advisory Board

Published 12/01/08 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

On Wednesday President-elect Barack Obama announced the creation of a special economic advisory board to steer the nation out of the current recession. Heading the board, which will include eight to 16 other members, will be former Federal Reserve Chairman Paul Volcker.

Volcker, 81, is a consummate Washington insider, having worked in the administrations of five presidents. Volcker has been a part of monetary policy in the Kennedy, Johnson and Nixon administrations. In 1979 Volcker was nominated to become chairman of the Federal Reserve Board by President Jimmy Carter where he would serve until 1987 - through President Ronald Reagan’s first term.

Volcker’s time at the Fed was not without controversy. While he is credited with beating back the stagflation of the 1970s and the inflation of the early 1980s, Volcker is also sometimes derided as being responsible for the recession of the early 1980s. To fight off inflation he allowed interest rates to peak at 21.5 percent, while unemployment reached a high of 10.7 percent in 1982.

At the same time, many credit him with fighting off some of the most severe economic problems of the latter half of the 21st Century. At one point during the 1970s inflation reached double-digits. Volcker’s policies are heralded as bringing inflation under 4 percent during his time at the Fed. Many credit Volcker’s moves with putting the nation in the position to enjoy the prosperity of the late 1980s and 1990s.

Love him or hate him, no one would deny that Volcker is well versed in dealing with economic crisis after steering the nation through the turbulent times of Jimmy Carter and Ronald Reagan’s first term.

"It's going to be a tough period," he said of the current crisis. "But when we dealt with inflation (in the early 1980s) it laid the groundwork for 20 years of growth."

Source CNNMoney:

Volcker presided over the Federal Reserve from 1979 to 1987 in the Carter and Reagan administrations. He is best known for taking raging inflation during that time by the scruff of the neck and breaking it by raising interest rates to historic highs.

The initial effect of that move created a recession and high unemployment rate. But it also laid the groundwork for a long bull market.

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