Paul Volcker Leaving the Fed
A biography of Alan Greenspan - written by Bob Woodward - starts with the period when Volcker was still the president of the Federal Reserve. It sheds some light on the change ritual in getting a new president.
Paul Volcker was designated for taking the presidency of the FED by the democratic President Carter. That was in 1979. After his first mandate President Reagan was charmed by the anti-inflationary campaign of Volcker and conceded him another term in 1983.
In 1984 Reagan started his campaign for a second term in the office. His personal assistant James Baker, was leading the campaign. He was afraid - given the strict policy of Volcker with raising interest rates when ever required - that elevated interest rates would not match the main message that Reagan would communicate: that of a protecting father and optimist. High interest rates would put in danger this campaign. In 1985 James Baker is assigned as secretary of the Treasury by Reagan.
"It was not that Baker wanted per se a "Marionette" he only wanted a republican.
With that setting, the last three years of Volckers Presidency start. As a professional "project manager" Volcker would rather resign than govern without a full mandate. In the end it is Volcker that hands over his letter of resignation to the president.
Although this setting was quite clear, the change ritual was not at all. The president of the Fed is and was free to decide whether he would stay. But the climate had changed. Volcker had done his job and was highly esteemed, he had controlled a period of high inflation, but times were changing. However from the biography it becomes clear that a change is not arranged directly. As well as the assignment and the discharge is a political process.
Paul Volcker was designated for taking the presidency of the FED by the democratic President Carter. That was in 1979. After his first mandate President Reagan was charmed by the anti-inflationary campaign of Volcker and conceded him another term in 1983.
In 1984 Reagan started his campaign for a second term in the office. His personal assistant James Baker, was leading the campaign. He was afraid - given the strict policy of Volcker with raising interest rates when ever required - that elevated interest rates would not match the main message that Reagan would communicate: that of a protecting father and optimist. High interest rates would put in danger this campaign. In 1985 James Baker is assigned as secretary of the Treasury by Reagan.
"It was not that Baker wanted per se a "Marionette" he only wanted a republican.
With that setting, the last three years of Volckers Presidency start. As a professional "project manager" Volcker would rather resign than govern without a full mandate. In the end it is Volcker that hands over his letter of resignation to the president.
Although this setting was quite clear, the change ritual was not at all. The president of the Fed is and was free to decide whether he would stay. But the climate had changed. Volcker had done his job and was highly esteemed, he had controlled a period of high inflation, but times were changing. However from the biography it becomes clear that a change is not arranged directly. As well as the assignment and the discharge is a political process.
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