"Here's the thing about Paul Volcker the former chairman of the Federal Reserve arguably one of the most influential of Fed shares. Who died it yesterday at the age of ninety two? Yeah it's kind of an amazing story that's author and New York Times editorial board member beaming Applebaum on this show about a month or two ago. He used to cover the Fed for the Times. When Paul Volcker I started at the Federal Reserve he worked basically as a human calculator in an office deep inside the Federal Reserve? There Have Bank of New York in the early nineteen fifties and he told his wife one night that he didn't think he had a future at the Fed that as an economist he was always going to be consigned to being essentially. Actually you know A worker bee at this institution that was run by financial market types businessmen. Those even a Iowa Hog farmer there and he didn't think that he had much chance of getting ahead. Suffice it to say Paul Volcker got way ahead at the Federal Reserve. Jimmy Carter picked him to run the Central Bank in nineteen seventy nine with inflation and this is important headed toward almost fifteen percent. I ask Carter about that about the economic and political fallout from picking Volker when I interviewed the former president in two thousand ten so I went looking as I Picked up this book. I went looking for the name. Paul Volcker who You pointed to the Fed in nineteen seventy nine. You don't come across crosses name until page three hundred and forty something and it's really funny because it is dismissed in a sentence. Paul Volcker came in We decided we could work with him. And then the the next day bang you name to defend that was really the one of the most hotly debated things. I did because a lot of my political advisor. Said don't appoint Paul Volcker because he's going to tighten up on everything and you will have no control at all over the Fed anymore. You won't even have communication with him when Paul Volcker came. I was seeing the prospect of enormous inflation rates. And so I agreed with Paul Volcker in conversation that I would not interfere in what he did. I was prepared for him. To tighten up tremendously and drive interest rates and so forth up in order to control rampant in. It's funny actually because a little bit later in the book you basically say in this passage that you dictated at the time Volcker says he's going to have to tighten interest rates. And it's GonNa hurt me politically. I mean. You knew it was coming. I knew it was coming but I was prepared to take it. I thought that I could be reelected in spite of that as it turns out. Of course things didn't work out for President Carter about which I asked Paul Volcker in two thousand twelve if I read the see the recounting of that job interview correctly in this book. You basically said I want independence and I gotta do what I gotTa do. It was obvious why he wanted to see me. But I MR president and if you're thinking of appointing me Germany Federal Reserve. You have to know that I believe in somewhat entitled Monetary Policy and we have been following and my predecessor followed. Yeah you know I the next question I asked the president actually was Did you mind when he raised interest. He's like that and he said Oh no I I thought it was going to be good for the next presidential term. I thought that term was going to be mine. Not Raking No. He asked him why said I cost him the election. There's some people said and he had kind of Ri- smiled and he said well I think there were a few other factors as well after he left the Fed in nineteen eighty seven. Paul Volcker worked on on Wall Street for a while. Got Drafted back into government service every now and then most. Recently as the chairman of President Obama's economic recovery advisory board and as the namesake for the Volcker Carulli. The part of the Dodd Frank Financial Reform Bill that limited some of the kinds of trades. The Big Wall Street banks could make. But really when you think Paul Volcker. It's those years in the late nineteen seventies early nineteen eighties when the Fed pushed short-term interest rates up to a record twenty percent to get inflation back under control twenty percent went today the Fed's current short-term target rate is between one and a half percent and one and three quarters percent and it hasn't over five in more than a decade which makes double digit interest rates hard for most Americans below a certain age to even fathom so marketplace's Amy Scott takes us back in the early nineteen eighties and Owen managed a bank branch Boston to remember telling customers. They'd have to pay twenty one percent interest for a car loan today. The average is just over for four percent. They would get mad at the bank and many times they would just basically say I can't afford that. Oh and went on to become an economist at the Fed and now teaches at Hamilton College. She says those high interest rates had a purpose volcker was trying to slow down demand by making borrowing more expensive give. It made it difficult for people to buy houses by cars Credit card interest rates. Were extremely high. The economy did slowdown slowdown falling into two recessions. In one thousand nine hundred eighty two unemployment topped ten percent in protest homebuilders mailed. Chunks of two by fours is to Volker and members of Congress. Fred Napolitano is former president of the National Association of homebuilders. Just make a point to say this is what we do is is what we build you know with. The interest rate is hurting us. That pain eventually paid off. Robert King is a professor of economics at Boston University. Ultimately once people began to believe that inflation was gonNA come down it came down and interest rates tumbled and the economy recovered and and it's viewed as a major triumph at triumph. Nobody wants to have to repeat. I'm Amy Scott for marketplace. Paul Volcker did yesterday at at the age of ninety"