Former Federal Reserve Chairman Paul Volcker, whose inflation-fighting campaign starting in 1979 brought U.S. prices back under control, died Dec. 8, according to a statement from the Volcker Alliance.
Volcker, who was 92, is widely credited with reining in U.S. inflation that reached as high as 14.6% in March 1980. Under Volcker's tenure, the Fed ratcheted up interest rates to dampen borrowing and economic activity, causing two recessions in the early 1980s and garnering substantial criticisms at the time.
In two notable examples of such backlash, farmers drove their tractors to Washington, D.C., and blocked the entrance to the Fed building, and contractors mailed him multiple pieces of 2x4 wood to show that a lack of home demand meant their lumber was no longer necessary.
The end result, though, was that the Fed conquered the inflation spikes and set the stage for "The Great Moderation," a period of relative macroeconomic stability that ended with the Great Recession in 2008.
Volcker, of Cape May, N.J., studied at Princeton University and Harvard University and did a five-year stint at the New York Fed before taking other roles in the private sector and Treasury Department, where he was undersecretary for monetary affairs between 1969 and 1974.
He became president of the New York Fed in 1975, where he began arguing that the Fed needed to gain better control of the nation's money supply and take a more proactive approach in bringing down inflation.
"I was frustrated, because the inflation rate kept going up and nobody stopped it," Volcker said later in an interview for a Fed oral history project. "There was no discipline. We needed a way to get some discipline in the system."
Volcker became Fed chairman in August 1979 after President Jimmy Carter reshuffled his economic policy team. President Ronald Reagan, Carter's successor, reappointed Volcker to another four-year term in 1983.
In a news release, Fed Chairman Jerome Powell said he was "deeply saddened" by Volcker's death.
"He believed there was no higher calling than public service," Powell said. "His life exemplified the highest ideals — integrity, courage, and a commitment to do what was best for all Americans. His contributions to the nation left a lasting legacy."
His work after the Fed included being the chairman of the board of trustees of the International Accounting Standards Committee and playing a major role in the development of postcrisis financial regulations.
Volcker chaired President Barack Obama's Economic Recovery Advisory Board, helping lead discussions on the Dodd-Frank Act, which substantially toughened rules for banks and created the Consumer Financial Protection Bureau.
During those discussions, Volcker introduced what became known as the Volcker rule, which was a portion of Dodd-Frank that prohibits banks from engaging in proprietary trading and limits their relationships with hedge funds.
Last year, Congress approved a package tweaking several parts of the Dodd-Frank Act, including freeing banks with less than $10 billion in assets from complying with the Volcker rule. Regulators have also recently finalized an overhaul of how they implement the Volcker rule, keeping in place the most stringent regulations on the biggest and most complex banks but loosening rules for smaller institutions.