Happy Birthday, Paul Volcker!

I would like to wish former Federal Reserve Chairman Paul Adolph Volcker a heartfelt happy birthday. He will turn 82 on Sept. 5 and will have lived from one Great Depression to the next. He was the first and the last truly independent Fed chief, being more devoted to his ideas of monetary policy than to the White House.

Appointed to this position in 1979 by President Carter, Volcker immediately got to work fighting the vicious stagflation of the last decade. Switching the economic philosophy of the Federal Reserve from Keynesian to Monetarism required that he begin to focus solely on the money supply. Unfortunately for Carter, this meant that he was going to have to start raising rates to make money tighter and keep the money aggregates stable, which typically isn't a policy that will get a president reelected when the economy starts to sour. Despite limited protests by Carter, Volcker started his tightening and put the president on the unemployment line with millions of other Americans.

Reagan came to power and promised the American people that good times were ahead of us, and that he would usher in that new age of prosperity. He offered the prospect of shrinking deficits coupled with tax cuts to bring his plan to culmination. When Reagan's "shrinking" deficit turned out to be anything but small, the president's faulty budget plan along with his tax cuts created an inflationary fiscal policy that butted heads with Volcker's recessionary monetary policy. Volcker stood the course, despite a massive outcry from Washington and a threat to limit Fed power if he didn't lighten up on interest rates. In fact, he tightened monetary policy even further in the depths of the 81-82 recession to counteract Reagan's inflationary policies, driving rates north of 20%.

The result was an economic downturn, the harshest we had seen since the Great Depression, with large scale unemployment and numerous bankruptcies. Volcker forcefully drove the U.S. into this downturn, defying two presidents and all of Congress, just to stay true to his goal of ending the run-away inflation of the past decade. He truly was the most powerful person in the world.

Now I don't want to romanticize Paul Volcker, here. No unelected official should have that much power: the power to end presidencies and send Congress into a panic, to turn economies rightside-up and upside-down. But the Federal Reserve was started in 1913 to be independent of the White House, and although it maintained that it was in fact independent, in reality it has always been an extension of the executive branch which will ALWAYS fight for easy money and inflation. Credit must be given to Paul Volcker for being the first and last chairman to actually DO HIS JOB in the near century that the Fed has been in existence, the first and last chairman to actually regulate the currency without being influenced by politics in Washington.

That said, Mr. Volcker, I wish you a happy birthday, and I also express the hope that the power you once wielded will be diminished and eventually destroyed, starting with H.R. 1207 and the move to audit the Fed.