'Paul Volcker' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.
Paul Volcker is the former Chairman of the Board of Governors of the Federal Reserve Board who continues to be influential in policy and in an advisory role to the President of the United States. He is one of the few living individuals to have an economic policy rule named after him.
Throughout his lengthy career of public service, Volcker has worked for the U.S. Federal Government for nearly 30 years. He became Chairman of the Federal Reserve from 1979 to 1987. Besides this, the man split his earlier career between the Treasury Department, Federal Reserve Bank of New York, and Chase Manhattan Bank.
It was President Jimmy Carter who elevated Paul Volcker to the role as Chairman of the Federal Reserve in 1979. He did a quality job and received reappointment from President Ronald Reagan in 1983. During his tenure in the big chair at the Fed, Volcker was forced to fight 10% yearly inflation. He did so using controversial contractionary monetary policy. This took real courage, as he had to double the Federal Funds rate from an already high 10.25% in 1979 to 20% by March of 1980.
After tinkering with the rates up and down for a year, Volcker maintained them at over 16% through May of 1981. This period of stunningly high interest rates became known as the Volcker Shock. It served its intended purpose to stop the inflation in the U.S. Regrettably, it also directly led to the recession of 1981.
The Volcker shock worked once Paul Volcker successfully convinced businesses and members of the public that he was serious in his unparalleled action to tame inflation. Former President Richard Nixon had caused the inflation when he abandoned the gold standard back in 1973. He crashed the value of the dollar and promoted inflation in the process. Nixon’s futile efforts to stop the inflation by instituting wage-price controls in 1971 only led to slower growth with continued inflation that became known as stagflation.
Fed chairman of the day Alfred Hayes lowered and raised interest rates like a see-saw in his efforts to defeat Nixon’s inflation and recession simultaneously. In the end this simply confused businesses and consumers about what Fed policy really was. After the end of wage-price controls in 1972, businesses increased their prices to try to keep ahead of higher interest rates. Consumers also participated by purchasing more goods before firms could again raise prices. The Fed had lost all credibility. Inflation attained double digits as things spiraled out of control.
Paul Volcker was responsible for helping global central bankers to understand how import it was to manage expectations regarding inflation. He had forced consumers to stop their runaway spending habits when they understood that he was serious about beating inflation. Businesses similarly quit raising their prices, and this put an end to high inflation.
Paul Volcker served in a variety of important capacities after retiring as head of the Fed. He led a committee looking into Swiss bank held assets of Nazi victims from 1996 to 1999. He worked as the International Accounting Standards Committee Chairman from 2000 to 2005 where he helped to create an international accounting standard that all nations could uphold.
In 2004 he chaired the Independent Inquiry into the United Nations’ scandalized Oil-for-Food Program. President Obama again called on the expert services of Paul Volcker in November of 2008 as he asked him to head up the President’s Economic Recovery Advisory Board. Eight years later, he remains Chairman of the Board (as of 2016). In this capacity, he fought for and achieved stricter banking regulations that became known as the Volcker Rule.