How Paul Volcker Views His Life

Tracy Alloway (0:10)

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:14)

And I'm Joe Weisenthal.

Tracy Alloway (0:17)

Joe, who's your favorite central banker?

Joe Weisenthal (0:21)

Good question. Right now or throughout history?

Tracy Alloway (0:25)

Throughout history.

Joe Weisenthal (0:26)

You know, it's funny. I'm kind of on an Alan Greenspan kick these days.

Tracy Alloway (0:30)

Oh, controversial choice?

Joe Weisenthal (0:32)

Yeah.

Tracy Alloway (0:33)

Why?

Joe Weisenthal (0:34)

Well, because he seems to have a lot of relevance right now. He felt like everybody in the late 90s was predicting inflation was going to happen, but he didn't believe it would happen. In fact, he got into some arguments with Janet Yellen and the economy had this big boom because he let monetary policy run easy and unemployment dropped further than anyone thought. Then there was this huge bubble and then there was this huge crash. So, you know, you kind of, there were some good aspects of his legacy, but also maybe some lessons to learn on the negative side too.

What about you, what's your favorite?

Tracy Alloway (1:09)

Oh God, I'm gonna completely sidestep the question because I wanna get to the point of the question that I just asked you, which you've summarized perfectly. And that's the notion that, you know, throughout central bankers' working lives, their professional lives, they kind of fall in and out of favor with each other and also with the general public. And it's really interesting to watch that happen.

Joe Weisenthal (1:34)

Absolutely, I mean, even like the very recent Fed shares, for example, I think that's the case. So I think people were very into Bernanke and Yellen for a while and of course, Bernanke for the actions he took and stemming the financial crisis.

But then you look now and you see that inflation is still cool and unemployment has dropped much further than they expected and you're like, oh, did they like tighten policy too quickly? So subsequent events, whether they're crashes or changing economic conditions can really shade how we saw a banker, a central banker, even just one that was in office a few years ago.

Tracy Alloway (2:14)

Exactly. And do you ever wonder what the central bankers themselves think of what they are doing when they're in office? I always do. Like, you know, does Jerome Powell stay up late at night worrying that he's making a policy mistake? What was Yellen thinking over the past few years? What was Alan Greenspan thinking immediately after the financial crisis? These are all very interesting questions. And today, we're going to explore all of those through the prism of one former Fed governor in particular, and that is Paul Volcker.

Joe Weisenthal (2:46)

Yeah, I'm really excited about this episode. I think, you know, obviously right before Greenspan, definitely a sort of legendary central banker and whose influence in terms of expectations regarding inflation and Fed independence and making difficult choices in the face of political opposition still looms large today. So I think his life and career hold a lot of lessons for right now.

Tracy Alloway (3:14)

Yep, and we are very lucky at Bloomberg because one of our colleagues, Christine Harper, she's the editor of Bloomberg Markets magazine, has actually co-authored Paul Volcker's autobiography, it's called Keeping At It, The Quest for Sound Money and Good Government. It just came out.

And so we're gonna get to ask her all these things about what Paul Volcker was thinking and how he actually was considering his legacy throughout the years.

Joe Weisenthal (3:44)

Can't wait.

Tracy Alloway (3:53)

Christine, thanks so much for joining us.

Christine Harper (3:55)

Delighted to be here.

Tracy Alloway (3:57)

So, I have to admit, when I first heard that you were co-authoring a book with Paul Volcker, I had no idea what was going on. Can you please explain how you actually know him and how this project got started?

Christine Harper (4:08)

Well, I really have to admit, it was pure luck. He has worked in the past with a publisher named Peter Osnos, who founded a publishing imprint called Public Affairs, which is now part of Hashet.

And Paul and Peter had some discussions about how Paul maybe after all these years might want to write a memoir.

And so Peter wanted to make that happen and wanted to find somebody to work with Paul on it. And he thought it was very important it'd be somebody in New York who knows a little bit about finance, but who wouldn't dominate the process and who would have the right kind of chemistry with him and could kind of regularly go and meet with Paul and talk about, you know, basically interview him and then try to pull it all together into a book. So I was very surprised. I knew Peter a little bit, but I was really not, you know, expecting to be asked to do anything like this. And it was a big surprise. But obviously I couldn't think of a book I'd rather work on. What a legend. And I kept thinking throughout the process that no matter what happened, I'd get to spend a lot of time with Paul Volcker. So it was a phenomenal experience. Basically I spent the last year and a half kind of almost daily and, you know, or a few times a week at least, seeing this great man listening to his stories, getting to work with him, learning a great deal about not only the history of the economic story of America and the world, but just about sort of government and integrity and how to live a really good life over 90 years.