Paul Volcker on Jimmy Carter

Paul Volcker's relationship with Jimmy Carter is defined by his appointment as Federal Reserve Chairman in August 1979, succeeding G. William Miller as part of a cabinet shakeup to address persistently high inflation. Volcker made it clear during his confirmation hearing that his top priority would be fighting inflation, even while acknowledging that the necessary measures could cause economic strain. Carter, determined to maintain a steady course against inflation, expressed confidence in Volcker's qualifications and commitment to a responsible monetary policy, assuring the public of a partnership between the administration and the independent Fed. The President had sought a nominee who would confront the severe economic environment, which included inflation threatening to rise further and a dollar that had lost significant value against foreign currencies.

Despite the economic disruption that Volcker's restrictive policies—the 'Volcker shock'—later caused, including a severe recession and protests from affected sectors, the initial appointment signaled a serious intent from the Carter administration to tackle the decade-long inflationary problem. Volcker himself acknowledged the unique economic difficulties and the need to make progress with problems in clearer perspective, while assuring maintenance of the Fed's integrity and professionalism within the government's framework. Although Volcker's subsequent actions led to his tight money policies being politically scrutinized by members of both parties, the selection process highlights Carter's willingness to appoint an inflation hawk capable of taking decisive, though painful, action.