Paul Volcker is dead. According to US media, referring to Volcker's daughter, the former head of the US Federal Reserve (Fed) died on Sunday. He is said to have contracted prostate cancer.
Volcker has become known above all as a fighter against inflation. When he came to office in 1979, the financial world was completely different from today. Consumer prices rose by as much as 13 percent per year - while at the same time the economy was slowing down slowly. US President Jimmy Carter needed to find a solution - and named Volcker the new Fed chief.
Volcker was determined from the beginning to fight the problem. "We wanted to kill the inflation kite," he later told in retrospect, "The New York Times."
The aim of the central banker was to break the expectations of American consumers. They should no longer assume that prices and wages rose at an ever faster rate.
Under his auspices, the Fed radically curtailed the supply of money in the economy - which led to banks drastically raising interest rates. The so-called prime rate, which banks demand for loans to their best clients, rose in the peak to 21.5 percent.
"He was as stubborn as he was long"
The shock therapy worked: By the year 1983, the inflation rate fell below four percent. But the side effects were grave: With consumers holding back on purchases and no longer taking real estate loans, the US economy slipped into recession.
Angry contractors sent squared timbers to the Fed headquarters in Washington as a token of their protest. In front of the building farmers demonstrated with their tractors. More and more people became unemployed.
President Carter also lost his job due to, among other things, the worsening economic situation. Nevertheless, he stopped at his 2.01-meter central banker. "Paul was as stubborn as he was long," the New York Times quoted him on Monday, "and though some of his decisions as Fed chairman were politically costly, they were still correct."
In 1983, Volcker was nominated by Carter's successor Ronald Reagan for a second term at the head of the Fed. Four years later, he resigned for personal reasons - and was replaced by Alan Greenspan, who pursued a very different monetary policy line in the 1990s with very low interest rates.
Private Volcker was considered extremely economical. He bought his cigars in the supermarket and was known for his bad-fitting suits. As a Fed chief, he lived in a tenement house where mostly students lived.
Even after leaving the Fed Volcker remained influential. In response to the severe financial crisis of 2007 and 2008, he drafted the Volcker Rule named after him on behalf of President Barack Obama, which restricts banks' proprietary trading activities in the interests of a more stable financial system.
Paul Volcker was 92 years old. He leaves a wife and two children.