Paul Volcker’s memoir invites a rethink of the fight against inflation
2019-02-07 15:33

PAUL VOLCKER’S legend is almost as grand and imposing as his physical personage, all six feet and seven inches of it. In 1979 President Jimmy Carter chose him to run the Federal Reserve and tackle America’s high inflation. Mr Volcker acted with grim determination, tightening monetary policy even as the economy sank into deep recession and beleaguered Americans pleaded for relief. Eventually he not only routed inflation, but also won a hard-earned credibility for the Fed that would help successors keep inflation stable. Mr Volcker himself recounts the story in a new memoir, “Keeping At It”, which calls on central banks to resist the siren song of loose money. But the book also invites readers to reconsider his legacy, and to ask whether central bankers have drawn the right lessons from the legend of Chairman Volcker.

保罗•沃尔克(PAUL VOLCKER)的传奇几乎和他的身体形象一样宏伟壮观,身高六英尺七英寸。1979年,美国总统吉米·卡特(Jimmy Carter)选择他执掌美联储(Federal Reserve),解决美国的高通胀问题。沃尔克的行动是坚定的,他收紧了货币政策,尽管美国经济陷入深度衰退,四面楚歌的美国人也在寻求解脱。最终,他不仅战胜了通胀,还为美联储赢得了来之不易的信誉,这将有助于继任者保持通胀稳定。沃尔克本人在一本名为《坚持下去》(Keeping At It)的新回忆录中讲述了这个故事,该书呼吁各国央行抵制宽松货币的诱惑之歌。但这本书也邀请读者重新考虑他的政治遗产,并询问央行官员们是否从沃尔克主席的传奇中汲取了正确的教训。

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The recessions and disinflation of the early 1980s proved a watershed both for macroeconomics and the practice of central banking. On the eve of Mr Volcker’s tenure the academic field was riven by arguments over why inflation crept ever higher and what should be done about it. The monetarist disciples of Milton Friedman argued that inflation was “always and everywhere a monetary phenomenon”, reflective of changes in the money supply that could be managed by the central bank. Economists of a Keynesian bent thought tighter money could reduce inflation, but only by inducing a severe depression. Other camps doubted monetary policy mattered much. Some economists thought inflation was rooted in cost pressures that required structural remedies, such as reforms to weaken monopolies and labour unions. Those of the rational-expectations school—which argued that policy must contend with people’s rapidly shifting views of the future—doubted that monetary policy could affect the real economy at all.

上世纪80年代初的衰退和反通胀被证明是宏观经济学和央行实践的分水岭。在沃尔克先生任职前夕,学术界被关于通货膨胀为什么会攀升以及如何应对的争论弄得四分五裂。米尔顿•弗里德曼(Milton Friedman)的货币主义信徒认为,通胀“在任何时候、任何地方都是一种货币现象”,反映了可以由央行管理的货币供应的变化。凯恩斯主义倾向的经济学家认为,紧缩货币可以降低通胀,但只能通过引发严重的萧条来实现。其他阵营则怀疑货币政策的重要性。一些经济学家认为,通胀的根源在于成本压力,这需要结构性的补救措施,比如改革以削弱垄断和工会。理性预期学派认为,政策必须与人们对未来迅速转变的观点相抗衡,他们怀疑货币政策根本不会影响实体经济

Mr Volcker’s disinflation settled several disagreements at a stroke. Among all but a few holdouts it put to rest the notion that monetary policy was powerless. It showed that tight money could indeed bring inflation down. Though the economy did shrink, the downturn was milder than Keynesians had feared. Monetary policy worked in part through its influence on people’s expectations of price rises. Once the Fed’s actions persuaded people that future inflation would be lower, workers moderated their wage demands, and firms their price rises, without being forced to do so by a 1930s-style slump. 


A new academic synthesis arose from this experience. Central banks should stabilise the economy by anchoring policy to some nominal variable (most ended up targeting a low rate of inflation). When a boom or a slump pushed inflation away from the target, they should act to prevent that deviation from influencing expectations and leading to higher inflation or unemployment. The more trusted the central bank, the easier the task.


Mr Volcker’s memoir suggests the chairman saw his inflation-fighting efforts in a very different light, however. He was familiar with the debates progressing within academia: he had studied economics extensively (though he never finished his PhD, for which he blames his penchant for procrastination). He was also a seasoned economic policymaker: he had run the Federal Reserve Bank of New York and served in the Treasury department under three presidents. Even so, he lacked strong intellectual commitments. Mr Volcker’s career at the Fed suggests monetarist sympathies; he launched his war against inflation by announcing that policy would operate through limits to money-supply growth rather than changes to interest rates. But those limits were soon abandoned. And his writing reveals an eclectic view of inflation: he blames fiscal incontinence for fuelling price increases, for instance, and credits another president, Ronald Reagan, for helping to subdue wage and price growth by reining in trade unions.

然而,沃尔克的回忆录表明,这位主席对自己抗击通胀的努力有着截然不同的看法。他对学术界争论的进展十分熟悉:他曾广泛研究经济学(尽管他从未完成博士学位,他将此归咎于自己的拖延症)。他也是一位经验丰富的经济政策制定者:他曾执掌纽约联邦储备银行(Federal Reserve Bank of New York),并在三位总统的领导下在财政部任职。即便如此,他也缺乏坚定的智力投入。沃尔克在美联储的职业生涯表明了货币主义者的同情;他宣布,货币政策将通过限制货币供应增长而不是改变利率来发挥作用,从而启动了对抗通胀的战争。但这些限制很快就被放弃了。他的文章也揭示了对通货膨胀的一种折衷观点:例如,他指责财政失禁助长了物价上涨,并赞扬另一位总统罗纳德·里根(Ronald Reagan)通过控制通货膨胀抑制了工资和物价的上涨

Moreover, his distaste for inflation seems rooted in a surprisingly moralistic view of the economy. Of economists’ support for a low but positive rate of inflation he asks: “[W]hat was the economic purpose, and for that matter the morality, of the government...intentionally debasing the nation’s currency a little every year? My mother would see through that.” Instead, he reckoned, the “fundamental responsibility of monetary policy” is to maintain confidence in the stability of the currency. Courting even a little inflation in an effort to boost growth risks eroding that confidence, forcing future central bankers to re-fight the disinflationary war Mr Volcker won in the early 1980s. Central banking is a test of character, he seems to suggest, in which resorting to the expediency of higher inflation is a sign of weakness.


Aim high


Although central banks today are filled with top monetary economists, Mr Volcker’s intuitive approach to monetary policy often seems as influential as the academic orthodoxy his tenure helped inform. He worries that economists favour reforms that would free central banks to court higher inflation during downturns. Although many do, central banks have very conspicuously declined to make such changes. They would view years of above-target inflation as a dangerous threat to their credibility, and easing policy in the face of such inflation an unforgivable sign of weakness. But years of below-target inflation in the aftermath of the global financial crisis did not generate a corresponding panic. Indeed, the Fed began raising interest rates while inflation remained below its target, unfazed by the risk that this would undermine public faith in its ability to boost the economy when the next recession strikes.


Mr Volcker writes that, time and again, governments accept “a little inflation” only to find themselves beset by spiralling prices. But the more time passes, the more the 1970s look like an inflationary aberration book-ended by decades of modest inflation. Inflation is a danger, but one among many. It is the strength of Mr Volcker’s character that deserves emulation rather than his response to a specific, bygone set of economic circumstances.


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