Hawkin:
“Check out how schizoid his Fed was (most notably, going from 20%, down to 8%, and back up to 20% all in less than 9 months):”
The Volcker Mistake:
Volcker did screw up in the first decrease in 1979 as inflation was not broken.
The Summer of 1980 it appeared that inflation had been broken. But double digit inflation was persistent and began to rise the summer of 1981 again.
inflation
Feb 1979 9.9%
Mar 1979 10.1%
Apr 1979 10.5%
May 1979 10.9%
Jun 1979 10.9%
Jul 1979 11.3%
Aug 1979 11.8%
Sep 1979 12.2%
Oct 1979 12.1%
Nov 1979 12.6%
Dec 1979 13.3%
Jan 1980 13.9%
Mar 1980 14.8%
Apr 1980 14.7%
May 1980 14.4%
Jun 1980 14.4%
Jul 1980 13.1%
Dec 1980 12.5%
Jun 1981 9.6%
Jul 1981 10.8%
Sep 1981 11.0%
Dec 1981 8.9%
Hawkin:
I think it entirely likely that the Fed did more harm than good during his chaotic leadership.
Opinions will vary.
https://www.stlouisfed.org/publications/regional-economist/january-2005/volckers-handling-of-the-great-inflation-taught-us-muchWithout
Without his bold change in monetary policy and his determination to stick with it through several painful years, the U.S. economy would have continued its downward spiral. By reversing the misguided policies of his predecessors, Volcker set the table for the long economic expansions of the 1980s and 1990s.