Grant McGuire: Memoir of Paul Volker, legendary Fed chairman

For those who don't remember, Paul Volcker was the legendary chairman of the Federal Reserve Board who single-handedly saved the United States from runaway inflation at the end of the Jimmy Carter presidency in the late 1970s.

Volcker's memoir "Keeping At It: The Quest for Sound Money and Good Government" provided me important lessons for my study of the subject. Volcker's 2018 book covers a career spanning six decades of public service, during which he served six presidents and reshaped American monetary policy.

The memoir's central narrative involves Volcker's most famous achievement: conquering the inflation monster that plagued America in the late 1970s and early 1980s. As Federal Reserve chairman from 1979 to 1987, Volcker inherited an economy where inflation had reached double digits, eroding the purchasing power of American families.

Volcker's approach required courage and determination as he implemented restrictive monetary policies that pushed interest rates to historic highs — mortgage rates hit 18% and prime lending rates (the rates large banks give to their best customers) reached more than 22%.

My father and grandfather had many different businesses in Kentucky, West Virginia and surrounding states. I remember them having to shut the doors of many of them in the early '80s because money was too expensive to keep them running.

All presidents want reduced lending rates because it looks good to voters in elections. The problem with low interest is that it fuels rises in prices, which causes inflation — too much money chasing too few goods.

It is the job of the central bank to keep inflation low. As one of Volcker's predecessors said, the job is to "take the punch bowl away from the party" before people get too drunk on low interest rates, leading to rampant speculation that breeds financial crises.

The battle against inflation was politically and economically brutal. Volcker faced fierce opposition from virtually every quarter: President Jimmy Carter called the Fed's money supply focus "ill-advised." President Reagan ordered Volcker in 1984 not to raise interest rates before the election. Of course, the Federal Reserve Board is independent and can't do such bidding of presidents, orders or no orders.

Throughout the memoir, Volcker emphasizes his three fundamental principles that guided his career: price stability, sound finance and good government.

Beyond policy achievements, the memoir reveals Volcker's character: the integrity inherited from his town manager father, the intellectual rigor developed through decades of public service and the moral courage required to make unpopular but necessary decisions.

He ends the book with a warning about America's future. A populist president came into office and began criticizing all government agencies and the Federal Reserve Board. Volcker observed that Washington in the 21st century changed for the worse with all the money flowing in to influence legislation.

Volcker could have earned millions a year on Wall Street yet dedicated his life to serving his country. It's refreshing today to see someone who believed passionately in selfless public service and good administrative management.

Just as Warren Buffett is called the Oracle of American business, Paul Volcker was the Oracle of the U.S. and world monetary systems. People found his advice trustworthy and wise.