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Paul Volcker’s final warning for America (FT)

15 December 2019


Financial Times title: Paul Volcker’s final warning for America

Financial Times subtitle: Donald Trump’s attacks on the Fed are helping to undermine faith in democratic institutions

Author: Paul Volcker

Date of publication: 11 December 2019

This piece was written in September, three months before the author’s death on December 8, as the afterword to the forthcoming paperback edition of his autobiography.”

“By the late summer of 2018, it was already clear that the US and the world order it had helped establish during my lifetime were facing deep-seated political, economic, and cultural challenges. 

Nonetheless, I drew reassurance from my mother’s reminder that the US had endured a brutal civil war, two world wars, a great depression, and still emerged as the leader of the “free world”, a model for democracy, open markets, free trade, and economic growth. That was, for me, a source of both pride and hope. 

Today, threats facing that model have grown more ominous, and our ability to withstand them feels less certain. Increasingly, by design or not, there appears to be a movement to undermine Americans’ faith in our government and its policies and institutions. We’ve moved well beyond former president Ronald Reagan’s credo that “government is the problem”, with its aim of reversing decades of federal expansion. 

Today we see something very different and far more sinister. Nihilistic forces are dismantling policies to protect our air, water, and climate. And they seek to discredit the pillars of our democracy: voting rights and fair elections, the rule of law, the free press, the separation of powers, the belief in science, and the concept of truth itself. 

Without them, the American example that my mother so cherished will revert to the kind of tyranny that once seemed to be on its way to extinction — though, sadly, it remains ensconced in some less fortunate parts of the world. 

When I was writing my book, I observed that President Donald Trump had not attacked the independent US Federal Reserve, for which I was grateful. To say that is no longer true would be an understatement

Not since just after the second world war have we seen a president so openly seek to dictate policy to the Fed. That is a matter of great concern, given that the central bank is one of our key governmental institutions, carefully designed to be free of purely partisan attacks. 

I trust that the members of the Federal Reserve Board itself, the members of Congress responsible for Fed oversight, and indeed the public at large, will maintain the Fed’s ability to act in the nation’s interest, free of partisan political purposes. 

Monetary policy is important, but it cannot by itself sustain global leadership. We need open markets and strong allies to support economic growth and the prospects for peace. Those constructive American policies have been a large part of my life. Instead, confidence in the US is under siege. 

Seventy-five years ago, Americans rose to the challenge of vanquishing tyranny overseas. We joined with our allies, keenly recognising the need to defend and sustain our hard-won democratic freedoms. Today’s generation faces a different, but equally existential, test. How we respond will determine the future of our own democracy and, ultimately, of the planet itself. There is a need to “keep at it”. It cannot be set aside.”

“The writer was chairman of the Board of Governors of the US Federal Reserve System from 1979 to 1987. Christine Harper co-wrote this piece as well as their book ‘Keeping At It: The Quest for Sound Money and Good Government’. The paperback edition is scheduled for publication next year by PublicAffairs”


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