The forgotten recession that irrevocably damaged the American economy

What Paul Volcker wrought

New York Stock Exchange, 1982.
(Image credit: | (AP Photo/Marty Lederhandler))

Let's talk about Paul Volcker. These days he's best known for the "Volcker Rule," a part of the Dodd-Frank financial reform bill. But for a long time he was known for something else too: the Volcker recession.

In 1979, Volcker was promoted to chair of the Federal Reserve by President Jimmy Carter, with one primary mission: get inflation under control. The consumer price index (CPI) — the measure of inflation most cited in the popular discourse — had hit a growth rate of 6 percent in 1970, then 12 percent in 1974, and finally climbed to almost 15 percent in early 1980. This was accompanied by recessions in both 1970 and 1974.

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