(10 of 10)
A few Fed watchers suspect that Volcker himself might eventually cave in to pressure and pump more money into the economy in an effort to bring down interest rates—especially if today's high rates seem to be thrusting the economy into an ever deepening recession, with no end in sight. If the economy continues to spiral down, says one financier, "by election time every politician in the country will be running against Volcker."
But Volcker's stand nevertheless has impressive support in the business, financial and academic communities. Members of TIME'S Board of Economists wish that Volcker, while continuing to hold down the growth of money supply, would try a mite harder to prevent interest rates from gyrating so much. But in general they give the chairman of the Federal Reserve a strong and well-deserved vote of confidence.
Says Alan Greenspan, a Republican and non-Government adviser to President Reagan: "I think Volcker is doing as well as anyone could, given the current economic environment." Adds Otto Eckstein, who served on the Council of Economic Advisers under Lyndon Johnson: "Volcker is the strongest Federal Reserve chairman in history."
Even in Congress, Volcker has strong champions. Says Colorado Republican William Armstrong, a member of the Senate Banking Committee: "People think that every morning when he shaves, Paul Volcker decides what interest rates are going to be that day. It's a myth. There is nothing the Fed can do about it with the massive deficits we are rolling up." Adds New Mexico Republican Harrison Schmitt, another member of the Senate Banking Committee: "You can yell and scream at him, but in your heart of hearts you don't want him to back down."
In all of public life, no one has put his career and his energies more wholeheartedly into a more thankless task than has Volcker. In his search for long-term and lasting relief from the debilitating inflation that has racked the economy for more than a decade, Volcker has angered many people and baffled many more. Yet with grinding certainty he is reaching his goal of bringing inflation to heel. By common consent of all who know him, Paul Volcker is an exceedingly steadfast man, and one who seems determined to continue on his course. —By George J. Church. Reported by David Beckwith and Gisela Bolte/Washington, with other U.S. bureaus