A handful of Chairs shaped the modern Fed. Paul Volcker crushed 1970s inflation with punishing rates. Alan Greenspan presided over a long boom. Ben Bernanke pioneered QE in the 2008 crisis. Janet Yellen began normalisation. Jerome Powell faced the pandemic and the inflation war. This history frames the Powell and Warsh debate.
Paul Volcker, the inflation slayer
Volcker (Chair 1979 to 1987) is the towering figure of modern central banking. Confronted with runaway inflation in the 1970s, he raised interest rates to punishing levels, into the high teens. He deliberately induced a severe recession to break inflation's grip.
It was hugely unpopular, but it worked, and it restored the Fed's credibility as an inflation-fighter. His stand is the reference point for what independence means: a central bank willing to do the unpopular, necessary thing.
Alan Greenspan, the maestro
Greenspan (1987 to 2006) presided over a long expansion and was dubbed the maestro. He handled the 1987 stock-market crash deftly, warned of irrational exuberance during the dot-com boom, and generally favoured lower rates and a light regulatory touch.
His legacy is contested. Admirers credit the long, stable growth of the era. Critics argue his low rates and hands-off approach helped inflate the imbalances that burst in 2008. The debate over Greenspan is, in part, a debate over how much the Fed should lean against bubbles.
Ben Bernanke, the crisis firefighter
Bernanke (2006 to 2014), a scholar of the Great Depression, faced the 2008 financial crisis. He cut rates to near zero and pioneered quantitative easing on a massive scale, an unprecedented expansion of the Fed's role. It is widely credited with helping avert a second Depression.
It is also the origin of the modern QE debate. Warsh, who served under Bernanke, came to criticise it. See Warsh's case against QE.
Janet Yellen, the normaliser
Yellen (2014 to 2018), the first woman to chair the Fed, inherited the post-crisis economy. She began normalising policy, cautiously ending QE and starting to raise rates from near zero after years of emergency settings. Her approach emphasised the labour market and a gradual, data-driven path.
She later became Treasury Secretary. Her tenure set the near-zero starting point that Powell inherited.
Powell and the thread through it all
Powell (2018 onward) inherited normalisation, then faced the pandemic, a return to zero and massive QE, and the inflation war, the fastest hikes in a generation. His tenure swung between both extremes of the modern toolkit. See the Powell Fed's war on inflation.
One question runs through this history: how activist should the Fed be? Volcker's discipline, Greenspan's easy money, Bernanke's QE, Yellen's caution and Powell's swings are all positions in that argument. The Warsh critique is the latest. This is education, not advice.
Questions
Who was Paul Volcker?
Fed Chair from 1979 to 1987. He crushed 1970s inflation by raising interest rates to punishing levels and deliberately inducing a recession. It was unpopular, but it restored the Fed's credibility.
What is Ben Bernanke known for?
Chairing the Fed from 2006 to 2014 through the 2008 financial crisis. He cut rates to near zero and pioneered large-scale quantitative easing, the activist, balance-sheet-heavy model today's debate revolves around.
Did Kevin Warsh serve under Ben Bernanke?
Yes. Warsh was a Fed Governor from 2006 to 2011, overlapping with Bernanke's chairmanship and the 2008 crisis response. He later became a prominent critic of the quantitative easing Bernanke's Fed pioneered.
70–80% of retail investor accounts lose money trading CFDs. This page is education, not advice. All trade examples are constructed composites.
