The short answer
The modern Fed was shaped by a handful of Chairs. Paul Volcker crushed 1970s inflation with punishingly high rates, restoring the Fed's credibility. Alan Greenspan presided over a long boom and a shift to low rates. Ben Bernanke, a Depression scholar, pioneered QE in the 2008 crisis. Janet Yellen began the slow normalisation. Jerome Powell faced the pandemic and the inflation war. Knowing this history frames the Powell–Warsh debate about how activist the Fed should be.
Paul Volcker: the inflation slayer
Paul Volcker (Chair 1979–1987) is the towering figure of modern central banking. Confronting the runaway inflation of the 1970s, he raised interest rates to punishing levels — into the high teens — deliberately inducing 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.
Volcker's stand is the enduring reference point for what independence and credibility mean: a central bank willing to do the unpopular, necessary thing. Every later Chair is measured against it.
Alan Greenspan: the 'maestro'
Alan Greenspan (1987–2006) presided over a long expansion and was dubbed 'the maestro.' He managed 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, while 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
Ben Bernanke (2006–2014), a scholar of the Great Depression, faced the 2008 financial crisis — and used his academic expertise to fight it. He slashed 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 — the very policy Warsh, who served under Bernanke, came to criticise. See Warsh's case against QE. Bernanke's Fed defined the activist, balance-sheet-heavy model that today's debate revolves around.
Janet Yellen: the normaliser
Janet Yellen (2014–2018), the first woman to chair the Fed, inherited the post-crisis economy and began the delicate task of 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, an unusual move from the Fed to the fiscal side. Her tenure set the stage — and the near-zero starting point — that Powell inherited.
Powell, and the thread through it all
Jerome Powell (2018–) 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.
The thread through this whole history is a single question: how activist should the Fed be? Volcker's discipline, Greenspan's easy money, Bernanke's QE, Yellen's caution, Powell's swings — and the Warsh critique — are all positions in that one long argument. Knowing the history is how you read the present debate clearly. This is education, not advice.
Frequently Asked Questions
Who was Paul Volcker?
Fed Chair from 1979 to 1987, who crushed 1970s inflation by raising interest rates to punishing levels, deliberately inducing a recession. It was unpopular but restored the Fed's credibility as an inflation-fighter, and he remains the enduring reference point.
What is Ben Bernanke known for?
Chairing the Fed (2006–2014) through the 2008 financial crisis. A scholar of the Great Depression, he slashed rates to near zero and pioneered large-scale quantitative easing, defining the activist, balance-sheet-heavy model that today's debate revolves around.
Who was the first woman to chair the Fed?
Janet Yellen, who served from 2014 to 2018 and began normalising policy after the crisis. She later became Treasury Secretary, an unusual move from the monetary to the fiscal side of policy.
How does Fed history relate to the Powell–Warsh debate?
The whole history turns on one question: how activist should the Fed be? Volcker's discipline, Bernanke's QE and Powell's swings are positions in that argument, and Warsh's critique of QE is the latest. Knowing the history frames the present debate.
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 that Bernanke's Fed pioneered.