"Fed Bashing" came into vogus, and the 6-ft., 8-in., cigar-smoking Fed chairman became a familiar figure on Capitol Hill, where he was frequently called to testify before irate Congressional committees.
Apparently convinced that the cure was more painful than the original ailment, Carter "pulled the rug out from under" his appointed inflation-buster, Feldstein says.
The president called for independent credit controls and urged a relaxation of the Fed's monetary grip; embattled on all sides, Volcker obliged, and inflation jumped to new heights.
Campaigning for the presidency in 1980, Reagan supported a return to Volcker's anti-inflationary policy. During the mid-term elections of 1982, when the side effects of the Fed's draconian measures were most pronounced, Reagan's motto was "Stay the Course."
Despite mounting pressure from business leaders, congressmen, and administration officials, Volcker stayed. Eventually, his course led to recovery.
"The Federal Reserve under Volcker gets an A or maybe an A-plus for having stood its ground during a time when the risk of not doing something far out-weighed the costs of recession," comments Allen Sinai, chief economist for Shearson Lehman Brothers, a New York based investment banking firm.
Volcker's relations with the president remain smooth. Reagan maps a general direction for the economy, giving Volcker, the technician, a relatively free hand to chart the course, close observers say.
"During my two years in Washington, Volcker visited the White House only three times," says Feldstein, who ate breakfast with Volcker every other week before he left the Administration.
Asked whether the president has a strong understanding of the economy, Volcker nearly sidesteps the issue.
"I'm not going to comment on somebody else in any way," Volcker says, chucking. "Obviously, he has very strong leadership talents and strong points of view."
Many of Volcker's former critics in the White House and the Congress have changed their tune, but the staunchest supply-siders have yet to forgive him for the trade-offs associated with his policies. In particular, Rep. Jack Kemp (R-N.Y.), a possible 1988 presidential contender, blames Volcker for curtailing expansion by keeping interest rates high.
And Volcker has yet to convert some of his public enemies, like the followers of leftist Lyndon LaRouche. Several weeks ago, while Volcker was addressing a gathering in Seattle, one of his detractors released a sack of live rats in the auditorium, temporarily disrupting his speech.
The protest was reportedly directed at his high interest rates and pressures on Third World debtor nations.
Amid the clash of national politics, Volcker comes across as something of an anomaly.
An outspoken exponent of his views, he guards his privacy and dodges the media's attention.