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Paul A. Volcker: America's Money Man

Harvard's 334th Commencement Speaker

"It's more of a burden than an enjoyment," he explains in a rare interview with The Crimson.

An adept politician, Volcker is said to disdain politics.

"He's somewhat of a loner. He's not the gregarious consensus maker," says Shawmut Bank Chief Economist John Kalchbrenner, who served under Volcker at the Treasury.

An avid outdoorsman, Volcker generally avoids the Potomac cocktail party circuit, favoring more sporting diversions.

"He will take the occasion of an international banking conference to go fishing in some obscure place," Feldstein notes.

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When Volcker left the Federal Reserve Bank of New York to accept the chairmanship, he also accepted a 45 percent pay cut. He now earns $67,000 yearly--one-tenth the salary he could command in the private sector, bankers say--and has family has shouldered significant sacrifices.

During the week, Volcker lives in a modest Washington apartment. He spends weekends with his wife Barbara at their New York home.

Several years ago, Mrs. Volcker, who has been ill, went to work as a clerk to add to the family's income. The Volckers also took in a boarder to help make ends meet.

The lucrative options open to Volcker fuel ongoing speculation that he will step down when his current term expires. Nevertheless, Volcker does not appear eager to change jobs.

"I have no plans at the moment," he says. "I don't perceive myself as a great sacrificial lamb here. But there are a variety of circumstances, personal and otherwise, that say at some point, it's time to leave."

Volcker's decision may be influenced by the state of the economy, which is beginning to stall.

Responding in part to a slowdown in the industrial sector, the Federal Reserve last month lowered the discount rate a notch.

But for months, Volcker has been calling for deep cuts in the federal budget deficit, which he believes is beyond monetary solutions.

"I quantified that a long time ago as real savings, one way or another, of upwards of $50 billion in the next fiscal year and then rising thereafter," he says.

If America's problems remain fiscal in nature, the Federal Reserve chairman may be more inclined to move on. However, if inflation returns, and if Volcker perceives a critical role for the Fed, the odds of his leaving seem slim at best.

Why does Volcker continue to resist the temptations of the world outside Washington?

Feldstein offers a widely accepted explanation. "It must be a sense of responsibility combined with the belief that he can do the job--that his successor might not be able to do the job as well."

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