Good morning all,

People who are interested in the financial market know a couple of interesting stories about it both fiction and with the real characters. People like Gordon Gekko, a capitalist shark and a fictional character of an American drama film, directed by Oliver Stone, or Alan Greenspan, the central banker of happy days of the late 80s and 90s decades.

Today I would like to talk about a real person who has achieved a lot in this field. It is Paul Volcker who passed away on Sunday at age 92.

Graduated summa cum laude from Princeton in 1949, he received his Master's degree in political economy at Harvard University. Later, he joined the staff of the Federal Reserve in 1952. In that period, he worked in investment banking and as a civil servant.

In the late 70s, he took the position of US Federal Reserve Chairman. He had stayed at the helm of the Fed for 2 terms under US Presidents Jimmy Carter and Ronald Reagan.

At that time, the US economy was going through hard times. It was affected by the oil crisis as well as low inflation running over 1% a month and reaching 14,8% in March 1980. As many of you should know, inflation is bad for savings and Investments (IS=LM).

"Something like half the working population — those under age 35 — have never known price stability in their working experience. ... We have become accustomed to living with inflation, adjusting to it — and anticipating more. And as we have done so, we unwittingly set in motion forces that have kept it going." were his words.

The US economy was in a deep recession. Under his mandate, the interest rate reached a record of 22,36% in July 1981. As consumers stopped buying homes and cars, millions of workers lost their jobs. Mr. Volcker managed to wring most inflation from the economy.

This settled the path for the future 30 years of wealth and growth; it also helped technocrats keep total control over monetary policy.

As the President"s economic advisor, he strongly influenced the policy that let to the idea to use other nations' surpluses to fund US deficits and shift those surpluses from Germany and Japan to oil producers.

These days, his legacy can be lost as the central banks kneel to pure monetarism, money printing and to politics. We still need such high standards (and not only) individuality.

ECONOMICS DATA

China's inflation hit 4,5% y/y, with pork prices rising by 115% in November.

Investors are awaiting the data from the eurozone (FR, IT Industrial production, GBP GDP, EU-GE ZEW index).Tomorrow the Fed will announce its decision on the key rate.

Stay safe