I was in Detroit, when Paul Volcker as chairman of the Fed weaponized its monetary instruments to throw the economy into a deep recession/depression. The auto industry and the traditional centers of auto production like Detroit, Flint, Pontiac, etc., felt its devastating impact as much as anybody. To make matters worse, it coincided with other changes taking place in the global auto industry that weakened the Big 3 and set into motion a massive restructuring process.
The experience of Detroit and other auto center in Michigan was of a different order of magnitude than many other places (and its racist dimension shouldn’t be lost sight of), but, at the same time, it wasn’t an outlier. Across the national and global economy the devastation of Volcker’s actions were, and are still, felt.
With the advantage of hindsight, his actions signaled not only a new round of class warfare, but in a fuller sense the beginning of the political ascendancy of finance and financial elites on a global level and the onset of an era of harsh austerity with all its attendant long term hurt and restructuring. The era of neoliberal governance and accumulation, it can be said, began, not with a bang, but with Volcker’s matter of fact announcement to ratchet up interest (borrowing) rates to record levels. A bang then followed. Few of us knew how big and how enduring that bang would be!