Which Federal Reserve Chair had the most significant historical impact?

Without a doubt, Paul Volcker.

If you had to pick a "tough guy" among all the Federal Reserve Chairs, it would certainly be him. His influence cannot be overstated, as he essentially redefined the mission of modern central banking.

That might sound a bit abstract, so let me tell you what he did, and you'll understand.

What kind of mess did Volcker inherit?

Volcker took office in 1979. At that time, the U.S. economy was suffering from a "disease" called "Stagflation."

"Stag" referred to economic stagnation, with factories closing and high unemployment rates.
"Flation" referred to rampant inflation, with prices soaring uncontrollably.

You can imagine: you're worried about being laid off at any moment, while watching the prices of eggs, milk, and gasoline at the supermarket rise every month. U.S. inflation rates once exceeded 13% during that period. Society was gripped by widespread anxiety, and people lost faith in the government and the future, feeling that life was unbearable.

Previous Fed Chairs had struggled with this dilemma. If they raised interest rates to control inflation, they feared the economy would worsen and unemployment would rise further; if they lowered rates to stimulate the economy, they worried prices would spiral even more out of control. The result was constant flip-flopping and indecisiveness, allowing the monster of inflation to grow larger and larger.

How "harsh" was his "shock therapy"?

When Volcker took office, his stance was crystal clear: he would crush the beast of inflation at all costs.

How did he do it? He employed a simple, brutal, yet extremely effective method: aggressively hiking interest rates.

He raised the federal funds rate (which can be understood as the central bank's benchmark interest rate) from around 11% all the way up to 20%!

What does 20% mean? It meant that the cost of borrowing for businesses was astronomically high. Many companies simply stopped borrowing for expansion, and some even went bankrupt. Mortgage rates for ordinary people could be as high as 18%! Who would dare to buy a house? Who would dare to consume?

The entire U.S. economy instantly slammed on the brakes, entering a period of deep and painful recession. Unemployment soared to over 10%, countless farmers went bankrupt, construction workers lost their jobs, and people across the nation cursed Volcker as an "economic killer." Congressmen, farmers, and business leaders all exerted immense pressure on him. Some even sent him used lumber, satirizing his role in destroying the construction industry.

But he withstood all the pressure and maintained the high-interest-rate policy for over two years.

Why is his impact considered the greatest?

While Volcker's "shock therapy" brought immense pain in the short term, its long-term impact was revolutionary:

Tamed the Inflation Beast: By 1983, U.S. inflation successfully dropped to around 3%. From then on, high inflation never again became a long-term nightmare in the U.S. (until recently...), laying the strongest foundation for the subsequent two decades of economic prosperity (the so-called "Great Moderation").
Established the Fed's "Credibility": This is his most critical and valuable legacy. Through his actions, he proved to the world: the Fed had both the ability and the resolve to control inflation, even at great economic cost. Once established, this "credibility" became an intangible asset. From then on, people trusted the Fed to manage prices, inflation expectations stabilized, and the fundamental logic of how the economy operated changed.
Became a "Textbook" for Global Central Banks: Volcker's success served as a model for central bankers worldwide. Countries began reforming their central banks, emphasizing "central bank independence" and "controlling inflation" as their primary mandates. It's fair to say that Volcker shaped the template of the modern central banking system we know today.

Of course, a few others are also worth mentioning:

Alan Greenspan: He succeeded Volcker and had an exceptionally long tenure, hailed as "the Maestro." During his leadership, the U.S. economy indeed experienced great prosperity. However, his issues included introducing a "deliberately ambiguous" communication style and a tendency to cut interest rates to rescue markets during downturns (the so-called "Greenspan Put"). Many criticize him for sowing the seeds for the later dot-com bubble and the 2008 financial crisis. His influence was significant, but so too was the controversy surrounding him.
Ben Bernanke: An expert on the Great Depression, he served as Chair precisely during the 2008 financial crisis. He decisively implemented a series of unprecedented rescue measures, such as "Quantitative Easing" (QE), preventing a complete collapse of the global economy. He essentially pioneered the modern toolkit for central banks to combat financial crises. Subsequent Fed Chairs, including Jerome Powell, have largely followed his playbook when responding to crises.

To summarize

Greenspan and Bernanke were undoubtedly heavyweights, but their actions were, to a large extent, carried out within the "low inflation, high credibility" framework established by Volcker.

Volcker, however, was the one who personally built that framework. He reversed an era's economic malaise and reshaped the core mission of central banks. His impact was fundamental, global, and continues to this day. Therefore, when it comes to the greatest impact on posterity, Paul Volcker is truly worthy of the title.