Before the summer is over, Paul A. Volcker will be gone from the Federal Reserve, leaving behind a remarkable eight-year record of accomplishment and a host of intractable problems.

Some close observers of the Fed and its chairman regard Volcker simply as a genius whose political and economic intuition and skill have made him the best chairman in the Fed's 74-year history. His successor, economist Alan Greenspan, whose own analytical and political skills are formidable, has little but praise for Volcker.

Greenspan, who was chosen as chairman of the Council of Economic Advisers by Richard Nixon shortly before Nixon resigned his presidency, and then served throughout the Ford administration, does not praise Volcker simply on the basis of the results of Fed policy in recent years. His admiration is deeper and more subtly based than that.

In an interview some weeks ago, Greenspan said some policymakers end up with more credit than they deserve because events, not the policymaker, dictated which course to follow. "I would say he made choices when he had others available, particularly in 1979 and 1980," Greenspan said. "He could not know the trade-offs in 1979.

"Now he is getting credit for the dramatic decline in inflation that we have had, and also the debits for the recession," the incoming chairman continued. And, indicating he would have made the same choice, Greenspan added, "But the long-term costs of allowing the inflation to continue would have been far greater than the short-term costs we paid. The cost-benefit analysis is self-evident."

Above all, what Paul Volcker will be remembered for as Fed chairman was his decision immediately after he became chairman in August 1979 to launch a serious attack on an inflation rate that had been getting progressively worse for more than a decade. It was running at about a 10 percent rate when he replaced businessman G. William Miller that summer, and was down to about 4 percent just over three years later.

However, as Greenspan said, Volcker will also be remembered for the economic and social pain that reducing the inflation required. Home builders flooded the Fed with short lengths of 2-by-4s mailed to protest the harsh impact on the housing market of the highest interest rates the country had seen since the Civil War era. Farmers, anxious to buy land to take advantage of soaring land and commodity prices, complained bitterly. Businessmen went into shock when the prime lending rate at commercial banks, to which the cost of their loans were tied, reached 21 1/2 percent at the beginning of 1981.

Whatever Volcker has accomplished as head of the nation's central bank, he has had far more support than has been generally realized from both presidents under whom he has served. Without that support, Volcker could not have pursued the policies that he has, according to students of the Fed.

President Carter appointed Volcker, who was then president of the New York Federal Reserve Bank and former undersecretary of Treasury for monetary affairs, because Carter and his advisers felt someone of Volcker's stature and reputation was needed to restore confidence in the government's handling of the economy and to break the fall of dollar. Specifically, it was understood that he would have to steer a reasonably strong anti-inflation course.

The late Harvard economist, Otto Eckstein, once remarked that Carter, in complete disregard for his own chances for reelection, showed great courage in appointing a Federal Reserve chairman whom he knew would pursue such a course.

Donald F. Kettl, a University of Virginia political scientist, wrote in his book, "Leadership at the Fed," that, "Despite the rising interest rates, Volcker enjoyed generally good relations with the Carter White House . . . . For their part, Carter's advisers found relations with Volcker better than with {former chairmen Arthur} Burns or Miller -- not because they liked Volcker's policy, because no president likes going into an election year with rising interest rates, but because Carter and his advisers had decided they needed to control inflation even more than to support economic growth."

When CEA Chairman Charles L. Schultze, speaking with a reporter with the proviso that his remarks not be attributed to him by name, once criticized Fed policy, he got a pointed note from the president telling him not to do it again. On only one occasion, when the Fed raised the discount rate -- the interest rate it charges on loans to financial institutions -- from 10 percent to 11 percent less than two months before the 1980 election, did Carter complain that the Fed's policies were "ill-advised."

Ronald Reagan has been equally reticent about criticizing the Fed, though he has allowed senior members of the White House staff, his secretary of Treasury and other administration officials far more freedom to tee off on Volcker from time to time. Some administration officials went so far as to argue that if it weren't for Fed mistakes, the 1981-1982 recession would not have occurred. However, those same officials did not address whether inflation would have fallen nearly as much had the economy not gone through the recession wringer.

But on the occasions of severe criticism, when Reagan himself was finally asked about it, he has backed the Fed -- with one minor exception.

And, of course, Reagan reappointed Volcker in 1983 when his first four-year term as chairman expired. The president did so over the strenuous objections of then-secretary of the Treasury Donald T. Regan, but with the agreement of most of his other close advisers, including White House chief of staff James A. Baker III and Michael Deaver. The only other name on the table then was Greenspan's.

Recalls former CEA chairman Martin Feldstein, now a Harvard professor: "The president was a backer of the Fed. Internally, we had a policy of not beating up the Fed." However, Regan and some other officials often did not follow that policy.

Reagan, like other presidents before him, undoubtedly would have liked to have had closer control over the Federal Reserve. Some of his advisers, who wanted to push for faster economic growth, urged the appointment of other members of the seven-person board who presumably would lean in that direction. Some governors have done so, and there was one major confrontation last year between Volcker and the Reagan appointees over whether to cut the discount rate.

In his book, Kettl summed up the situation this way: "Volcker did not always follow the monetarist prescription with the same ideological zest some Treasury officials would have preferred, and he was subjected to constant second-guessing by officials who thought they could do the job better. Restoration of business confidence in a new economy free from inflation, however, was perhaps the central economic goal of the early Reagan years, and more than anyone else Volcker was responsible for what economic success the administration achieved in its first term."

Not only did Volcker succeed in delivering what Reagan wanted, Kettl continued, he did so largely on Volcker's terms. "For the first time in the Fed's history, its chairman controlled the agenda for macroeconomic policy. He had in 1979 pushed control of inflation to the keystone of economic policymaking. He followed that by developing a strategy to break inflation, and he succeeded in winning political support for it.

"Ronald Reagan's {1981 personal and business income} tax cut was perhaps the most important fiscal policy decision since the beginning of the Vietnam War, but once Congress passed it into law the federal budget no longer had any flexibility for managing the economy. That task, especially the attempt to manage economic cycles, fell instead to Volcker and the Fed.

"Volcker's quick success in reducing inflation, although accomplished by painful steps, gained him and the Fed invaluable credibility. Then, as Reagan and Congress tackled the deficit, Volcker's leadership role grew. The Fed had unquestionably come to dominate the making of macroeconomic policy," Kettl wrote.

In the end, Reagan's basic support for Volcker and his policies -- perhaps as tempered somewhat by the chairman's need to accommodate the newer members of the board -- was emphasized last week in the most concrete way possible: The president offered to reappoint him. Volcker, for personal reasons, declined.

One major reason that so many economists, financial analysts and politicians give Volcker such high marks is that he has done far more than just use high interest rates to squeeze inflation out of the economy. He accomplished the feat at a time when many of the rules of the game were changing in unprecedented ways.

The whole structure of the nation's financial institutions began to change radically in 1978 with the introduction of money market accounts. The new accounts allowed institutions to pay depositors higher interest rates than those allowed on the traditional passbook savings accounts.

Some of the changes that have occurred were strongly opposed by Volcker, who has generally fought to require that commercial banks stick to their traditional knitting of taking deposits and making sound loans to creditworthy borrowers. But whatever his views, sweeping deregulation has taken place, and he and the Fed have had to cope with a new financial environment. Bank supervision and regulation has become more difficult as institutions continually probe to find where the new limits on their activities lie.

Meanwhile, a large number of financial institutions found themselves up against the wall, partly as a result of deregulation, but more as a result of the impact of the sought-after disinflation on the value of many assets, such as farmland, office buildings and oil leases. Hundreds of institutions either failed or are expected to eventually. In one spectacular case involving Continental Illinois National Bank and Trust Co. in Chicago, which was a bank with more than $40 billion worth of assets, the Fed and other government agencies took the unprecedented step of guaranteeing all of the bank's liabilities.

Volcker believed the bank simply could not be allowed to fail. He feared that, because of linkages through the nation's network for clearing interbank payments, a Continental failure would have produced a cascade of other bank failures.

Another sweeping change during the Volcker era has been the rapid internationalization of the American economy, particularly in terms of financial flows. As the necessary electronic technology has been developed, and the costs of transactions has plummeted, the world has become one vast interconnected market.

At the same time, the United States' international transactions have gone deeply into the red. Last year, foreigners invested or lent more than $140 billion more in this country than U.S. residents did abroad. Today, Fed policy choices are to a degree circumscribed by the need to keep that foreign money pouring in. Earlier this year, for instance, when private foreign investors became more wary about acquiring more dollar-denominated assets, the value of the dollar fell sharply on foreign exchange markets. In order to keep their currencies from going up too much against the dollar, foreign central banks were forced to buy vast amounts of the American currency.

Long-term U.S. interest rates shot up, and the Fed could do nothing to stop them. Finally, in late April, the central bank was forced to tighten credit conditions slightly and, to maximize the effect of its action, Volcker announced the step publicly. The need to protect the dollar and keep the foreign money flowing -- and to reassure financial markets about its determination not to let inflation get out of hand again -- had forced the Fed's hand.

This latest episode underscores the sort of problems Volcker will leave behind for Greenspan and other Fed officials.

The federal budget is still deeply in deficit and so are the nation's international accounts, though both are improving for the first time in several years. As a result of the falling dollar, inflationary pressures are stronger than at any time since 1982. More than 200 commercial banks are expected to fail this year, and the entire structure of the thrift industry could come crashing down if some way to shore up its insolvent deposit insurance fund is not found soon.

And then there are the debts of less developed countries (LDCs), especially in Latin America. Volcker earns some of his highest praise for his early recognition of the seriousness of the LDC debt problem before Mexico announced in mid-1982 that it could not keep up payments on its foreign debt.

If those are some of the problems facing the Federal Reserve today, when Volcker arrived on the scene in 1979 the singular problems were rapidly rising inflation and a concomitant weakness of the dollar, which was adding to the inflation problem by causing increases in the prices of imported goods.

According to interviews with nu- See VOLCKER, H4, Col. 1