Former Fed Chairman Paul Volcker Agrees with Ron Paul

A blunt former Fed chairman takes on Bernanke. Take heed of what he says

AVNER MANDELMAN

00:00 EDT Saturday, April 12, 2008

A few days ago an unusual event took place: Paul Volcker, the mythical U.S. Federal Reserve Board chairman from the Reagan years, criticized the policy of the current Fed chairman, Ben Bernanke, in a speech to the Economic Club of New York.

Just so you grasp how extraordinary this was, you should first understand that normally a past Fed chairman scrupulously avoids saying anything at all about current Fed policy – for the simple reason that the current Fed chairman’s words are one of his most important tools: They can sway markets.

This ability does not fade entirely when a Fed chairman leaves.

So when a past Fed chairman speaks, his words can clash with those of the present one and make that one’s job difficult. Out of professional courtesy, past Fed chairmen therefore keep quiet; Mr. Volcker especially – the man who hiked interest rates to 20 per cent to kill inflation, at the cost of a deep recession. But last week Mr. Volcker spoke his mind bluntly. He said, in effect, that the current Fed is not doing its job.

This would have been unusual enough. But Mr. Volcker went further. Not only is the Fed not doing its job, he said, but it is doing the wrong job: It is defending the economy and the market, instead of defending the dollar. And just to stick the knife in, Mr. Volcker added that this bad job now will make the real job – defending the greenback – much harder later. It’ll cause even greater economic suffering.

Advertisements

One Response to Former Fed Chairman Paul Volcker Agrees with Ron Paul

  1. euandus says:

    I read today in the NYT about Volcker being marginalized in the Obama WH in respect to his advise on how to obviate another financial crisis. I wrote a post on it arguing that the nation’s financial houses are apparently able to squeeze out even a credible voice that is no longer in their financial interest. I am much less surprised to find this going on, than that Barak Obama and those he has selected as his advisers are represented here as being on the side of the financial culprits. A case of cooptation, I believe. I’m assuming that Barak wants a second term pretty bad and is willing to… (you know)

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: