Advertisement
Features

Paul Volcker: the US is in a "hell of a mess"

Paul Volcker, former chair of America's central bank, isn't happy about the state of the USA.

920_MW_P15_Guru
Paul Volcker, former Federal Reserve chairman (1979 to 1987)

2016 Getty Images

Paul Volcker, the man credited with crushing double-digit inflation by hiking interest rates aggressively during his time at the helm of the US central bank in the late 1970s and early 1980s, is not optimistic about the future of America.

"We're in a hell of a mess in every direction," he tells Andrew Ross Sorkin of The New York Times. "Respect for government, respect for the Supreme Court, respect for the president, it's all gone... how can you run a democracy when nobody believes in the leadership of the country?"

Advertisement - Article continues below

Volcker, 91, has written a memoir, Keeping At It: The Quest for Sound Money and Good Government. "I grew up in a world in which good government was a good term," he says. Yet the rising power of lobbyists means that America is "developing into a plutocracy", with the wealthy pushing the case for lower taxes and smaller government. Ironically, this was a driving factor behind the election of Donald Trump Volcker is no fan of Trump but acknowledges that he "seized upon some issues that the elite ignored".

It's not just the quality of US politics that concerns Volcker. Central banks are too obsessed with their 2% inflation targets, he tells Gillian Tett in the Financial Times. The threat posed by deflation is overstated, he suggests, so they should aim for price stability instead. Meanwhile, quantitative easing has made the financial system riskier. "There's a lot of leverage going on now", while banks are lobbying to loosen regulations again all of which point to further financial crises in the future.

Advertisement
Advertisement

Recommended

Visit/519858/how-long-can-the-good-times-roll
Economy

How long can the good times roll?

Despite all the doom and gloom that has dominated our headlines for most of 2019, Britain and most of the rest of the developing world is currently en…
19 Dec 2019
Visit/516944/why-wall-street-has-got-it-wrong-again
Economy

Why Wall Street has got the US economy wrong again

The hiring slowdown does not signal recession for the US economy. Growth is just moving down a gear, says Brian Pellegrini.
25 Oct 2019
Visit/investments/investment-strategy/investment-gurus/601532/terry-smith-im-not-used-to-being-ignored
Investment gurus

Terry Smith: I'm not used to being ignored

Running a £20bn fund doesn’t guarantee good treatment from the companies you invest in.
22 Jun 2020
Visit/investments/stocks-and-shares/tech-stocks/601498/jeremy-siegel-pandemic-played-right-into-the-hands
Tech stocks

Jeremy Siegel: "pandemic played right into the hands of the FAANG stocks”

Jeremy Siegel, professor of finance at Wharton, says the tech giants benefited from the closure of many physical businesses.
12 Jun 2020

Most Popular

Visit/investments/property/601606/house-prices-crash-uk-property-prices-falling-where-next
Property

House price crash: UK property prices are falling – so where next?

With UK property prices falling for the first time in eight years, are we about to see a house price crash? John Stepek looks at what’s behind the sli…
2 Jul 2020
Visit/economy/inflation/601584/the-end-of-the-bond-bull-market-and-the-return-of-inflation
Inflation

The end of the bond bull market and the return of inflation

Central bank stimulus, surging post-lockdown demand and the end of the 40-year bond bull market. It all points to inflation, says John Stepek. Here’s …
30 Jun 2020
Visit/investments/stockmarkets/601611/nasdaq-all-time-high-markets-and-the-real-economy
Stockmarkets

How can markets hit new record highs when the economy is in such a mess?

Despite the world being in the midst of a global pandemic, America's Nasdaq stock index just hit an all-time high. And it's not the only index on a bu…
3 Jul 2020