His concerns go to the very core of how America lives and how Wall Street operates. A child of the Great Depression and a man of legendary personal thrift, Volcker thinks Americans have been living above their means for too long.
“It is the United States as a whole that became addicted to spending and consuming beyond its capacity to produce,” Volcker lectured the Economic Club of New York in April. “It all seemed so comfortable.”
Bringing consumption back in line with income would not only crimp individuals and families, but also require major readjustments in the global economy, which has relied on the U.S. as consumer of last resort.
Jared Bernstein, slated to be economic adviser to Joe Biden, in the NY Times on Monday: “We’ll be lucky if the unemployment rate is below double digits by the end of next year.”
http://tinyurl.com/5qtx5m
Not a single word from Mr. Frugality about government living beyond its means.
[blockquote]Not a single word from Mr. Frugality about government living beyond its means. [/blockquote]
Well, he knows which side of his bread is buttered on, B.
That said, I find it hard to find fault in what Volker is saying and what his philosophy was and is. Even as a laissez-faire libertarian type, I gasp as some of the salaries these fair-haired boys pull down, even in the face of massive failure. Like Volker, I’m a frugal guy and I worry when I see anyone, or anything, living beyond its means. I see it as inherently dishonest. I pray Volker can bring some sanity to the financial system and to out of control government spending.
I think the bailout is wrong, and I think nationalizing the auto industry is wrong. However, as much as I hate to admit it, I think team Obama is on the right track with spending money on infrastructure improvement. That is the correct way for government to put money into the economy. The flip side of that is, I think the Fed needs to (gasp) raise interest rates. The 70’s with the misery index, the fuel shocks, and stagflation is our model. Volker raised interest rates, despite the pain, and set up the long expansion that followed.