The Guy From Australia
Member
- Joined
- Apr 19, 2008
- Messages
- 3
Here is a snippet from a newsletter I receive.
<quote>
When Volcker Talks Should We Listen?
Paul Volcker was the Federal Reserve Chairman from 1979 to 1987. Many might not remember anything before Alan Greenspan but those in the know say Volcker may have been the best chairman ever.
Volcker recently called the current credit crisis is the “mother of all crises” and the modern financial system has “failed the test of the market-place”.
“The transient causes of extreme leveraging have been exposed by force of circumstance. The nation’s spending and consumption are being brought into line with our capacity to produce,” said Volker.
“The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded Central Banking principles and practices … What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time-honored central bank mantra in time of crisis: lend freely at high rates against good collateral; test it to the point of no return.”
When asked about the possibility of a dollar crisis, Mr. Volcker retorted, “Dollar crisis … you don’t have to predict it, you’re in it … Let me remind you that the dollar after all is a fiat currency backed only by the word and policies of our government, policies exemplified by an independent Central Bank committed to maintaining price stability.”
Strong words especially when you consider the fraternity of Federal Reserve members rarely (very rarely) talks out against the current administration. With little to gain by such remarks, Volcker’s statements should be considered seriously. Hard to believe there isn’t another leg down coming – but this time may be different. So far it has been.
</quote>
<quote>
When Volcker Talks Should We Listen?
Paul Volcker was the Federal Reserve Chairman from 1979 to 1987. Many might not remember anything before Alan Greenspan but those in the know say Volcker may have been the best chairman ever.
Volcker recently called the current credit crisis is the “mother of all crises” and the modern financial system has “failed the test of the market-place”.
“The transient causes of extreme leveraging have been exposed by force of circumstance. The nation’s spending and consumption are being brought into line with our capacity to produce,” said Volker.
“The Federal Reserve has judged it necessary to take actions that extend to the very edge of its lawful and implied powers, transcending in the process certain long-embedded Central Banking principles and practices … What appears to be in substance a direct transfer of mortgage and mortgage-backed securities of questionable pedigree from an investment bank to the Federal Reserve seems to test the time-honored central bank mantra in time of crisis: lend freely at high rates against good collateral; test it to the point of no return.”
When asked about the possibility of a dollar crisis, Mr. Volcker retorted, “Dollar crisis … you don’t have to predict it, you’re in it … Let me remind you that the dollar after all is a fiat currency backed only by the word and policies of our government, policies exemplified by an independent Central Bank committed to maintaining price stability.”
Strong words especially when you consider the fraternity of Federal Reserve members rarely (very rarely) talks out against the current administration. With little to gain by such remarks, Volcker’s statements should be considered seriously. Hard to believe there isn’t another leg down coming – but this time may be different. So far it has been.
</quote>
