Paul Volcker: Quantitative Easing May Create Inflation in Future

Former Fed Chairman Paul Volcker warns that more quantitative easing by the Federal Reserve will stoke inflation. "When money is too easy for too long, we will have more" asset bubbles, the 83-year-old Volcker told Bloomberg News.

Volcker, an adviser to President Obama, was commenting ahead of a meeting of Fed policymakers. The Fed is widely expected to purchase at least $500 billion of long-term securities in a bid to boost economic growth and lower unemployment.

While Fed Chairman Ben Bernanke has said that the Fed "will do all it can" to sustain the economic recovery, Volcker said he doesn't expect a "massive" amount of quantitative easing.

As Fed chairman between 1979 and 1987, Volcker tamed inflation by raising interest rates to as high as 20%.

Volcker added that the possibility of future inflation doesn't mean that quantitative easing is alarming. He said the U.S. unemployment rate will remain high, and he acknowledged that the country's economic problems can't all be fixed in the near term.

Increase your money and finance knowledge from home

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Understanding Credit Scores

Credit scores matter -- learn how to improve your score.

View Course »

Add a Comment

*0 / 3000 Character Maximum

3 Comments

Filter by:
thedtecter

Well duh Paul, that is what happens when they keep printing money and chuck it into the system!

November 02 2010 at 3:26 PM Report abuse +1 rate up rate down Reply
scottee

inflation in the future? how about now? bread is $5 a loaf. we need deflation, we need The Fed audited and ended and we need the dollar put the back on the gold standard. both parties in Washington need fiscal confines and we need to vote out all career politicians because they are the problem, not the solution.

November 02 2010 at 11:54 AM Report abuse +1 rate up rate down Reply
1 reply to scottee's comment
jdrumerrnr

Where the heck are you buying your bread?

November 03 2010 at 7:13 AM Report abuse rate up rate down Reply