Paul Volcker, Chairman of U.S. President Barack Obama’s Economic Recovery Advisory Board, said Thursday it is reasonable to expect that economic growth will resume in the U.S. late this year, but warned that a strong recovery is unlikely.
Addressing a financial forum in Beijing, the former Chairman of the U.S. Federal Reserve said that the U.S. faces “a long slog, with continuing high levels of unemployment.”
Volcker, known for successfully bringing inflation under control during his term at the Federal Reserve, said that the current economic situation “is not an environment in which inflationary pressures are at all likely for some time to come.”
In his prepared remarks, Volcker said that, although there will be no alternative to the U.S. dollar in the foreseeable future, “the ultimate logic of a globalized financial system is a world currency.”
“The theoretical premise that a system of floating exchange rates would promote swift and efficient adjustment has not been borne out in practice,” he said.
In the absence of a global currency, the dollar has provided a “workable, pragmatic approach,” he said.
Maintaining the purchasing power of the U.S. dollar is “the central responsibility of the United States,” Volcker said, adding that it is in the country’s own interests to do so.
http://blogs.wsj.com/economics/2009/06/11/volcker-strong-recovery-is-unlikely/
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