WASHINGTON - former President of the Federal Reserve Paul Volcker warned Friday that $ trillion deficits represent a threat to the stability of the US economy and the dollar and said he is frustrated by the impasse in Washington.
Speaking to the World of the Oregon Business Council, Volcker said that "extend trillion deficits $ may not be a reality" and that the United States is about to have public debt to exceed the size of its domestic product gross.
"One way or another, we return to a balanced budget", he said in prepared remarks.
Volker speech came the same day when the Congressional Budget Office, said that the US deficit had totaled 871 billion for the first seven months of the year, which is clearly over pace of the previous year. On Thursday, Vice President Joe Biden led a meeting of bipartisan to conclude an agreement with Republicans to cut growing deficit, thus avoiding the default value.
They face a deadline August 2 to lift the debt of the 14.3 country limit billion.
Volcker, who resigned earlier this year as Chairman of the Advisory Board to President Barack Obama economic recovery, expressed concern about how the United States consumes and borrows "to the"point that China, the Japan and other foreign countries hold more than 5 trillion dollar U.S. Government bonds."."
"Consider this statistic in the light of the prospects for the continuation of deficits, doubts about future inflation and international stability of the dollar", said, noting that the United States is running out of time to fix things.
To fill the deficit, said Volcker agrees legislators need to tackle the discretionary spending, an area which can help the United States to save 300 billion of current projections by 2020. But that alone, said, will not suffice to address deficits trillion dollars.
"I will put the point bluntly," he said. "It is simply unrealistic and irresponsible to believe the budgetary balance can be achieved without revenue higher compared to the GDP." We do generate revenues higher without fiscal reform.
Separately, Volcker also discussed his views on the progress made so far on the law of review Dodd - Frank Wall Street and other efforts around the world to strengthen the regulation of financial markets.
Volcker has been the driving force behind a pillar of the Dodd-Frank Act, known as the Volcker rule, which cracks down on proprietary trading by major banks. Visit although it is more a formal advisory role in the administration, it remains in the White House from time to time.
In particular, it was concerned by a failure to properly address some areas key, including credit rating agencies, accounting issues and funds from money market - a question to explore in a round table next weekthe Securities and Exchange Commission plans.
"Taken together, my personal grade on financial reform is incomplete," he said, noting that it is still more missing abroad as the United States "I do not equate incomplete with out of time, but I fear that momentum in the reform effort is in decline."
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