Last Month we did a fairly in depth review of the Paul Volcker speech to the Bretton Woods Committee in a two part series. Now the Wall Street Journal has run an article on the speech that starts by noting "his remarks received little media attention".
But not here, we ran these articles:
The Wall Street Journal writer (Seth Lipsky) says he feels the Volcker speech strikes him as "an underplayed story". He then goes on to say it warranted more attention because the US Congress passed legislation to conduct a serious audit of the Federal Reserve in 2012. He adds that a bipartisan bill is being pushed in the US Senate to establish a Centennial Monetary Commission.
I wondered if this Centennial Monetary Commission might be something that could lead to major monetary system change. Volcker was clearly calling for major monetary system review and change in his speech and Mr. Lipsky offers this Commission as a possible answer to his call.
But we noted that the Volcker speech actually ended up suggesting that major change is "a long way off" and offered no tangible ideas as to how change might take place. In this article Mr. Lipsky offers this quote from Mr. Volcker:
"It's easy to say what's wrong," Mr. Volcker told me over the weekend, "but sensible reforms are a pretty tough thing."
Mr. Lipsky then goes on to suggest it would be great if Mr. Volcker would get behind the Centennial Monetary Commission whose job would be to review the US FED and then offer ideas on how to improve in the coming century. He adds that a new, rules based system is needed.
But what I see once again is more indication from Mr. Volcker is that, in his view, major change any time soon is unlikely. And a review of the US FED is not the kind of major change we are talking about on this blog. What we are looking for is something that changes the role of the US dollar as global reserve currency. Something that might lead to the IMF stepping forward in a much greater role as a global central bank to deal with a global level crisis. Something that might lead to the SDR as reserve currency in a new way (under new "rules of the game"). That is what we would view as major monetary system change.
However, nothing in this article suggests anything like that is on the horizon. And Mr. Volcker seems to just re confirm his pessimism that things will change much any time soon.