moneynews.com / March 4, 2013, 03:03 PM
Former Federal Reserve Chairman Paul Volcker said U.S. central bank officials may find it difficult to rein in their historic stimulus at the appropriate time because “there is a lot of liquor out there now.”
“At some point when the worm turns and the party is getting under way, to use that old analogy, at what point do you begin retreating?” Volcker said Monday in a forum discussion in Washington. “You can make a mistake and go too quick, but the much more frequent mistake in my judgment is you go too slow, because it’s never popular to take the so-called punch bowl away or to weaken the liquor.”
“There’s a lot of liquor out there now,” he said during the National Association for Business Economics annual policy conference.
Fed officials have expanded the central bank’s balance sheet to a near-record $3.09 trillion by purchasing assets in an effort to stimulate economic growth and reduce an unemployment rate at 7.9 percent. The actions have raised concerns the Fed may risk contributing to financial instability.
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