Former Fed chief Volcker worries about US 'plutocracy'

[WASHINGTON] Hubris, growing distrust in government and growing concentration of wealth worry the elder statesman of American central banking enough that in his ninth decade he has written a memoir to sound a warning.

Paul Volcker, 91, the towering Federal Reserve chief who defeated inflation - literally towering, he is a few inches shy of seven feet tall - laments the breakdown of governance and policymaking.

"We're in a hell of a mess in every direction," Mr Volcker told The New York Times.

"Polarization between (and even within) political parties, accompanied by the ever-growing influence of highly concentrated wealth, has paralyzed key elements of public policymaking," he writes in the introduction of his book, "Keeping at It."

And Mr Volcker told the newspaper he worries that "we're developing into a plutocracy."

"We've got an enormous number of enormously rich people that have convinced themselves that they're rich because they're smart and constructive. And they don't like government, and they don't like to pay taxes."

In the book due out October 30, he stresses that "no force on earth" can long resist "the thousands of individuals and hundreds of millions of dollars in the Washington swamp aimed at influencing the legislative and electoral process."

This has undermined governance, leading to the decline of "prudent budgeting," such that even "needs as self-evident as rebuilding our infrastructure seem, for all the talk, beyond our capacity for action," Mr Volcker wrote.

He points to the growing mistrust in government and mistakes by policymakers, like the failure to "recognize the costs of open markets and rapid innovation to sizable fractions of our own citizenry," and the belief that "inventive financial markets could discipline themselves."

President Donald Trump was able to capitalize on those fears because he "seized upon some issues that the elite had ignored," Volcker said in the interview.

AFP