Paul Volcker: "....the Federal Reserve Act is going to be reviewed".

The exerpt below is from Agora Financial's "5 Minute Forecast" newsletter:

April 20, 2009

“For better or worse,” said the octogenarian Paul Volcker yesterday, “we are at a point where the Federal Reserve Act is going to be reviewed."

"None of us has seen a decline in economic activity at the rate of speed seen late last year," he stated the former Fed chair in a speech at Vanderbilt University -- a noteworthy observation from the guy who was credited with slaying the rampant inflation of the late ’70s.

One of the data points that has Volcker spooked? The corporate earnings disaster currently under way:

We’ve never seen a “balance sheet” recession as severe as the one we’re going through right now.

A side note on Volcker: He’s a bit cranky, but he knows his stuff. When we met Volcker in his office overlooking the skating rink at Rockefeller Center (for I.O.U.S.A. ), we described our project to him.

“We’re trying to help ‘ordinary’ people understand the economic and financial crisis we expect will beset the country,” we said.

“Why?” he replied under his breath, “You ought to leave economics to me.”

Heh. Really?

Volcker was one of the few members of the Nixon administration who argued that dismantling the Bretton Woods exchange rate system in 1971 -- effectively removing gold as the guarantor of the dollar’s value and replacing it with “the full faith and credit” of the U.S. government -- was a bad idea. (Arthur Laffer was another. Both discussed that fateful day in their interviews for the film, the complete transcripts for which we’ve published here.)

Now, it looks like the powers that be are openly discussing not just the dollar’s role as reserve currency of the world, but the role of the Fed as set forth by the Federal Reserve Act of 1913 itself.

Link to Agora Financial's newsletter: http://www.agorafinancial.com/5min/archives/

As of April 22nd, the 4/20/09 newsletter had not been archived.