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He called QE III "the most extreme easing of monetary policy" he could recall. "Monetary policy is about as easy as it can get. Another round of QE is understandable - but it will fail to fix the problem.""There is so much liquidity in the market that adding more is not going to change the economy." Banks are hoarding cash. They're not lending. They're speculating or stashing it in tax havens.
Corporations are doing the same thing. Why hire and invest when weak conditions aren't improving.
Volker said inflation isn't a problem now, but watch out. "The risk is that central bankers are not able to tighten policy in time. Will they be able to pull back fast enough from loose monetary policy?"
The same goes for the ECB, Bank of England and Bank of Japan. They're dumping money from helicopters to use Bernanke's former expression. Even so, it hasn't worked.
Don't expect China to rescue the world, Volker added. Its economy "slowed 50pc since its peak and is no longer able to support international growth."
China equities hit a three and a half year low. Its manufacturing diffusion index was down for the 11th straight month. In 2012 through August, its foreign direct investment slumped 3.4% year-over-year. On September 20, its Commerce Ministry said:
"In general, external demand for China's exports will probably be even lower than in January-August since the global economy is continuing on a downward trend."
The bloom looks very much off its rose. It's just a matter of time until other large economies decline like China. A composite Eurozone manufacturing and service sector read fell to 45.9. It's the worst showing since June 2009.
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