Volcker: U.S. 'addicted to spending'

WASHINGTON, Dec. 8 (UPI) -- Paul Volcker, U.S. President-elect Barack Obama's special economic adviser, says Americans have been living above their means for too long.

A look at recent comments by Volcker, who as U.S. Federal Reserve chairman in the early 1980s induced a painful recession as a means to brake runaway inflation, show him saying U.S. consumers have become "addicted to spending" and warns of privations to come, the Los Angeles Times reported Monday.

"It is the United States as a whole that became addicted to spending and consuming beyond its capacity to produce," the newspaper quoted Volcker saying at the Economic Club of New York in April. "It all seemed so comfortable."

Warning not to expect any quick fixes, Volcker has also noted that the 1981 recession, while painful, had great long-term benefits, the Times said.

"It's going to be a tough period," Volcker said in a speech at the Urban Land Institute in late October. "But when we dealt with inflation, it laid the groundwork for 20 years of growth. I'd like to see that happen this time."

The newspaper said it's also likely Volcker will advise Obama against using deficit financing from foreign investors to subsidize the growth of consumption.