I do not think there are grounds for great optimism. It is going to take a while, I think, to have a strong recovery.

There’s a visible commitment by the government to support these so-called systemically important institutions at this point, so they’re not going to go under in the sense of ceasing operations or even interrupting operations. It’s a question of how much support they’re going to need.

How quickly we deal with the system that is, as I say, still in intensive care, is the question.

The Federal Reserve is going beyond the traditional role of central banks here or abroad. At some point it’s reasonable to ask should this particular institution, with its independence very well protected, be allocating so much of what is essentially government money.

The inflation problem, which should be a real threat for the future, is not right on the doorstep. But two or three years from now that may be the critical problem, how that’s handled. Because, given what the Federal Reserve has been doing, it’s going to be harder to retrace their steps, so to speak, than it ordinarily would be.

—Paul Volcker