Even Paul Volcker is concerned that the Fed is going to take too long in making its move to tighten monetary policy. From CNBC:
The enormous amounts of liquidity pumped into the U.S. financial system by the Federal Reserve are not inflationary "at the moment" but will become so at some point, Paul Volcker, the former Fed chairman and a White House adviser, said on Thursday.
Volcker, now an economic adviser to President Barack Obama, said it was difficult, but necessary, to start draining the billions of dollars in liquidity even while unemployment rates remained high as the U.S. battles out of recession.
"You have to act against what seems like common sense. If you wait, it's too late," Volcker said while answering questions after a speech on financial markets at Harvard University's Kennedy School of Government.
It seems that if the credit bubble was built on too easy monetary policy, that moving to the exit now puts us a step closer to a real recovery, instead of a recovery based on the same policy that created the problem in the first place.