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NEW YORK (TheStreet) -- Over this past week, we have spent a lot of time discussing recent U.S. economic policy and reasons why this policy has currently been ineffective in stimulating faster economic growth.

But these are not new subjects. Take this September 2011 New York Times article, former Chairman of the Board of Governors of the Federal Reserve System Paul Volcker. It's worth a second look.

It's primarily about a speech given by then Fed chief Ben Bernanke at the Fed's annual retreat in Jackson Hole, Wyoming, but Volcker also discussed the relationship between U.S. economic policy and the achievement of faster economic growth.

He was writing after the Federal Reserve had engaged in two rounds of quantitative easing, a year before the beginning of its third round. He argued that creating more inflation would not solve the real problems that the economy was facing.

"The danger is" he writes," that if, in desperation, we turn to deliberately seeking inflation to solve real problems we would soon find that a little inflation doesn't work. Then the instinct will be to do a little more...What we know, or should know, from the past is that once inflation becomes anticipated and ingrained-as it eventually would-then the stimulating effects are lost. Once an independent central bank does not simply tolerate a low level of inflation as consistent with 'stability,' but invokes inflation as a policy, it becomes very difficult to eliminate."

This inflation can either be consumer price inflation, which we have not really had much of since the mid-1980s, or asset price inflation, which has been present in the United States since the early 1970s.

For the past fifty years, people and businesses in the United States have learned that sustained government policies to keep unemployment low and put as many families into homes as possible have created an environment where these people and businesses have found it more profitable to invest in assets than to invest in operations that produce goods and services.

In other words, as Volcker argues, the stimulus becomes ineffective.

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And, why? Because of inflationary expectations.

Unfortunately, as credit expectations build up in an economy, the credit created by these government policies goes increasingly into the financial circuit of the economy and not into the industrial circuit, where goods and services get produced.

If anyone should know about dealing with inflationary expectations, it is Volcker who was on the front line at the Treasury Department and in the Federal Reserve System battling inflation and inflationary expectations in the 1970s and 1980s.

He continues, "once inflation becomes anticipated and ingrained-as it eventually would-then the stimulating effects are lost. Once an independent central bank does not simply tolerate a low level of inflation as consistent with 'stability', but invokes inflation as a policy, it becomes very difficult to eliminate."

The United Stats has faced fifty years of credit inflation, which resulted first in consumer price inflation and then in asset price inflation and the expectation of this has just been re-enforced by three rounds of Federal Reserve quantitative easing and continued large fiscal deficits.

The beneficiaries of this policy stance have been hedge funds, private equity funds, and other sophisticated investors who know how to play the asset price inflation game. And, since this has been the basic policy of the federal government for fifty years, they have had plenty of time to refine their efforts.

Volcker makes one more remark in this article that we should all keep in mind: "experience confirms that price stability-and the expectation of that stability-is a key element in...sustaining a strong, expanding, fully employed economy."

Let's expand this to say, experience confirms that credit stability -- and the expectation of that stability -- is a key element in sustaining a strong, expanding, fully employed economy.

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.