Former Federal Reserve chairman Paul Volcker warned Monday about potential dangers from what he calls "unorthodox" and aggressive moves by central banks around the world.

Central banks, including the Fed, could eventually inflict more harm by "what they're doing with their portfolio to save the world economy," said Volcker speaking alongside Sir John Vickers, the chair of the U.K.'s independent commission on banking, at NYU Stern School of Business early Monday.

"Central banks are no longer central banks," said Volcker. "I think it gets dangerous when they lose sight of the basic function of the central bank."

Volcker said that rather than trying to stay out of the market as much as possible and simply tinker from the sidelines, central banks have been aggressively trying to influence economic growth and even inflation.

And:

"Once you have the idea that a little bit of inflation is a good thing, it is very hard to get rid of it," said Volcker.

Moreover, he says the more central banks become key players in financial markets, the more dangerous their actions can become.

"The Federal Reserve is the world's largest financial intermediary," he said.

David Fuller's view Fullermoney's main role is to identify bullish and bearish market trends and also address subscriber's queries, not to pontificate on the merits or otherwise of central bank policies. However, we have all the human foibles and have shouted at central banks on occasion.

In recent decades, we repeated that Alan Greenspan should raise margin requirements on speculators to curb the "Irrational exuberance" that he correctly identified in 1996. We bade in vain at the Bank of Japan for many years, urging them to reflate out of the disinflationary / deflationary spiral, which is what Shinzo Abe's BoJ is now doing. Incidentally, I think it is a bit rich of critics to castigate Abe's regime for trying to break the longest downward slide for any serious economy over the last 100 years. And before Mario Monte arrived at the European Central Bank, Fullermoney urged his predecessor to reflate if Europe wanted to have any chance of holding the euro together.

We have not followed the lead of many by expressing outrage at Ben Bernanke's QE, partly out of self interest, to be honest, because it has been very good for financial markets. Instead, we have viewed it as a lesser evil, but we are fearful of a potentially tumultuous ending when either he or his successor stops QE, possibly within the next year or two. Mr Volker has been diplomatically restrained about QE, but we should note his comments.

Meanwhile, the monetary sun is still shining on investors.