Speaking in an interview with news magazine Der Spiegel, Volcker said he admired Germany's economic model, and suggested that the US should consider a shift towards exporting to help the US recover from the economic crisis.
"In some ways, I think the labour cost is higher in Germany than it is in the United States but you can somehow maintain that export edge," Volcker said, "You are dedicated to exporting, we are dedicated to financial engineering and it hasn't worked out too well."
Volcker, who is chairman of the US Economic Recovery Advisory Board, added, "I wish we had fewer financial engineers and more mechanical engineers. Tell me the secret of how the Germans keep this going."
Volcker also said that while the US was doing okay in researching and developing new technologies, it was leaving all the manufacturing to other countries, particularly Germany.
The 82-year-old is more pessimistic about the US economy than some of his colleagues, most notably Chairman of the US Federal Reserve Ben Bernanke, who recently declared the recession over.
"The recovery is quite slow and I expect it to continue to be pretty slow and restrained for a variety of reasons, and the possibility of a relapse can't be entirely discounted," said Volcker, "I'm not predicting it but I think we have to be careful." The veteran economist said it was "amazing" how quickly people are forgetting the global financial meltdown and want to return to business as usual.
Volcker said that there was a fundamentally different psychology in Germany than in the US, which allowed a lot of manufacturing be outsourced.
"The young, ambitious Germans realize that export industry and heavy engineering is the German competitive advantage," he told the magazine, "The best Americans don't even think about that. We have the Silicon Valley and that whole kind of high tech industry is still our strength but we need something broader than that too."