WASHINGTON (Reuters)  Paul A. Volcker, former chairman of the Federal Reserve, warned on Wednesday the United States could face a 1970s-style period of skyrocketing inflation if investors lost confidence in the buying power of the dollar.

“If there is a real loss of confidence in the dollar, then I think we are in trouble. That is something that has to be watched,” Mr. Volcker told the Congressional Joint Economic Committee.

The former Fed chief, who championed the battle against double-digit inflation in the 1970s by raising interest rates sharply, warned that without careful focus on the declining dollar and inflation, the United States could face similar, or even worse, inflation pressures.

“That has to be very much in the forefront of our thinking. Without that, we are back to the inflation of the 1970s or worse,” Mr. Volcker said, questioning the relevance of measuring inflation by stripping away volatile food and energy prices.