Economists against Fed

More QE2 dissent – this time from the back of the classroom.

An open letter to Ben Bernanke via the Wall Street Journal:

We believe the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.

We subscribe to your statement in the Washington Post on November 4 that “the Federal Reserve cannot solve all the economy’s problems on its own.” In this case, we think improvements in tax, spending and regulatory policies must take precedence in a national growth program, not further monetary stimulus.

We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy.

The Fed’s purchase program has also met broad opposition from other central banks and we share their concerns that quantitative easing by the Fed is neither warranted nor helpful in addressing either U.S. or global economic problems.

That letter marks the start of a campaign by a group of prominent Republican-leaning economists (including Michael J. Boskin, Ronald I. McKinnon Niall Ferguson and) to stop Ben Bernanke and his crazy money creation schemes. According to the WSJ the letter will be published as an advert in their newspaper and the New York Times this week.

Others who have joined the campaign against QE2 include Richard ‘I ♥ banks’ Bove, Jim Chanos of Kynikos Associates and James Grant of Grant’s Interest Rate Observer.

In addition to letter-writing, the economists have already started to lobby influential politicians in Washington over suppers of sea bass, says the WSJ:

The economists have been consulting Republican lawmakers, including incoming House Budget Committee Chairman Paul Ryan of Wisconsin, and began discussions with potential GOP presidential candidates over the weekend, according to a person involved.

… Last Tuesday evening, about 20 economists and others met over sea bass at the University of Pennsylvania Club in Manhattan and hashed out a broad strategy. Mr. Ryan, who has gained notice for a plan to balance the federal budget through deep spending cuts, joined the group as they discussed ways to encourage the GOP’s new House majority to unite behind what they describe as a “sound money policy.”

“We talked about the importance of the right being outspoken and unified on this,” said a participant.

Munchies and monetary policy. Yum.

http://ftalphaville.ft.com/blog/2010/11/15/404186/economists-against-fed/?updatedcontent=1

 

if only those economists knew to what party former fed boss, greenspan, attended. bohemian grove- the meeting of top satanists.

these economists are clueless. they do not know the simple fact that the Fed is doing EVERYTHING possible to make the economy worse for the majority of people and all the best to themselves- the elite. On purpose, not by the lack of economic knowledge.

Why the famous fed critics (incl. Jim Rogers) do not address this fact? Affraid of being labeled as a "conspiracy nut"?

it is also funny, the economists seem to think they will influence the elite just by writing letters or speaking on tv / youtube. yeaaaah!

the only thing which is capable of changing a fed policy is a mad, vicious crowd, millions of people who will end the career of bernanke, obama, etc. exactly like the citizens of Romania did to Nicolae Ceauºescu in 1989.

 

QE is bad, bad for majority, bad even for Ben and Obama. QE - specially when declared for a few month ahead, actually tells to people - 'make more debt now, accumulate more hard assets against new debts, USD money will be cheaper in 6 months, then you will sell only part of what you buy now to return debts..' - that's writing on the wall for hyperinflation of Zimbabwe style. The problem , however, isn't in hyperinflation itself, but in its sideeffects - society degradation, poverty, possible unrest. Actually, nobody is going to benefit it, even those who think they will. And that stupid excuse of Fed that the QE is their only tool for now, that's why they're doing it - it's a joke or/and lie - because it's actually not a FED's job to fix the economy, it's a government job. FED is supposed to be a watchdog of fiscal policies, not more then that.It's supposed to have guts to tell government - no more free money, darling, take you lazzy ass and work more,cut spending , etc. More money in economy - it won't help until 9.5 % (or even actually more) of workforce ain't working , until unions force corporates into BK instead of salary alignments , until government forbidding cheap oil energy and forces (by taxes/subsidies) alkiline-batteries life style instead.. It's living in denial , until ... The question is until what - that's really interesting one, because it's not clear. WW3 , sovereign BK , hunger en mass in western world, what else? It looks Ben&Barak are really interesting to see this movie end..
God bless US if they stop this QE - it will be hard today, but much better tomorrow and day after..

 

the Fed policy may be wrong, but i'd much rather have the Fed making monetary policy than the U.S. congress. If you'll recall the congress gave us cash for klunkers and 8K tax credits for home buyers, etc. (And at one point Bush, while busy planning to start a war, even sent everyone a small check mid year at the cost of many millions) What on Earth are these people that come up with these schemes thinking?! What the Fed is doing makes far more sense to me, as awful and as stupid as it may be, then those short-term, taxpayer-financed subsidies of banks, real estate companies, lawyers, and car makers.

And as far as Republican "economists" are concerned it's essential to recognize they are working for Wall Street. It was Republican economists like Phil Gramm and Alan Greenspan that got us where we are today. Do we need more of that? I think NOT!

They, and Wall Street, have a definite agenda which includes, incidentally, killing off social security. Since they can't kill it directly, they plan to kill it by making sure that no meaningful adjustments get past the congress for the President's signature. They know that the cost of fixing it will escalate exponentially with time so unless it's fixed soon it won't be fixable at all, and will die a slow, painful death. Then they can have their picture taken behind a banner that reads "Mission Accomplished."

 

QE is intended to aid the banks. The banks buy Treasuries ahead of the Fed and sell them to the Fed at a profit. Then they take the extra cash and make other investments and extending a small amount to borrowers. The pool of qualified borrowers is extremely small since the Great Recession has lowered credit scores dramatically. QE isn't going to do much for job growth but it will help the homes appreciate that Bank of America will soon own.

 

A bit off topic, but the romanian "revolution" was nothing but a black op of CIA and KGB, part of a larger operation to remove all the old communist leaders from eastern europe. Worked like a charm.

 

Bubble ben bernanke and friends are buying treasuries because no one else will.

Everyone is cheering QE2 now but in years to come they will wish they never thought up of this great plan to prop up gdp and the rest of the economy.

 

Wall st. has been on the ropes since the 2008 fiasco. The havoc wreckers you mentioned above are being discredited as America slowly wakes up. When QE fails, it will not be a pretty sight.

 

all I hear is bitching about QE2. Bitching about QE2 has become the IN thing to do

 

You must agree with Bubble ben bernankes way of "fixing" the economy.