The ground swell of people opposing Ben Bernanke's crazy Quantitative Easing (QE 2) program grows. Today 23 high profile economic and financial leaders wrote an open letter to Bernanke in the Wall Street Journal. They don't want QE 2. The Federal Reserve in responding said, they are "confident that it has the tools to unwind these policies at the appropriate time." Trusting that Ben Bernanke can put the currency debasement/inflation genie back in bottle is not a risk the country can afford to take.
Wall Street Journal:
Open Letter to Ben Bernanke --
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.
Michael J. Boskin
Former Chairman, President’s Council of Economic Advisors (George H.W. Bush Administration)
Richard X. Bove
Charles W. Calomiris
Columbia University Graduate School of Business
John F. Cogan
Former Associate Director, U.S. Office of Management and Budget (Reagan Administration)
Author, The Ascent of Money: A Financial History of the World
Manhattan Institute & e21
Author, After the Fall: Saving Capitalism from Wall Street—and Washington
Grant’s Interest Rate Observer
Kevin A. Hassett
American Enterprise Institute
Former Senior Economist, Board of Governors of the Federal Reserve
The Hertog Foundation
Claremont McKenna College
Former Director, Congressional Budget Office
Editor, The Weekly Standard
Former Deputy Assistant Treasury Secretary (Reagan Administration)
Ronald I. McKinnon
Council on Foreign Relations
Co-Author, Start-Up Nation: The Story of Israel’s Economic Miracle
Council on Foreign Relations
Author, The Forgotten Man: A New History of the Great Depression
Paul E. Singer
John B. Taylor
Former Undersecretary of Treasury for International Affairs (George W. Bush Administration)
Peter J. Wallison
American Enterprise Institute
Former Treasury and White House Counsel (Reagan Administration)
Cass Business School at City University London
A spokeswoman for the Fed responded:
“As the Chairman has said, the Federal Reserve has Congressionally-mandated objectives to help promote both increased employment and price stability. In light of persistently weak job creation and declining inflation, the Federal Open Market Committee’s recent actions reflect those mandates. The Federal Reserve will regularly review its program in light of incoming information and is prepared to make adjustments as necessary. The Federal Reserve is committed to both parts of its dual mandate and will take all measures to keep inflation low and stable as well as promote growth in employment. In particular, the Fed has made all necessary preparations and is confident that it has the tools to unwind these policies at the appropriate time. The Chairman has also noted that the Federal Reserve does not believe it can solve the economy’s problems on its own. That will take time and the combined efforts of many parties, including the central bank, Congress, the administration, regulators, and the private sector.”
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