Rocky Vega

Today, an open letter to Fed Chair Ben Bernanke appeared via the Wall Street Journal questioning the wisdom of the Fed’s round two of quantitative easing. It’s signed by 23 economists, financial writers, fund managers and others, including, to name just a few…

* Richard X. Bove of Rochdale Securities
* Jim Chanos of Kynikos Associates
* Niall Ferguson of Harvard University
* James Grant of Grant’s Interest Rate Observer
* Seth Klarman of Baupost Group
* David Malpass of GroPac
* John B. Taylor of Stanford University

It’s a group that would not necessarily agree on wide range of issues, but that’s on the same page when it comes to QE2 and the destruction it could potentially unleash on the US economy and wider financial markets.

Here’s a part of the text, as published in WSJ:

“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 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.”

The signatories are members of a group named, e21: Economic Policies for the 21st Century, so are in some way previously organized. However, they still seem to represent at least part of a rising and mainstream current of criticism directed toward the Fed’s ambitious, unpredictable, and most likely ill-fated plan. In the political sense, the outcry came most quickly and loudly from leaders abroad, but the dissent now also appears to be growing increasingly fervent at home. If nothing else, the letter represents more collaborative outrage than we saw with the first round of QE, so, at least in that sense, it’s a start…

You can read the full text of the open letter, the complete list of signatories, and a Fed spokeswoman’s rather boilerplate-sounding response, in the Wall Street Journal’s post on an open letter to Ben Bernanke.

Best,

Rocky Vega,
The Daily Reckoning

Rocky Vega

Rocky Vega is publisher of Agora Financial International, where he advances the growth of Agora Financial publishing enterprises outside of the US. Previously, he was publisher of The Daily Reckoning, and founding publisher of both UrbanTurf and RFID Update -- which he ran from Brazil, Chile, and Puerto Rico -- as well as associate publisher of FierceFinance. Rocky has an honors MS from the Stockholm School of Economics and an honors BA from Harvard University, where he served on the board of directors for Let?s Go Publications, Harvard Student Agencies, and The Harvard Advocate.

Recent Articles

4 DIY Halloween Costumes You Can Make in 10 Minutes or Less

Peter Coyne

Halloween is tonight! And just in case you waited until the last second to think about what you're going to wear, here are four costume ideas you can easily put together in about 10 minutes or less. With these costumes you'll be the hit of your friend's party - provided you're friends with a bunch of economists. (Downloadable masks included...) Happy Halloween!


Bill Bonner
4 Basic Truths to Help You Navigate the Financial News

Bill Bonner

The financial news is full of misinformation - reported by unreliable pundits and taken at face value by an easily swayed public that doesn't really no better. That's why today, Bill Bonner relays the four basic truths he's discovered during his 30 year career in the financial industry to help you make sense of it all. Read on...


Extra!
How YOU Can Help Pass the Swiss Gold Referendum

Grant Williams

For those who doubt the effectiveness of the Swiss Gold Initiative, Grant Williams has a few startling charts to show you. Today, he relays just how popular this movement is, and how you can actually influence the outcome... no matter where in the world you call home. Read on...


How Small Cap Stocks Saved the Market

Greg Guenthner

For most of the year, no one wanted small cap stocks in their portfolios. But over the last three weeks, few sectors of the market have performed better than small caps. Greg Guenthner explains how to use this to your advantage... and what to expect for the rest of 2014. Read on...


Why a Strong Dollar is the Mortal Enemy of Gold and Oil

Frank Holmes

Gold and oil are down because the US dollar is up, despite all the inflationary pressures the Fed has put on it. What's going on? Today, Frank Holmes, breaks down the U.S. economy’s current direction with several important charts. Plus, he's got a mining play for you that's prospering despite the current sentiment...