Federal Reserve considers buying new type of bond-buying in order to subdue worries about future inflation. The aim of the program is to neutralize fears stemmed from the possibility that FED money printing to aid recovery may fuel inflation. The Wall Street journal reports that the plan will progress according to the following scenario: FED will print money to buy long-term mortgage or Treasury bonds, but immediately will borrow back the money for short-periods at low rates. But there are many critics against this “sterilized” quantitative easing. For instance Jim Grant describes the new policy as “manipulation the value of the currency”. He mentions that repressing interest rates puts the economy on more risky position. Grant’s take can be categorized under three items:
· Unintended Consequences could be harmful & Unbalanced
· FED should learn from 1920-1921 Depression
· U.S. Policymakers are Prolonging Symptoms of Recession
Maria Bartiromo: “What are the alternatives?”
Jim Grant: “Capitalism! Capitalism is an alternative to what we have now. I highly recommend it.”
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