Fed Should Have Stopped After QE 1, Huszar Says

Nov. 13 (Bloomberg) — Andrew Huszar, a senior fellow at Rutgers Business School and former official at the Federal Reserve Bank of New York, talks about the Fed’s policy of quantitative easing and his role in the first phase of the program. Huszar speaks with Erik Schatzker and Stephanie Ruhle on Bloomberg Television’s “Market Makers.” (Source: Bloomberg)

What else could Bernanke have done?

QE1 at the time was defensible… but as we progressed, very quickly we began to see it was not working

So why wasn’t a decision made then to change course?

That’s a very good question and why I felt compelled to write this apology to America…

This was a program that was devised to help mortgage lending in America… mortgage lending decreased in that time…

Instead what we saw was massive Wall Street earnings

When should the Fed have stopped?

The Fed should have stopped after QE1 – when it was clear it wasn’t working – instead it has bought $2.5 trillion more bonds and put itself in a position where the exit is very uncertain…

…

Ultimately the tools [the Fed] has at its disposal don’t work, and what it has done instead is enable a “crisis-driven” political system

 

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