Former Federal Reserve Official: ‘I’m sorry, America’ for QE

The Federal Reserve has been attempting to resuscitate the United States economy with its aggressive $85 billion per month bond-buying program while also keeping interest rates artificially low. This was initiated by Fed Chair Ben Bernanke and will most likely be increased by his successor, Janet Yellen, who wants to improve the labor market.

This year alone, there have been a few Fed officials that have lambasted QE and have conceded that it has been a failure. One of the latest central bankers was Fed Dallas president Richard Fisher, who believes the current policies will lead to another crash.

Well, it seems another official at the Fed has similar sentiments.

Appearing on CNBC on Tuesday and writing an op-ed piece in the Wall Street Journal on Monday, former Federal Reserve official Andrew Huszar issued an apology to the country: “I can only say: I’m sorry, America,” he wrote. “The central bank continues to spin QE as a tool for helping Main Street. But I’ve come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.”

Speaking on “Fast Money,” Huszar explained the Fed tried to have another tool in its arsenal to revive the economy, but QE wasn’t working as the Board of Governors had intended it would. He is now concerned at the prospect that QE could last for years.

“I think the real issue is that the Fed has expanded its tool kit so dramatically, and really there are some real questions as to how potentially it unwinds, when it unwinds,” the Rutgers Business School senior fellow said. “We saw this past summer there was this announcement of potentially a taper and the markets actually tanked, and after that the Fed backpedaled. What’s going to happen if we go on for months, years longer?”

He added that QE prevented the concept of reining in the banks that are deemed “too big to fail.” By increasing the amount of money in circulation, according to Huszar, it increased the power of the “banking cartel” in the country: “0.2 percent of banks control 70 percent of assets in this country.”

The Fed’s QE has led to a substantial jump in the money supply, price inflation can be seen by most households at both the grocery store and at the gas pump and the unemployment rate is in the low- to mid-20s. Right now, it’s costing $85 billion each month to keep the Dow above 15,000.

As Huszar alluded to, the media and officials kept repeating the notion that the Fed would taper QE this past summer. However, the central bank didn’t and only one person in the media knew it wouldn’t: Peter Schiff.

When will Bernanke make a public apology?

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