The Federal Reserve’s stimulus measures aren’t having as strong an impact on the economy these days as people think, said former Fed Chairman Alan Greenspan.
Since the downturn, the Fed has sought to spur recovery by slashing interest rates to near zero and taken more unorthodox measures such as buying bonds like mortgage debt or Treasury holdings from banks, a stimulus tool known as quantitative easing that injects liquidity into the economy to keep rates low and encourage investing and hiring.
Critics dub quantitative easing as printing money out of thin air that will fuel inflationary pressures down the road.
Either way, the Fed’s policies aren’t having much of an impact, especially while banks hold off on lending out all that fresh money.
“I’ve not commented about Fed policy since I got out of office, but I will say this: that whatever the Fed is doing, whether you like it or not, it’s not actually, in my judgment, having a major effect,” Greenspan told CNBC.
Read More at moneynews.com . By Forrest Jones.