Fed crosses rubicon and sets off firestorm
New plan to buy Treasury debt ‘a step in the dark’
The Federal Reserve’s decision Wednesday to buy $300 billion in longer-term Treasury securities has ignited a firestorm, with analysts saying it will either cause a currency crisis or jolt the economy out of the morgue.
“We’re in a car heading for a cliff and the Fed has just stepped on the gas,” said Peter Schiff, the author of a best-selling book ‘Crash-proof’ and one of a handful of economists who worried about the economy long before it slipped
On the other hand, David Jones, chief executive of DMJ Advisors and a long-time Fed watcher, hailed Bernanke’s decision as a “turning point” for the economy.
The Fed’s plan now is essentially to print money to raise the supply of credit. It wants to push investors out of Treasurys into riskier assets, but investors might balk, said Ian Shepherdson, economist at High Frequency Economics.
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