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Bernanke ‘Absolutely Right’ With Treasury Purchases, Biggs Says

Friday, 05 Nov 2010 11:15 AM

 


Nov. 5 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke’s decision to purchase Treasuries to boost the U.S. economy was “absolutely right,” hedge-fund manager Barton Biggs said.

“We still are in a very precarious situation,” Biggs, the managing partner of New York-based Traxis Partners LLC and former chairman of Morgan Stanley Asset Management, said in an interview today with Betty Liu on Bloomberg Television’s “In the Loop.” “The economy could easily tip back into a double dip, and Bernanke did what he had to do.”

The Fed said Nov. 3 that it will buy an additional $600 billion of Treasuries through June, expanding record stimulus and risking its credibility in a bid to reduce unemployment and avert deflation. Policy makers, setting a pace of about $75 billion of purchases a month, “will adjust the program as needed,” the Fed’s Open Market Committee said Nov. 3.

The central bank left unchanged its pledge to keep interest rates low for an “extended period” after Bernanke said it could be modified in some way. While Bernanke’s near-zero rates and $1.7 trillion in asset purchases helped end the recession, the Fed said progress has been “disappointingly slow” in bringing down joblessness close to a 26-year high.

--With assistance from Samantha Miller in New York. Editor: Nick Baker

To contact the reporters on this story: Inyoung Hwang in New York at ihwang7@bloomberg.net; Betty Liu in New York at bliu17@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.


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