Tags: America's Forum | economy | growth | borrowing | recovery | quantitative easing

Economist Wiedemer: It's Doubtful Fed Will Continue QE Tapering

By Courtney Coren   |   Thursday, 01 May 2014 07:23 PM

It remains to be seen if the Federal Reserve's announcement that it will continue to taper quantitative easing, even though the U.S. economy stalled in the first quarter, will hold, noted economist Robert Wiedemer says.

"We've tapered after QE1 only to find that the economy and stock market was in trouble, so we brought QE2. We tapered after QE2, only to find that the stock market and economy was in trouble, so we did QE3," Wiedemer told J.D. Hayworth on "America's Forum" on Newsmax TV.

"When we get into trouble, they're going to put the printing press back on if we need to pump up the stock market," he added.

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Even though the stock market is at a record high, "it's gone almost nowhere this year, barely up one percent, year-to-date," he explained. "So we're already seeing some impact from this tapering.... I'm sure that they will un-taper if we run into any real problems coming up in the next few months or a year."

The bestselling author of "Aftershock" said that it is "fascinating" that the interest rates have not gone up since the tapering began.

Another surprising factor is that "bonds have . . . been a good investment since the Fed started tapering, which makes no sense at all."

However, Wiedemer said that it's important to "remember that this whole recovery is fake."

"It's driven by massive money printing and massive government borrowing," he explained.

"We're going to borrow probably twice as much this year as our entire economy will grow."

"That's the government alone borrowing money. So let's not think that this is somehow growth that's on its own, is organic," he added. "It's not, it's stimulated growth."

The economist warns that it might be "fine to ride [the bubble] up, just make sure you get out before it goes down."

Wiedemer also warns that even though China's economy is growing, that its "bubble economy is even bigger than ours," and investors need to keep that in mind, as well.

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