Tags: David Stockman | Janet Yellen | Federal Reserve

Former Reagan Budget Head David Stockman: Yellen Doesn't Have a Clue

By Dan Weil   |   Wednesday, 13 Nov 2013 01:59 PM

Former White House budget director David Stockman has nothing but disdain for the Federal Reserve's massive easing program, and he doesn't think things will get any better under Janet Yellen.

The Fed vice chair is President Barack Obama's choice to take over as the central bank's chairman Feb. 1.

"Fed policy is off the deep end so far that we're in danger of financial instability of massive magnitude," Stockman told Yahoo.

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"I praise Sen. Rand Paul, R-Ky., for trying to stop this nomination. . . . Zero interest rates for six years is an invitation to massive speculation, carry trades, the best thing the 1 percent ever had happen to them."

Stockman, founder of private equity firm Heartland Industrial Partners, doesn't expect the Fed to exit its easing smoothly.

There is "no hope [that Yellen] — one of the architects of an utterly destructive, misguided policy — will have any clue how to get out of the corner that she and Bernanke painted themselves into," Stockman says.

"The faster they taper, . . . the more likely we can get out of this mess. But I doubt it."

Former Fed Gov. Kevin Warsh offers a more subtle critique of the central bank's policy. The trials and tribulations of quantitative easing "should engender humility on all sides," he writes in The Wall Street Journal.

"It should also correct the misimpression that QE is anything other than an untested, incomplete experiment."

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Related Stories:

Peter Schiff: Yellen Would Lead the Fed in a 'Dangerous Direction'

Steve Forbes to Moneynews: Yellen, Summers Both 'Pretty Sorry Choice' for Fed Chief

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