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Streettalk Advisors CEO Roberts: Fed is Wall Street’s ‘Drug Dealer’

By Dan Weil   |   Tuesday, 13 Mar 2012 08:22 AM

The Federal Reserve has overdone it with its easing moves that have followed the financial crisis, says Lance Roberts, CEO of Streettalk Advisors.

The Fed’s policy has played a major role in the stock market’s doubling over the past three years, he tells Yahoo. But the policy also is causing inflation, Roberts says.

“The problem is that each one of these [easing programs] has had less and less relative effect on the economy as well as the markets,” he says.

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

The latest package — Operation Twist — had “a marginal effect, but not a lot,” Roberts says. Now the talk is that the Fed will adopt sterilized quantitative easing (QE).

“There was a great article saying markets are addicted to quantitative easing,” he says. “The Fed has become an official drug dealer to Wall Street. The issue now is what are we going to do from here? My concern is [the Fed] cannot do much.”

And why is that? "Every time you implement QE, you create inflationary pressures,” Roberts says. “Oil prices go up, food prices go up, and the average American is not seeing wage increases.”

Many experts expect central banks around the world to continue their accommodative policy.

"The major central banks have learned there are deep, pernicious problems," Nathan Sheets, head of international economics at Citigroup, tells Bloomberg. So they are adopting "a more simulative stance of monetary policy."

Editor's Note: You Owe It to Yourself to Know What Obama and Bernanke Are Hiding From Americans

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