Tags: Robertson | Fed | Easing

Julian Robertson: Fed Easing is Getting Out of Hand

Thursday, 15 Dec 2011 03:08 PM

Loose monetary programs have long enabled politicians to wiggle their way out of economic downturns in the past without making tough adjustments to the economy, but today's policies are getting out of hand, says Julian Robertson, head of the Tiger Management hedge fund.

Quantitative easing, often referred to as printing money, floods the financial system full of liquidity although critics say such moves, particularly popular among current Federal Reserve officials, pump up inflationary pressures.

"The area where we must watch is the printing presses and how fast they go. I find that almost no one worries about printing money anymore, I feel like I am a total reactionary," Robertson tells CNBC.
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"It is the easy way out of our problem, it's always the way politicians have faced up to financial problems but we may be out overdoing it this time, and it worries me tremendously, and I think that's really why you have so very much volatility right now."

Under quantitative easing, centrals banks buy assets from banks such as government bonds, pumping those institutions full of money in the process with the aim of stimulating ailing economies that seemingly refuse to pick up the pace of recovery on their own.

In the U.S. the Federal Reserve, under Chairman Ben Bernanke, has already launched two rounds of quantitative easing, known widely as QE1 and QE2.

QE1 saw the Fed buy $1.7 trillion in assets from banks, mainly mortgage-backed securities, while QE2 saw the central bank snap up $600 billion of Treasury bonds.

Should prices fall and suggest crippling deflation is rearing its ugly head and if unemployment rates remain stuck way above pre-recession levels, the Federal Reserve may unleash QE3 into the markets, experts say.

"We think additional easing in the form of QE3 is possible by the second half of next year, when we expect the economy to have weakened materially from fiscal policy-induced uncertainty," Michael S. Hanson, U.S. economist at Bank of America Merrill Lynch writes in a recent note, CNBC adds.

The Federal Reserve has not shut the door on a third round of quantitative easing, experts add, and will watch inflation rates carefully, the monetary authority said in a statement after its most recent meeting earlier in December.

"I think QE3 would be a welcome change to the status quo. I think the market was disappointed," says Francis Lun, managing director of Lyncean Holdings in Hong Kong, according to the Associated Press.

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Loose monetary programs have long enabled politicians to wiggle their way out of economic downturns in the past without making tough adjustments to the economy, but today's policies are getting out of hand, says Julian Robertson, head of the Tiger Management hedge...
Robertson,Fed,Easing
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2011-08-15
Thursday, 15 Dec 2011 03:08 PM
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