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Tags: Alan Greenspan | Monetary Policy | Fed | Economy

Alan Greenspan: More QE Possible as Monetary Policy 'Has Done Everything It Can'

Alan Greenspan: More QE Possible as Monetary Policy 'Has Done Everything It Can'

By    |   Friday, 15 April 2016 12:42 PM


Former Federal Reserve Chairman Alan Greenspan said current monetary policy has done everything it can without another round of quantitative easing.

"Monetary policy … has done everything it can unless you want to put additional QEs on,” he told CNBC. 

“They're not helping that much in the sense that ultimately determines whether or not you're getting an effect from the QEs" beyond increasing price-to-earnings ratios in the stock market, he told CNBC.

"There's no real evidence that we're getting an impact on lending and on the economy picking up," he said.

Meanwhile, Japanese and European policymakers have pushed some key rates into negative territory. But negative interest rates "hurt in the sense that financial intermediaries require positive interest rates, but I wouldn't blame it on the negative interest rates, I'd blame it on the policies that got us to where we are," Greenspan said.

Anemic productivity growth and flagging corporate profits can be traced to too much entitlement spending as the world's population ages, Greenspan explained, CNBC reported.

"If you look at it in a bookkeeping sense, it's because gross domestic savings, everywhere across the spectrum — the political spectrum — has been severely undercut by social benefit increases in virtually every single major country," he said.

"It's fundamentally … a political problem," he said.

The Smarter Analyst has wondered if the Fed is actually considering more QE.

Seeing a weak economy and struggling middle class, the Federal Reserve is considering measures to stimulate the economy. In a speech earlier this week, Janet Yellen, Chair of the Federal Reserve, said the Fed has “considerable scope” for stimulating the economy, hinting that something akin to the Quantitative Easing programs of the late 2000s and early 2010s may be in the cards in the near term," the site reported.

Meanwhile, Seeking Alpha’s Matt O'Connor explains that equity markets are locked in an abusive relationship with a Fed that time and time again has failed to live up to its own promises.

"Not only has the Fed's policy decisions not functioned as well as they seemed to think they would, but further rounds of QE, low rates and general easing monetary policy will become less and less effective at impacting economic growth as time goes on," he wrote.

"For now, market onlookers are left wondering why equity investors are choosing to stay with the Fed when time and time again the Fed's promises of forecasted growth have fallen short, and their policies has failed to deliver a lively rate of fundamental economic growth."

(Newsmax wire services contributed to this report).

© 2021 Newsmax Finance. All rights reserved.


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Former Federal Reserve Chairman Alan Greenspan said current monetary policy has done everything it can without another round of quantitative easing.
Alan Greenspan, Monetary Policy, Fed, Economy
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2016-42-15
Friday, 15 April 2016 12:42 PM
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