Tags: Dick Bove | Federal Reserve | policy | anti-capitalistic

Dick Bove: Fed Policy Is 'Anti-Capitalistic'

By    |   Tuesday, 15 July 2014 12:29 PM

Many economists don't like the Federal Reserve's approach to monetary policy and financial regulation. Count bank analyst Dick Bove of Rafferty Capital Markets as one of them.

He doesn't think much of the Fed's "macroprudential policy," designed to prevent another financial crisis.

The central bank has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008 and has expanded its balance sheet to a record $4.4 trillion through quantitative easing.

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"The whole financial system and economy of the United States is now a laboratory experiment, as macroprudential policies are put in place by those very people who failed to understand or correct the excesses that developed in the last financial crisis," Bove wrote in a commentary obtained by CNBC.

"More problematic is the fact that macroprudential policy requires regulators to control the growth and direction of the U.S. economy. It denies the right of the private sector to grow in any direction it chooses without the explicit control of the government. It is anti-capitalistic."

David Rosenberg, chief economist at Gluskin Sheff + Associates, also sees the central bank's policy as flawed.

"This Fed is erring on the side of uber-accommodation far too long and is playing with fire," he wrote in The Financial Post of Canada.

The real fed funds rate may reach negative 0.5 percent by the time full employment is reached, Rosenberg said.

"If this forecast proves prescient, it is difficult to believe inflation expectations at some point won't become unhinged and send long-term bond yields substantially higher," he noted.

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Many economists don't like the Federal Reserve's approach to monetary policy and financial regulation. Count bank analyst Dick Bove of Rafferty Capital Markets as one of them.
Dick Bove, Federal Reserve, policy, anti-capitalistic
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2014-29-15
Tuesday, 15 July 2014 12:29 PM
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