David Malpass, president of Encima Global Research firm, isn't too impressed with the Federal Reserve's decision to maintain a huge balance sheet for years and to refrain from an interest-rate hike until at least next year.

The Fed's balance sheet has bulged to $4.5 trillion through quantitative easing, and it has kept its federal funds rate target at a record low of zero to 0.25 percent since December 2008.

"Far from being neutral or stimulative, these policies have caused huge distortions in financial markets, contributing to slow growth and falling median incomes," Malpass writes in The Wall Street Journal.

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

GDP growth has averaged only about 2.2 percent since the recession ended in June 2009.

"Given the tendency of government programs to expand and become permanent, the risk now is that the Fed's large pool of assets and liabilities evolves into a semi-permanent government-controlled investment fund," says Malpass, an official in the Reagan and George H.W. Bush administrations.

And that amounts to "a U.S. version of the sovereign-wealth funds created by other governments" he says.

"The longer the Fed holds its portfolio, the greater the danger that political forces will nudge its investments away from Treasury securities," Malpass notes.

"Instead of tackling a complex new investment mission, the Fed should establish a clear portfolio wind-down process that would let it concentrate on monetary and regulatory policy rather than investment management."

Meanwhile, Harvard economist Kenneth Rogoff says Fed officials aren't truly concerned about inflation now, as they focus on preventing another economic downturn.

"You've just gone through this epic recession, Inflation has been below target for a really long time," he tells CNBC. "If inflation goes above target, [Fed officials] are going to say they care, but they really don't care. The big game here is not to have another double dip."

Editor’s Note: 5 Shocking Reasons the Dow Will Hit 60,000

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