The Federal Reserve’s move to stimulate the U.S. economy with a third round of quantitative easing will fail in its intention to boost consumer spending and lower unemployment rates, said Stephen Roach, former chairman of Morgan Stanley Asia and current Yale economist.

The Fed recently announced it will buy $40 billion a month in mortgage-backed securities from banks to pump liquidity into the financial system in a way that pushes down interest rates across the broader economy to spur recovery, a monetary policy tool known as quantitative easing.

Side effects to such a policy tool — branded by many as printing money out of thin air — include a weaker dollar, rising stock and commodity prices and mounting inflationary pressures.

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation

The move aims to fuel demand for financing and jolt the economy.

While the Fed has rolled out two rounds of quantitative easing since the downturn, this third round will fail in its aim to spur consumer spending and drive down unemployment rates in that it doesn’t address the size of the country’s debt burdens themselves, said Roach.

“I hobnob with all these macro theorists at Yale, they don’t see any evidence of a linkage between liquidity injections in the mortgage-backed securities industry and the labor market distress in the U.S.,” Roach told CNBC.

Consumer spending drives 70 percent of the U.S. economy and the only way to really get them spending again is to forgive some of their debts, mortgages namely.

“We need debt forgiveness for consumers who have bet the ranch on collateral that is now under water,” Roach said, referring to households that owe banks more than their homes are worth, CNBC added.

“It’s very contentious. And they need financial security that can only come from higher level of personal savings. And banks need to take write-downs.”

Fed officials have argued that they need to keep their feet on the economy’s gas pedal with unlimited quantitative easing to fuel recovery, as not intervening would mean allowing the economy to decline and unemployment rates climb even higher.

“The actions taken by the Federal Reserve last week provide significant additional support to the economic recovery,” said Boston Fed President Eric Rosengren, a noted inflation dove, according to Reuters.

“They should result in stronger economic growth, and return us to full employment more quickly than would be the case absent the policies.”

Editor's Note: See the Disturbing Charts: 50% Unemployment, 90% Stock Market Crash, 100% Inflation