Last week Meredith Whitney declared that the government is out of bullets, and now Alan Greenspan is saying the same thing about his old place of employment, The Fed.
Reuters: The U.S. Federal Reserve has done all it can do to reduce unemployment and needs to worry more about the risk of inflation from the stimulus it poured into the economy, former Fed Chairman Alan Greenspan said on Sunday.
“I think the Fed has done an extraordinary job and it’s done a huge amount (to bolster employment). There’s just so much monetary policy and the central bank can do. And I think they’ve gone to their limits, at this particular stage,” Greenspan said on NBC’s “Meet the Press.”
Remember: this is a guy who knows his bullets, having fired them early and often at ever opportunity during his tenure at the Fed.
He’s probably right, though if anything he’s understating things a bit. The Fed, with its quantiative easing and massive expansion of the Fed’s balance sheet has already gone far beyond what many regard as safe.
Even if the Fed’s activites haven’t been dangerous and bubble-making, we should hope that the economy can somehow organically from here. If we’re still at the point where it’s on Bernanke to do the job, we’re screwed, especially in light of the higher Fed funding costs looming on the horizon…