Here's one view of "printing money"
A growing chorus of critics are sounding the alarm about QE2; in fact they think it has the potential to be the downfall of the US.
We know that's dramatic but that's effectively what widely followed strategist Dick Bove of Rochdale told us on the Halftime Report.
He believes the economic damage generated by QE2 could doom America to a fate similar to the Weimar Republic, which you'll remember disintegrated into Hitler’s chancellorship largely due runaway inflation and a government perceived as grossly inept.
Hopefully, the US isn't looking at something quite that extreme, but Bove did use that analogy to illustrate his point, which is QE2 makes more problems than it solves.
“A country (that) has a huge debt and then debases its currency and prints money" -- which is what we're doing now and what happened in Germany in the 1920's - "is creating a problem that’s structural and long-term in nature.”
"The time has come for the Fed to realize this is going to hurt the economy not help," says Bove.
Because some of these comments are rather extreme, it's important to note that ultimately Bove does not necessarily disagree with the Fed's actions - rather he takes issue with the speed and magnitude of it all.
"Historians can tell you rapid increase in money supply does not improve the economy," Bove says. However it does increase inflation. "The Fed may be creating a liquidity trap," he adds.
Bove is so troubled by the speed of QE2 he’s one of 23 market mavens who have signed an open letter to Ben Bernanke published by the WSJ – urging him to re-think the strategy.
Open Letter To Bernanke
They say “the Federal Reserve’s large-scale asset purchase plan (so-called “quantitative easing”) should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed’s objective of promoting employment.”
Usually the Fed doesn’t flinch in the face of criticism, but the people who signed this letter are so influential it led to the following response:
“As the Chairman has said, the Federal Reserve has Congressionally-mandated objectives to help promote both increased employment and price stability. In light of persistently weak job creation and declining inflation, the Federal Open Market Committee’s recent actions reflect those mandates.