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North: QE3 is a Bad Idea

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  • Description

    Euler Hermes chief U.S. economist Dan North explains why more quantitative easing won’t work.

  • Duration 2:34
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Our next guest says the Fed will print more money this year but it will be to let all will come too late the consequences could actually be more damaging than any upside.

-- -- US economist that you learn as Hermes joins us now.

Dan first let's talk about whether what do you think of the Fed will do some more easing and when I know that that Wall Street was hoping for September -- you say now.

Well I think there's been some perception of firmer data recently which may be takes the pressure off the Fed a little bit.

They really don't wanna shoot that last -- until -- half to.

But the market's gotten way ahead of themselves and if you look at the data over the past few months it GDP was better than expected but is still pathetic -- one and a half percent.

The employment report was better than expected but still way below the 250000.

Jobs a month we need to stimulate the economy.

The housing market as Bernanke says still depressed to mean.

Starts we're we're down from they've been down four out of the six past months permits were up this month it was only second time in four months.

Our retail sales is up great last month first time in four months.

Philly Fed.

My empire state fed both of those were weak.

So.

There's there's some excitement about some firmness in the day and it's still it's really quite weak and gives a lot of impetus for the Fed sometime later this.

Here right that the density telling you yesterday you -- because on one hand.

It sounds like you feel like the Fed should act now -- -- that the data.

Are actually not as good as that that may think they are yet on the other hand you think that any easing is a bad idea don't you.

I do.

I'm trying to think what the Fed thinks it it should do as -- say it is somewhat firmer day at a perception of someone -- data takes the pressure off for September.

But I think the longer term look at the -- still quite weak.

And puts pressure on for some time this year not tell.

Why be a bad idea do you any easing at all why you hope that they don't do what.

It's it is terrible idea first off at Wal-Mart basically I mean we already have tremendous amount of excess liquidity sloshing around from chilly -- QE2.

How much more excess liquidity is gonna help we already have record low interest rates how much lower interest rates are really gonna help.

And more sell more importantly -- that's inflationary pressures out in the future.

And so it's -- and if you look at QE2.

Interest rates it actually backfired interest rates actually went up during QE2 not down because the bond market understands.

The printing moneys inflationary.

It say it's -- really.

It's it's a hot.

-- high risk low reward move alright well thank you Dan nor the markets disagree with him but we appreciate you being.

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