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The dangers of dragging the Fed into politics

Business Times - 12 Nov 2010


The dangers of dragging the Fed into politics

By LEON HADAR
WASHINGTON CORRESPONDENT

THE US Federal Reserve's decision to inject more money into the financial markets is being blasted by a prominent political figure - and I'm not referring here to the leaders of China, Germany or Brazil.

The former governor of Alaska and republican presidential candidate John McCain's 2008 running mate - and quite possibly a 2012 presidential candidate - may not be a leading economic policy wonk but Sarah Palin is now bashing the policies being pursued by Ben Bernanke, the Fed's chairman. She argued that the new round of quantitative easing (QE2) through the buying of US$600 billion in long-term US Treasury bonds - purchases that will total up to US$900 billion and be completed by the end of the third quarter of 2011 - posed a major threat to American and global economic recovery and could ignite inflation and devalue the US dollar.

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