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Credit Insights

Memo to Fed: Take a Vacation

Instituting another round of quantitative easing at this point will only be pushing on a string and could have many unintended consequences.

The Federal Reserve's actions during the credit crisis kept the financial system from completely breaking down. Between lowering the federal funds rate to an emergency range of 0.0%-0.25%, the acronym plans (TARP, TGLP, TALF, TAF, CPFF, CPP), and a $1.7 trillion quantitative easing program, the Fed has had a busy two years.

Memo to the Fed: Now that these programs have subsided and the economy is no longer in panic mode, why don't you take some time off? Don't try to micromanage the economy by implementing another round of quantitative easing. Give the economy some time to sort itself out and heal naturally. Let the markets find the clearing prices of assets without additional intervention.