U.S. Sen. David Vitter (R-La.) expressed concern with the Federal Reserve's decision to implement another round of quantitative easing -- this time with no announced end in sight. Quantitative easing is a fiscal maneuver used by the central bank that seeks to provide a form of stimulus to the economy. The Fed purchases certain assets to increase their reserves and lower interest rates. Critics of this practice, such as Vitter, believe this printing of excess money to provide stimulus to big banks will prolong inflation and make it more severe.
"Chairman Bernanke and the Federal Open Market Committee are clearly feeling tremendous pressure to bailout the economy because of President Obama's struggle to turn around the jobless numbers," Vitter said. "The cost of this open ended easy money policy dramatically outweighs the short term benefits. The Fed's move today puts us on the fast track to rampant inflation and potentially a return to a world with twenty percent interest rates. Chairman Bernanke needs to show some restraint and allow this economy to develop based on the fundamentals rather than the sugar high this action provides the stock market."
Vitter had previously blocked the nominations of Jeremy Stein and Jerome Powell because they clearly support the current unprecedented activist monetary policies of the Fed. One of his expressed reasons for delaying their approval to the Federal Reserve was their support of this very practice of quantitative easing. Both Stein and Powell voted to support the measure today.