- FDIC's Bair Cautions on Risks in Bank Break-Up Plan
- Wednesday's Economic News Crunch Could Tilt Markets
- Call Me Crazy: Confessions of a Black Friday Shopper
- US Firms Hit by Payroll Taxes at Exactly the Wrong Time
- Citi Mortgage Reveals Something the US Treasury Won't
- Fed Sanguine About US Recovery, Worried on Jobs
- Amended Berkshire Filing Reveals No 'Secret' Holdings
- Holiday Guide to This Season's Smartphones
- In Time for Holidays: More Gloom and Doom on Economy
- Citi Mortgage Reveals What Treasury Won't
- S&P to Hit 1,200 by Year-End: Chief Investor
- Amended Berkshire Hathaway Filing Indicates No Secret Stock Stakes at End of Q3
- Facebook's Biggest-Ever Holiday Shopping Season
- Facebook's New Dual Class Structure - Slow Steps to an IPO
- 5 Big Bank Stocks Investors Should Consider: Strategists
- Gambling Drunk, Texting to Live And America's On Sale - Your Emails
- Nov. 24: Unusual Volume Leaders
- NBA D-League On The Rise
MOST SHARED
- The 'Real' Jobless Rate: 17.5% Of Workers Are Unemployed
- Wednesday's Economic News Crunch Could Tilt Markets
- NBA D-League On The Rise
- Trading Block
- Australia Wheat Exporters Face Challenges: GrainCorp
- Japan Export Rebound Eases Fear of New Recession
- Ron Paul's Plan to Audit Fed a 'Serious Attack': Mishkin
- The Social Media Gaming Threat
- Australia's Economy Upswing to Last Years: Central Banker
- Cramer’s Christmas List
Text Size 
I promised Squawk viewers that I would get Hugh’s final answer and here it is. My question was: Why is Quantitative Easing the right strategy for the Fed and the Bank of England and will it work?
This was Hugh's answer:
"When I think of QE I think about the quantitative theory of insanity. This is an idea from the British writer Will Self who says there is a fixed portion of sanity in the world at any one time. So as one group becomes more sane, another group becomes more insane.
In our case, as the Fed and the BOE have become more sane by printing money the so called gurus like Soros and Buffett suffer a deficit of sanity. They are saying the actions of these central banks will lead to inflation. I contest that.
The central banks are replacing the dollars and pounds destroyed in unprecedented amounts by the recession. I am a friend of the central banks – they understand the history of the 1930s and are trying to prevent us returning there.
This destruction of dollars and pounds is creating a scarcity of money. We are losing dollars and pounds from the system.
Perhaps the real question is whether the central banks should be even more aggressive. The Fed is creating $2 trillion, but maybe they should be creating $10 trillion. I don’t think 2 is the right number.
Based on the Taylor rule on employment and inflation, the Fed's own forecasters think interest rates should be at minus 5. That would imply a level of money creation at $10 trillion.
The private sector has got it wrong. The private sector is refusing to spend and that is going to have the effect of making money even more scarce. That will push us closer to depression.
That is why I say the central banks are our friends; they are trying to help the economy recover while the likes of Buffett are arguing against these actions. I think he is wrong."
Print
Email
- Remember when auto shows were major events where new models could generate buzz?
- CNBC’s Mike Huckman visits a cutting-edge plant to see how the flu vaccine of the future is being made.
- People who bottle up their anger at work are up to five times more likely to suffer a heart attack, a study found.
- Playboy will outsource its publishing operations in a bid to become profitable again.
- A new McDonald's in Manhattan is the nation's first to sport a sleek, chic interior imported from stores in London and Paris.
- For nearly three decades, these on-call experts have been dishing advice on how to – and not to – cook turkey.
Data is a real-time snapshot *Data is delayed at least 15 minutes