Skip navigation

Current DateTime: 08:55:30 26 Nov 2009
LinksList Documentid: 24355697
  • Runway Angels

      The superbowl of fashion shows, models walk down the runway at the 2009 Victoria's Secret Show.

  • Smartphone Guide

      Here's a need-to-know guide to nine devices, based on features, price, network and platform.

  • Wines for the Holidays

      Not quite sure what wine to pair with Turkey or Creme Brulee? Our experts do.

FEATURED QUIZZES


Current DateTime: 08:55:30 26 Nov 2009
LinksList Documentid: 33793611
  • How Well Do You Know Your Bird?

      Let's talk turkey. Test your turkey knowledge and perhaps pick up a bit of trivia to trot out at your holiday meal.

  • A Healthier & Wealthier You

      Take the following quiz and find out how much you know about the impact of obesity on the health of the U.S. economy.

  • The Billionaire BFF's

      Philanthropists. Bridge partners. Hockey players. Which responses are based on facts from Buffett's and Gates' real lives?


Current DateTime: 08:55:30 26 Nov 2009
LinksList Documentid: 24890560
  • Winterizing Your Portfolio

      If 2009 was the winter of our discontent, will 2010 be a winter wonderland for investors? A lot depends on the recovery—or lack thereof.

  • Investor's Guide to Real Estate

      Some even say the long-awaited recovery is here. Regardless, buyers and sellers alike can profit from our guide.

  • Alternative Investing

      Stocks and bonds? Sure. But it's a big world out there for investors.

powered by digg
By: Geoff Cutmore, CNBC Anchor | 28 Apr 2009 | 06:03 AM ET
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?

Geoff Cutmore

Geoff Cutmore
CNBC Anchor

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."

© 2009 CNBC.com
Tools:
Print EmailAdd This share icon
  • digg share

CNBC HIGHLIGHTS

  • Ever wished your cab driver would stop nattering and just get to where you're going? Well that moment is near(er).
  • Eric Schmidt pledges to create a virtual copy of the Iraq National Museum at Google’s expense.
  • Bill Griffeth is taking a leave of absence from CNBC and Power Lunch for a year. Here's a message from Bill.
  • More shoppers than ever plan to comparison-shop this season. Who will benefit?
  • It may be the most unusual guide to business you'll read.
ADD COMMENTS
Remaining characters


Current DateTime: 01:44:15 26 Nov 2009
LinksList Documentid: 29778428

Current DateTime: 01:03:48 26 Nov 2009
LinksList Documentid: 29779196

Current DateTime: 01:07:49 26 Nov 2009
LinksList Documentid: 29779199

Current DateTime: 01:02:06 26 Nov 2009
LinksList Documentid: 29779198
  Data is a real-time snapshot  *Data is delayed at least 15 minutes
Global Business and Financial News, Stock Quotes, and Market Data and Analysis

© 2009 CNBC, Inc.  All Rights Reserved.
A Division of NBC Universal
Thomson ReutersThomson Reuters