The Federal Reserve's move to implement quantitative easing on an ongoing basis likely will not be much help to the economy and reflects growing fear from the central bank, former Fed governor Kevin Warsh told CNBC.
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The new iPhone 5 is displayed during an Apple special event at the Yerba Buena Center for the Arts on September 12, 2012 in San Francisco, California.
Thursday's decision to launch open-ended QEwas a move akin to what the Fed would have done "during the deepest, darkest days of the financial crisis and the panic" in what is, rather, "a suboptimal recovery, a lousy recovery," Warsh said.
The decision was unique in that it tied Fed policy directly to lowering the 8.1 percent unemployment rate. But Warsh doubted the policy will help.
"The Fed's goal is to be focused on the labor market in addition to other things," he said during a "Squawk Box" interview. "What concerns me about it is in my view the Fed can't do much more to lower the unemployment rate. The Fed is rightly dissatisfied. But the iPhone 5 is going to do more for the real economy than QE3." (Read more: Surge in iPhone 5 Sales Forecast)
Market participants already have nicknamed the latest easing move as "QE Infinity," in that it there is no specific amount the Fed has designated for the asset purchases traditionally involved with its quantitative easing measures.
Warsh said the decision reflects deep concerns at the Fed over the state of the global economy.
"I suspect they concluded that the economy is at stall speed or worse," he said. "The global economy is weakening. The developments out of Europe, while they might be dealing with some of the tail risks, Europe is in the early innings of a serious recession."
Consequently, the Fed finds itself trying to compensate for policy failures in Washington and likely will "over-promise and under-deliver," Warsh said.
"If we continue the policies we've been going down, then it would be taking risks we need not take as a country," he said. "If you look at the markets now, where asset prices continue to melt up, where asset prices are driven less by fundamentals and particular companies and more by speeches and policies that come out of Washington, you're taking these risks. Risks are highest in the economy when measures of risk are the lowest."
