The U.S. Federal Reserve has engineered a housing bubble to divert attention away from growing inequality in the country, according to controversial Societe General strategist Albert Edwards.
Edwards, who is known for his bearish views, argued that the Fed's surprise decision last week to keep its stimulus program intact would continue to inflate house prices in the U.S.. The idea behind the Fed's bond-buying program is to free up more funds so that banks have more money to lend to home-buyers. With more buyers on the market, and interest rates near record lows, house prices should increase.
Edwards referred to recent comments by Marc Faber, publisher of the Gloom, Boom & Doom Report, who said the Fed's decision to maintain its $85-billion-per-month quantitative easing program meant it was "climbing to a higher diving board."
(Read more: Albert Edwards: Bernanke, Osborne blowing bubbles)
But Edwards added: "I go further. I see growing inequality draining the swimming pool dry. The crunch, when it comes, will be ugly."
There is correlation between the rising U.S. house prices and soaring inequality levels, according to Edwards, who argued the was Fed deliberately pushing up prices to offset the impact of rising inequality. He also said that quantitative easing mainly helps the wealthy, by boosting the value of investors' stocks and bonds and enriching management figures via share buybacks.