Former Federal Reserve Governor Kevin Warsh told CNBC’s “Squawk Box†that the Fed’s wishy-washy language and behavior has been spoiling the financial markets. Every nuanced speech of central bankers can influence markets, making it impossible for Americans to get a true idea of how the economy is behaving. Warsh finds it disturbing that the Fed has run its quantitative easing and interest rate experiments for 7 years while ignoring real economic indicators.
Warsh believes Fed officials have fallen prey to “groupthink,†which has put them completely out of touch with normal Americans. In this 2-part interview,Warsh says exactly what Peter Schiff believes, only less pointedly — not only has the economy not legitimately recovered, but it’s in for a rude awakening when the Fed’s policies drag it down again.
Another remarkable thing about this interview is the lack of push-back from the CNBC anchors. In fact, they agreed with Warsh that the Fed is relying too much on stock market performance to inform its decisions. Warsh concluded that central bankers need to change their attitude:
The most important thing that all central bankers should have right now is humility. We have never run this experiment, which we should all describe as radical. The idea that we somehow suggest that it is riskless to stay at these sorts of rates 7 years into a recovery strikes me as unnecessary.â€
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Part 1 (Video Length: 00:02:23)
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Part 2 (Video Length: 00:04:21)
