Dan Weil
MoneyNews
August 12, 2010
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| The Federal Reserve’s decision to expand its quantitative easing by purchasing more Treasuries is a dangerous one. | |
The Federal Reserve’s decision to expand its quantitative easing by purchasing more Treasuries is a dangerous one, says Keith McCullough, CEO of research firm Hedgeye.
“That could lead the country to the brink of collapse,” he wrote in a Fortune magazine column.
McCullough agrees with economists Carmen Reinhart and Ken Rogoff, who recently wrote that government debt in excess of 90 percent of GDP pulls down economic growth.
“It’s a point from which it’s almost impossible to return,” McCullough wrote.
Government debt will reach 62 percent of GDP by Sept. 30, the Congressional Budget Office predicts.
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“On July 2nd, we cut both our third quarter 2010 and full year 2011 GDP estimates for the U.S. to 1.7 percent,” McCullough says.
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