“While printing money to buy bonds and reduce long-term interest rates is justified during crises like those in 2008 or 2020, the case for maintaining quantitative easing (QE) in more tranquil times is far from obvious.”
USAGOLD note: Velasco, Dean of the School of Public Policy at the London School of Economics, sees a kind of moral hazard for the government that borrows short-term for expediency thereby exposing itself to greater interest rate costs when rates go up down the road. That is why he believes quantitative easing needs to end. It supports a fiscal madness that could introduce “serious risks” – both economic and political. Though Velasco’s warning carries a ring of familiarity to those who follow the fiscal-monetary debate (former Treasury secretary Larry Summers recently issued a similar warning), it will most likely fall on deaf ears at both the White House and the Marriner Eccles building.