Hussman: More Fed Easing Will Trigger Economic Disaster

“Economist and fund manager John Hussman says another round of quantative easing would be far too costly.

“At this point, if the Fed buys Treasury bonds, it will predictably lose money — after interest — unless interest rates rise less than 20 basis points a year during the period that the Fed holds those bonds,” Hussman writes in a note to investors.

“Whether or not a speculator is willing to take a bet on lower yields, it’s highly unlikely that the Fed could buy Treasury bonds here at a yield of 1.5 percent and ever expect to unload its portfolio later at even lower yields, because yields would shoot higher merely on the anticipation of Fed liquidation.”

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