“Nouriel Roubini, the New York University economist noted for his pessimism and accurate prediction of the global financial meltdown, is worrying these days about the long-term impact of easy money policies by central banks.
Roubini said the quantitative easing (QE) programs pursued by the Federal Reserve and other central banks may overwhelm the economy with debt-strapped banks, businesses and consumers, according to The Guardian.
“Over time, you get zombie banking, zombie corporates, zombie households, which is damaging in the long term,” he told an audience at the World Economic Forum in Davos, Switzerland. Zombie banks refer to financial institutions that are insolvent but are propped up by cheap money from the government.
Roubini maintained there could be unintended consequences if central bankers err in their QE exit strategies, The Guardian reported.
“You’ve got QE2, QE3, soon you’ll have QE Infinity. What’s going to happen to the regime of monetary policy?” he asked.
“Most countries had inflation targeting. Now the U.K. is talking about throwing it away. What’s going to be the new anchor? How are we going to anchor people’s expectations of inflation over time?” …”
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