“A former Harvard economics professor thinks the risks facing the banking system are so great that he has withdrawn nearly $1 million from his checking account, atBank of America.
And, oh yeah, he blames the Federal Reserve.
Terence C. Burnham, an associate professor of business and economics at Chapman University in Orange, Calif., told CNBC there is a “psychological connection” between the Fed’s low interest rate policies and the subsequent unrest in emerging market currencies. He also draws a connection between the central bank’s actions and the zero percent interest rate BofA offers on checking accounts.
Though Burnham acknowledged that Bank of America has little exposure to emerging markets, he worries that a sizable financial crisis could trigger a run on banks, leaving depositors unable to withdraw their money from the bank. But he implied any financial crisis could very well be the unintentional consequence of the Fed’s quantitative easing.
“The Fed has set interest rates at zero. So the reward is zero …”
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^^^^ Gets it.