Alan Greenspan, former Federal Reserve Chief from 1987 to 2006, thinks the Fed’s Quantitative Easing (QE) didn’t do much for the real economy.
Fed’s bond-buying program fell short of its goals, Greenspan told the Wall Street Journal (WSJ). Although boosting asset prices has been “a terrific success,” actually the “effective demand is dead in the water,” he said.
To sum up, yesterday’s announcement by the Fed that it does end QE3 (as widely expected) should bring more volatility and trouble to financial markets which have been dependent on QE for several years, this way influencing the stocks’ valuation. “I think that real pressure is going to occur not by the initiation by the Federal Reserve, but by the markets themselves,” Greenspan said.
Consequently, “gold is a good place to put money these days given its value as a currency outside of the policies conducted by governments,” Greenspan added.
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