2013 Nobel Prize in Economics recipient Eugene Fama appeared on CNBC Tuesday afternoon and had a bit of an exchange with outspoken reporter Rick Santelli over the Federal Reserve’s policy of quantitative easing.
Santelli asked Fama about the possible risks associated with the monetary policy known as QE. “The effects are being greatly inflated by the accounts,” the economist replied, before arguing that the Fed’s recent actions aren’t affecting the economy all that much.
Despite that, however, Santelli continued to press the University of Chicago professor on the policy’s potential risks.
“They’re basically neutral events,” Fama responded. “I don’t think they do very much.”
Tensions began to rise as Santelli continued on, challenging Fama with several hypotheticals in which the Fed “poisons the well.”
As Fama rattled off an answer on why he thinks the QE policy has been “neutral,” Santelli interjected:
SANTELLI: Let me interrupt you.
FAMA: You didn’t let me finish…
SANTELLI: If it’s no big deal, then why don’t all central banks just do this to the nth degree and make it a constant day to day week to week event where they purchase what’s issued, keep interest low, and just target a low rate forever. Why won’t that work then?”
Fama’s answer? Said with a dismissive chuckle: “There’s so much confusion in what you said it’s difficult to answer.”
Watch below, via CNBC:
[h/t Business Insider]
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