Thoughts on business school, economics, NC State, and everyday life from an economist at NC State's business school
Monday, May 6, 2013
Dr. Doom on the Fed
NYU Stern's Nouriel Roubeni takes a hard look at the Federal Reserve's quantitative easing policy in a recent blog post. Roubeni, aka Dr. Doom for calling the 2008 recession, thinks the Fed is creating another asset bubble that will end badly. With interest rates at historic lows, investors are pumping more and more cash into risky assets: stocks, junk bonds, and emerging markets. Of course there is a significant downside to increasing interest rates, a move that likely would decrease investment. Roubeni thinks the Fed is likely to keep interest rates too low for too long, and we will see a repeat of the same movie we saw in 2006 and 2007 with the same sad ending.
Steve Allen is Associate Dean for Graduate Programs and Research in the College of Management at NC State University. He has appointments in the Department of Economics as well as the Department of Management, Innovation, and Entrepreneurship. Steve also is a Research Associate of the National Bureau of Economic Research, a non-profit research organization located in Cambridge, Mass.