Is It Too Soon to Begin QE Tapering?

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Aug. 23 (Bloomberg) -- Lindsey Group CEO Larry Lindsey discusses the outlook for Federal Reserve monetary policy with Sara Eisen on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Director of the national economic council under george w. bush and a former fed governor as well.

Thanks for being here.

I've been looking forward to talking with you, larry.

Everyone is wondering when the taper is happening, and what are the risks associated with it?

Tapering is going to have to happen at some point.

But i think the thing we are learning is that it is a tough thing to do.

A little bit like having an addict on drugs, and we need them off.

It is kind of tough.

When they decided to start quantitative easing three, i thought they were going to keep doing it until we got the unemployment rate down to something like 6.5%. i am a little bit surprised.

You think it is too soon?

I was never a fan of quantitative easing to begin with, but if you lift the genie out of the bottle, you might as well get your three wishes before you try to put him back in.

And your characterization of the economy and the labor market?

We are still off.

We are not growing fast, i don't see any signs that we will have faster growth.

What is holding us back?

Whenever you have a financial crisis like we had, it tends to happen.

Reinhardt wrote about this, and i think it is the general story.

This gets to the core of our problem.

I was trained at harvard, so i am an activist.

I like to do things.

Are you a libertarian?

A little bit, but i like government to work well.

Big government doesn't always work well.

If you are cutting interest rates, for example, so back in 2008 or 2009, we tried to move that demand to 2008 and 2009. now we are borrowing with 2014 demands.

We have a problem here because pretty soon, tomorrow becomes today and then becomes yesterday.

And what are you going to do?

I think in general, government has not gotten a lot of bang for their buck.

The government did not use the time well, so i think we will do more of the same until we decide to do the important structural reforms that we need on the fiscal side and on the regulatory side.

Let's say the dodd frank is not working the way people thought it was.

Obamacare is not working the way people thought it was.

Social security and medicare are five years closer to bankruptcy.

We have got to make those changes.

We need to invest, create jobs but we have all these big problems out there.

We have an active fed on the brink of making a major move and we don't know who is going to carry it through.

It has to add uncertainty.

It does, and people were talking about things other than estimating term structures.

All of the people out there are qualified.

I think what people are worried about is the way this was handled.

It will be the seventh fed chairman of my life.

From the white house?

I think the president gratuitously insulted bernanke on the charlie rose show and opened pandora's box when he started mentioning names.

Before nominating him, he started defending one of the candidates and i don't think it was helpful to the process.

Do you care who the candidate is?

They are all my friends, i have known larry summers for 35 years.

Roger ferguson, you can go through the list.

The issue is not which one, it is the way the decision is being

This text has been automatically generated. It may not be 100% accurate.


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