PIMCO CEO Mohamed El-Erian harshly criticized the Federal Reserve and chairman Ben Bernanke on Friday, saying not only are they willing to tolerate inflation but actually are trying to create it, with a “mess” left behind for their successors to clean up.
El-Erian (left) told CNBC the reason is that “the risks outweigh the rewards as the central bank tries to stimulate an economy that still is foundering three years after the financial crisis recession ostensibly ended.”
As the network notes, El-Erian has previously called the policy a “reverse Volcker moment,” in reference to former Fed Chairman Paul Volcker, who raised rates and deliberately put the nation into recession in the early 1980s to control runaway inflation.
“Not only will they tolerate higher inflation, not only will they wish for higher inflation, but they actually may target higher inflation,” El-Erian said during a “Squawk Box” interview.
The interview is a response to last week’s announcement that the Fed was embarking on a third round of quantitative easing that will continue until the economy reaches an unspecified target in the jobless rate. The announcement provoked a firestorm of response in many financial services circles.