After months of "will they or won't they?" speculation, the Federal Reserve finally began to slow down its controversial $85 billion a month bond-buying program, also known as quantitative easing (QE). Many financial experts say that it's time to put QE to an end, but also say that the Fed's actions over the past few years are setting the stock market up for a big collapse.
During an appearance on CNBC's "Squawk Box" program, Jim Grant, editor of Grant's Interest Rate Observer, said that the central bank should have never intervened in the markets during the financial crisis of 2008 and 2009. According to him, the system should have been allowed to hit rock bottom.
"My fear is because that interest rates are suppressed, therefore earnings are inflated," Grant said during the program. "So when rates go up […] the 'hall of mirrors' is shattered and we look at each other and see what actually is real rather than what the Fed wants us to believe."
In addition to artificially inflating stock values, Grant said that QE has done the exact opposite of what it was intended to do. Instead of spurring economic growth, the program has actually stifled it.
Although the Federal Reserve said that the bond-buying program would be completed by the end of 2014, it may be backtracking on its commitment. James Bullard, president of the Federal Reserve Bank of St. Louis, recently told Dow Jones Newswires that he was considering pushing the program into 2015.
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