For example, after the crisis, the Federal Reserve, "rather than simply winding down its short-term liquidity facilities, continued to intervene through massive asset purchases," he writes in The Wall Street Journal.
"Many outside and inside the Fed are unconvinced quantitative easing (QE) is meeting its objective of spurring economic growth. Yet there is a growing worry about the Fed's ability to reduce its asset purchases without market disruption."
Just hints by Fed Chairman Ben Bernanke that the Fed might taper its QE was enough to send interest rates soaring earlier in the year, Taylor notes.
"Despite a massive onslaught of legislation and regulation designed to foster prosperity, economic growth remains low and unemployment remains high," he explains.
"Rhetoric aside, many both inside and outside the government quite reasonably seek to return to the kinds of policies that worked well in the not-so-distant past."
Some experts worry that the Fed's massive easing program is creating bubbles in financial markets.
"There is a threshold out there somewhere" where markets rise too far or the central bank's asset holdings get too big, and the Fed will have to react, Michael Gapen, a former Fed official and now an economist at Barclays, tells Bloomberg.
"The problem since the beginning of QE three is there isn't significant enough clarity for what is the stopping rule."
Related Stories:
- Hank Paulson: Another Financial Crisis Is 'a Certainty'
- CEI Senior Fellow Matt Patterson: Fiscal Crisis Represents 'Collapse' of Government Leadership
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