Fed policies are setting markets up for long-term problems, all-star investor Rich Bernstein warns (via TradingNation)
Richard Bernstein warns unprecedented Federal Reserve policies may eventually cause serious harm.
He cites near record deficits and aggressive efforts to increase the money supply among the biggest problems. "I'm surprised that people aren't more concerned about what huge monetary growth means for the economy in the United States now," the CEO and Chief Investment Officer of Richard Bernstein Advisors told CNBC's "Bernstein is particularly concerned about the vast bond purchases the Fed is making right now.
"They've effectively turned the bond market into third grade soccer," Bernstein said. "There are no winners or losers. Everybody gets a participation medal, and one has to wonder by taking out the risk return consideration from a huge market — what that means for misallocation of capital, where a bubble is going to form and things like that."
Yet Bernstein, a CNBC contributor who has spent decades on Wall Street, acknowledges extreme monetary and fiscal measures have been crucial to avoid a depression-like scenario and get the economy back on track., he saw fundamental problems emerging in the economy and started to play defense.
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