Goldman Sachs Defends Bernanke's Plan to Buy Assets

Updated

Goldman Sachs (GS) economists defended Federal Reserve Chairman Ben Bernanke's decision to pump billions of dollars into the economy, saying the move will boost economic growth.

The Fed's plan to buy $600 billion of assets will improve growth and reduce the risk of deflation, economist Jan Hatzius wrote in an e-mail to clients, Bloomberg News said.

The governments of China, Germany and Brazil have all criticized the plan, saying it will hurt the global economy.

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"The widespread hostility to the Fed's actions is misplaced," Hatzius wrote. "Downside risks to the economic outlook have declined significantly. U.S. inflation is unlikely to become a problem for years."

Bernanke defended his policies and dismissed the notion that the purchases will stoke U.S. inflation.

"I have rejected any notion that we are going to raise inflation to a super-normal level in order to have effects on the economy," Bernanke said on Nov. 6.

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