A group of Republican economists aren't keen on the Federal Reserve's decision to buy $600 billion in bonds in an effort to spur the U.S. economy. Their criticism focuses on the potential for the aggressive strategy -- championed by Fed Chairman Ben Bernanke -- to trigger inflation and weaken the dollar, the Associated Press reported.
Former John McCain economic adviser Douglas Holtz-Eakin and ex-Treasury official John Taylor are among the nearly two dozen economists criticizing fellow Republican Bernanke in advertisements that will be published this week in The New York Times and The Wall Street Journal, the wire service reported. The ad contains a letter to Bernanke saying the decision to buy bonds should be "reconsidered and discontinued."
Economists and officials continue to debate the effectiveness of the Fed's aggressive monetary policy, which it launched earlier this month as the second phase of its quantitative easing program, the so-called QE2.
In response to the ad, a Fed spokeswoman said spurring the U.S. economy will require a coordinated effort among many entities, including the Fed, Congress and the Obama administration, the AP said.
Last week, Federal Reserve Governor Kevin Warsh, in a speech to the annual meeting of the Securities Industry and Financial Markets Association in New York, said the government's decision to buy more bonds could cause longer-term inflation because of a weakening dollar and higher commodity prices. He added that the government may be better off reforming the tax code to create incentives for companies to boost investment, according to a separate AP report.