Tags: Boehner | CNBC Fed | easing

Boehner to CNBC: 'We All Knew This Day Was Going to Come'

Thursday, 20 Jun 2013 08:50 PM

By Dan Weil

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Federal Reserve Chairman Ben Bernanke indicated Wednesday that the Fed may start tapering its quantitative easing by the end of this year and finish QE around the middle of next year.

That's none too soon for House Speaker John Boehner, although he sympathizes with Bernanke's situation.

"He was dealt a pretty tough hand. I've sat through a lot of meetings with him, ... and he helped us navigate through a very difficult crisis," the speaker said, according to CNBC's transcript of his interview with Maria Bartiromo.

Editor’s Note: Put the World’s Top Financial Minds to Work for You

"But this quantitative easing, I've been concerned about it. I think it's over the top and puts us in very dangerous territory. I understand his concern is more about deflation than it is inflation, but you can't continue to debase the currency long-term; it's just not a healthy thing."

Interest rates can't stay at virtually zero for a long time, Boehner says. The federal funds rate target has stood at zero to 0.25 percent since December 2008.

"You're telling investors you only have one place to go, and that's to the equity market," Boehner said. "We all knew this day was going to come – when he was going to start to back up a little bit; better now than later."

Meanwhile, Boehner says the economy worries him. "We've had this anemic economic growth for four years now," he said.

"I think the president's policies are getting in the way of investors and entrepreneurs willing to invest in our economy. They're just sitting on their hands."

The Affordable Care Act is one problem, Boehner says. "You've got Obamacare that's got a lot of employers scared to death, because they don't know what the rules are going to be."

A host of other policy issues weigh on the economy too, he says.

"You've got an EPA [Environmental Protection Agency] that continues to bring out more and more rules," Boehner said.

"We need to fix our tax code, we need to deal with our spending problem. And if people begin to understand that we're dealing with these issues, I think the picture clears, people are more willing to invest."

A stock market plunge obviously won't help matters, Boehner says. The Standard & Poor's 500 Index dropped a combined 4 percent Wednesday and Thursday. It posted its biggest one-day drop Thursday since November 2011.

"People open their 401k statements at the end of every quarter, and for most people it's an indication of their wealth," he said.

"But the sell-off is in large part due to the policies that we've had coming out of the Federal Reserve. You can't continue to deflate our money and have equity markets go without some change."

Experts say the stock market drop has scared investors. “It’s been so violent that it puts people on the sidelines,” James Paulsen, chief investment strategist at Wells Capital Management, told Bloomberg.

“The buyers are saying ‘I’m going to wait and see.’ They’re not running to the exits. but they’re also not willing to catch a falling knife.”

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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