Most Fed officials and various economic commentators are of the view that the US economy might be rapidly approaching a stage where it is possible to take out a large chunk of the recently pumped money without causing any harmful side effects. What they don’t tell us is that monetary pumping has given rise to various bubble activities. Hence, contrary to popular thinking, the massive money pumping has actually weakened the economy’s bottom line. If the Fed were to start taking some of the newly pumped money from the economy, it would set in motion an economic bust.
Source link: http://archive.mises.org/10125/the-fed-might-have-painted-itself-into-a-corner/