Open letters tend to stir up some controversy. The one written to Federal Reserve chairman Ben Bernanke is no exception, as academics, GOP strategists and other experts let Bernanke know how they felt about Quantitative Easing.

About the same time this open letter became public, The Wall Street Journal interviewed a group of 49 economists for its monthly economic forecasting survey. The Fed’s decision to utilize quantitative easing to accelerate economic growth was the main focus of this month’s forecast. Survey respondents did not expect to see a big impact on economic growth with a projected quarterly economic expansion of 2.4%, seasonally adjusted. This small amount of growth is not expected to do much to bring down unemployment rates.

Future Quantitative Easing Plans

The Fed is waiting to see the impact the first round of quantitative easing has on the economy before continuing with any bond-buying plans. The current course of action is for the fed to inject $600 billion into the economy by purchasing long-term treasury securities. Of the billions of bonds the Fed plans to purchase through June 2011, $300 billion will go into maturing mortgage re-investments. Economists do not believe that there will be another round of quantitative easing after the fed evaluates the affect the first round of purchases will have on the economy.

There has been much debate over whether the bond purchases would be able to speed up growth and improve the economy.

According to The Wall Street Journal, “Of the economists surveyed, 29 said they would have voted against the latest round of asset purchases were they members of the Federal Open Market Committee, the Fed’s policy-setting panel; 16 said they would have backed the move.”

Conservatives Publicly Reject QE2

This “new and improved” version of quantitative easing, dubbed QE2, has not been around long enough for regulators and forecasters to make conclusions on its ultimate impact. However, this does has not stopped critics from voicing their opinions on the potential negatives that could come from QE2. Earlier today an open letter written to Ben Bernanke, economists pushed for him to reconsider the Fed’s quantitative easing plan.

The letter contained 23 signatures and can be read in full on the Wall Street Journal website. One of the most prominent concerns voiced was the possibility of inflation growing out of control, a common risk with quantitative easing.

“We disagree with the view that inflation needs to be pushed higher, and worry that another round of asset purchases, with interest rates still near zero over a year into the recovery, will distort financial markets and greatly complicate future Fed efforts to normalize monetary policy,” the letter said.

Besides hyperinflation another problem, that can arise is with the world currency market. Critics worry how this will impact America’s trading relationship with the rest of the world considering the decreased value of the dollar could negatively affect world markets. The overall results of the survey show forecasters do not expect to see major economic growth, a modest expectation compared to the conservative analysts. Some good news came from the monthly economic forecasting survey: the probability of revising the recession in the next year is at a six-month low of 16%.

Here’s a humorous, critical and animated take on the Fed’s monetary policy:

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