Divorced From Reality

A divorced from reality Chicago Fed bank President Charles Evans helped spur a rally in gold today with calls for aggressive monetary stimulus. Evans is in favor of QE3 and would have voted for it at the Fed’s last policy meeting. Like Fed Chairman Ben Bernanke, Mr. Evans believes that QE2 was successful. Successful at what—temporarily propping up stock prices and raising food and fuel prices? Unemployment hasn’t come down meaningfully and the economy is weaker now than it was when the Fed announced QE2 last year. Mr. Evans policy prescriptions are wrongheaded, but sadly I fear his views are shared by a majority on the FOMC.