By Abby Schultz, Special to CNBC.com
Fund manager Jeremy Grantham, long a Federal Reserve critic, issued a blistering attack on Fed policies Wednesday, likening its strategy of low interest rates and monetary easing to a Halloween horror movie that is dangerous and destabilizing to the economy. "In almost every respect, adhering to a policy of low rates, employing quantitative easing, deliberately stimulating asset prices, ignoring the consequences of bubbles breaking, and displaying a complete refusal to learn from experience has left Fed policy as a large net negative to the production of a healthy, stable economy with strong employment," Grantham, chief investment officer of GMO, an investment management firm in Boston said. Grantham's quarterly note to clients came with a mock horror movie image titled, "Night of the Living Fed: Something Unbelievably Terrifying." ( Click here to read the note.)
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"In my opinion, capitalism has been manipulated far more, and more dangerously, by the last two Republican-appointed Fed bosses than everything else added together," he wrote. "It is naïve, if fashionable, to blame the rather lame current Administration for all of our problems. They inherited a cake already baked or, better, "half baked," and the master bakers were the current and former Fed bosses, and the underbaker (not quite an undertaker, but nearly) was Hank Paulson with his "contained" sub-prime crisis."