WASHINGTON, Dec. 8 (Xinhua) -- The U.S. Federal Reserve's expansionary monetary policy to some extent has boosted U.S. economic growth, but the U.S. economy and business owners are confronted with great uncertainty due to political brinkmanship, says former Federal Reserve Chairman Alan Greenspan.
The Fed's long-term low-rate interest policy has some "buoying elements" in U.S. economic growth, but "the level of uncertainty about the very long-term future is far greater than at any time I particularly remembered," Greenspan said during an interview with CNN aired Sunday.
"Even though we have very major expansion of the balance sheets, it has not essentially spilled over in lending by commercial banks into the usual pattern that one sees when reserves go up," he contended.
Since the onset of the financial crisis, the Fed has kept its short-term interest rate at a historically low level and completed two rounds of quantitative easing (QE) programs.
It is now purchasing longer-term government debt and mortgage-backed securities at a pace of 85 billion U.S. dollars per month, dubbed as the QE3, with its balance sheet surpassing 3.9 trillion dollars.
"There is a political difference of significant dimensions between people who believe that the extent of government intervention has been so horrendous that businesses cannot basically decide what to do about the future," Greenspan said.
Two years ago the percentage of cash flow of business that is invested in any form of capital asset was at the lowest level since 1938, he noted, adding that it is improved somewhat but still extraordinarily low.
"And what we're observing there is with all this money coming in, all the profit, the cash flow, it cannot find adequate investments to use it," said Greenspan.
Janet Yellen, who is expected to become the first female chair in the Fed's 100-year history, is a "very good" economist, and "she knows exactly what is going on," he commented.
"She will do as well as anyone I can think can handle it. But there's a different type of problem that's going to be occurring. None of us has handled this before," he said.
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