WASHINGTON — A week after Federal Reserve Chairman Ben Bernanke defended the benefits of quantitative easing before a House subcommittee, the same committee invited a panel of economists who mostly questioned the efficiency of QE.

Summarizing the view of three of the panelists, David Malpass from Research firm Encima Global recommended that the Fed "Stop digging the hole deeper" and "walk back."

Peterson Institute for International Economics Senior Fellow Joseph Gagnon walked the opposite - and lonely way - considering that the Fed's current monetary policy is actually "too tight" and commenting that "The case for easy monetary policy is strong."

Gagnon was isolated as Stanford University economics professor John Taylor and Carnegie Mellon University economic policy professor Allan Meltzer also decried the Fed's current policy as ineffective.

The point is that the "overall effect is negative," Taylor told the House Financial Services Committee when asked who was benefitting the most from the Fed's quantitative easing.

The hearing was trying to answer the question "Near-Zero Rate, Near-Zero Effect? Is 'Unconventional' Monetary Policy Really Working?"

Meltzer's answer clearly sided with the "near-zero effect" opinion.

"No entity or agent in our government should have so much unrestrained authority," he said earlier in his written testimony.

"Current practice violates all our beliefs about checks and balances," he added. "It sets a terrible precedent that should be avoided. It carries high costs. And it achieves very limited benefits to our economy."

Taylor's answer was just as clear: "the Fed's unconventional monetary policy is not really working."

"Of course, this is contrary to the Fed's stated intentions," Taylor said in his written testimony.

"Ironically the ineffectiveness of these interventions and the disappointing economic performance during the weak recovery has led policy makers to intervene more," Taylor said, concluding "No one should want a continuation of this vicious circle."

The one thing all four panelists agreed on, however, is that a fiscal consolidation plan would help the Fed's policymaking decision.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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