The Risk of It All via Commercial Property Executive

When the financial crisis began, most investors agreed that the economy needed the various stimulus programs initiated by the administration and the easy money policies provided by the Federal Reserve. However, a quick look at the debt clock shows us that several years later we are stuck with a $16.8 trillion national debt and a Fed balance sheet of $3.1 trillion while job and economic growth remain tepid. It is not surprising that increasing numbers of investors wonder whether such policies—especially QE3—are becoming less a fundamental support and more a psychological crutch.

Real Estate Research Corporation’s (RERC’s) institutional investment survey respondents, in fact, take this view a step further. Once seen as one of the strongest assets to the economy, monetary policy is now viewed as contributing to investor uncertainty and increasing risk for investors. Some RERC survey respondents noted that such accommodative support by the Fed is “becoming more harmful than helpful,” and that it is “re-inflating asset bubbles.” Others noted that the “distortions and uncertainty” caused by the Fed’s easy money policies are “rewarding risk-taking and borrowing, while punishing saving.”

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