Fed Virtually Funding the Entire US Deficit: Lindsey

09-27-2012 • http://www.cnbc.com, By: Justin Menza

The latest round of extraordinary Federal Reserve stimulus is risky and leaves little room to maneuver should another crisis hit, economist Lawrence Lindsey told CNBC’s “Squawk Box” on Wednesday.

Lindsey said that with the Fed purchasing at least $40 billion a month in mortgage debt through QE3, “they are buying the entire deficit.” (Read more: Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates.)

“I have no problem doing extraordinary things in extraordinary times,” said Lindsey, a former White House economic advisor under former president George W. Bush who now runs his own consulting firm.

Lindsay said he agreed with the Fed’s first two rounds of quantitative easing. Now, with the economy now growing closer to its trend rate, “doing something that’s really out of the ordinary is risking things.”