Hedge-fund manager David Einhorn is a big critic of quantitative easing — and he thinks the U.S.'s current monetary policy should essentially be reversed.
Peter Foley/Bloomberg via Getty Images
Speaking at lunch time Thursday to guests at The Economist's annual Buttonwood Gathering in New York, Einhorn, who manages nearly $8 billion, argued that zero-level interest rates were stunting the country's economic growth. (Read More: Wall Street Gaming Romney Win: 'Trillions at Stake)
While low rates may have been necessary in the depths of 2008, Einhorn said, years of diminished returns to savers have begun to change consumer behavior, creating a "hoarding" effect rather than spurring spending.
Restoring jobs, consumer activity, and higher GDP levels would require an about-face by the Federal Reserve, Einhorn added. But such a shift would have to be accompanied by "careful messaging" because an abrupt hike in rates could risk a "blow up" of certain derivatives books.
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Einhorn said he also questioned the wisdom of economists who back continued QE — a group that seems increasingly at odds with traders like him. "Aggressive policies" are creating "tail risks," he said, and a "reflexive groupthink" has developed among the country's leaders that leaves little room for economic policy debate.
-By CNBC's Kate Kelly
@KateKellyCNBC
