Ruchir Sharma, author of the hit Breakout Nations (2012), today mounted an attack on the Fed’s intended policy of a third round of quantitative easing.

Rather than driving up stock prices, thereby making consumers feel richer and encouraging them to spend more, QE3 is more likely to lead to a bubble in commodity prices. This would curb spending on other goods and limit growth. Moreover, it would hit the poorest – in both the US and emerging markets – the hardest, since a far larger proportion of their income is spent on fuel commodities compared with that of the rich.

The Fed should drop its QE3 plans if it is to avoid the twin evils of dampening growth and increasing inequality.