Encima Global president David Malpass says the Federal Reserve is weakening the dollar and a third round of easing will only make things worse for economic growth and the currency.

“With all eyes on the debt-limit debacle and Washington's out of control spending, it's easy to forget the monetary-policy mess created by the Federal Reserve and its near-zero interest rate,” Malpass writes in The Wall Street Journal.

“But it is even more harmful for economic growth than our $15 trillion debt and might get worse if the Fed lurches toward QE3, another big wave of bond buying being urged by big-government forces.”

“Monetary policy's goal of market-based allocation of capital has morphed into subsidizing debt and manipulating the dollar downward.”

Malpass says Fed interventions have weakened GDP growth. “Banks are overflowing with liquidity already, but their lending is rationed by armies of federal regulators sitting rent-free in their offices,” says Malpass.

“The interbank market — which normally moves large sums from cash-rich banks to the growing banks that lend to new and small businesses — can't function properly with rates at zero.”

The U.S., says Malpass, is practically alone in the world in pursuing a near-zero interest rate and letting its central bank leverage to the hilt to buy up the national debt, Moreover, by choosing to pay savers nearly nothing, the Fed's policy is directly connected to the weakness in personal income.

"The zero-rate policy only benefits mega-borrowers like federal and state governments, big banks and big corporations-a group not known for much net private-sector job creation," Malpass says.

"The select few are able to borrow cheaply, but corporate proceeds often go abroad while most government borrowing just encourages deficit spending."

Reuters reports that some analysts think that rather than launch a third round of quantitative easing, the Fed is more likely to eventually cement its low-rate vow, perhaps by committing to keep its balance sheet bloated for an extended period or by weighting its securities holdings to longer maturities.