DAVID EINHORN: 'Central bankers behave as if we're still in crisis'

The Federal Reserve is looking for trouble, according to David Einhorn's Greenlight Capital.

In an investor letter sent Friday, Greenlight said that "we have central bankers who are determined to see flashing lights that aren't there."

Here's more from the letter, a copy of which was viewed by Business Insider (emphasis added):

"We are more than seven years into an economic recovery, yet central bankers behave as if we're still in crisis. Not only are experimental emergency policies being maintained, they are being expanded despite little evidence that they are needed or helpful. The newest manifestation comes from Japan, where the central bank has committed to monetize the entire government bond market if needed to keep the ten-year rate at zero. Leading economists are currently destigmatizing the idea of fiscal policy stimulus financed by direct money printing, so that goes into the coming attractions queue.

With U.S. unemployment at 5% and the core CPI rising 2.2% over the last year, it is difficult for the "data dependent" Fed to further rationalize emergency rates based on its official dual mandate. It appears that the real criteria for raising rates are:

 Market forecasters fully expect a rate increase.

 The most recent move in the S&P 500 was positive.

 There is no trouble in foreign economies or financial markets.

 There are no potentially destabilizing geopolitical events, including foreign elections.

 The Cubs win the World Series."

Greenlight returned 3.4% net of fees and expenses in the third quarter, bringing its year-to-date net return to 3.8%, according to the letter.