Ultra-loose monetary policies by the U.S. Federal Reserve and the European Central Bank are throwing the world into "chaos" rather than helping the global economic recovery, Nobel Prize-winning economist Joseph Stiglitz said on Tuesday.

A "flood of liquidity" from the Fed and the ECB is bringing instability to foreign-exchange markets, forcing countries such as Japan and Brazil to defend its exporters, Stiglitz told reporters in a conference at Columbia University.

"The irony is that the Fed is creating all this liquidity with the hope that it will revive the American economy," Stiglitz said. "It's doing nothing for the American economy, but it's causing chaos over the rest of the world. It's a very strange policy that they are pursuing."

The U.S. dollar has weakened about 6.5 percent against a basket of major currencies [ .DXY 81.31  +0.09 (+0.11%) ] since the beginning of September as prospects for further monetary easing by the Fed have led investors to seek higher returns elsewhere.

That flow of dollars caused currencies to appreciate in many emerging market countries such as Brazil, which offers strong growth prospects. The Japanese yen [ JPY=X 80.45  +0.26 (+0.32%) ] has also hit record highs against the dollar on expectation of additional greenback weakness.

Recent actions by those countries to curb the strength of their currency were "necessary," Stiglitz added.

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