Do You Ever Feel Like You've Been Here Before? And Before? And Before? Richard Fisher Takes Us There Again
Federal Reserve Bank of Dallas President Richard Fisher said central bank efforts to stabilize credit markets produced an “abnormally” expanded balance sheet that policy makers must carefully shrink.
“We still have work to do,” Fisher said in a speech today in Dallas. Fed officials “must find ways to unwind the Fed’s much expanded balance sheet with the deftness to minimize credit-market disruptions and the timeliness to avoid inflationary pressures.”
Policy makers, whose purchases of assets such as Treasuries provided the banking system with more than $1.1 trillion in reserves held by Fed banks, are trying to determine whether the economy is strong enough to withdraw unprecedented stimulus. Fed Chairman Ben S. Bernanke said in prepared testimony released today that policy makers may raise the discount rate “before long” as part of the “normalization” of Fed lending.
“As to the economy, there remain many roadblocks that must be overcome before we will be able to breathe easy again,” Fisher told the World Affairs Council of Dallas/Fort Worth. The obstacles include the need to resume bank lending, rebuild business and consumer confidence and tackle public concern that the U.S. deficit will widen, he said. The risk that Congress will “politicize” the Fed is an additional challenge.
But wait, after we mention that part, let's be sure to get a nice long jerking off in (WSJ's Real Time Economics):
The official also said he’s confident the mortgage market will be fine after the central bank ends its purchase of housing-related bonds in March. The effort to buy $1.25 trillion in mortgage securities, which ends in March, was a “deliberate attempt to impact the markets, to keep rates in all private markets lower,” and “it succeeded,” Fisher told an audience in Dallas.
Currently the spread — or difference — between Treasury securities and mortgage debt is “abnormally low,” the official said. “As we have announced we would terminate that program it hasn’t expanded very much. That indicates, possibly, the markets are much healthier than they were before, so we did our job.”
fapfapfapfapfapcrap he got me x_@
I'm confused, does this mean it's fixed and we can all go back to normal now? If so, I'd like to see Richard Fisher invest one entire year's worth of Federal Reserve Bank salary in long-term Treasurys. Go long, Dick!
How redundant. Haven't we heard this speech 15 times in the last week by various Fed officials? Just wait, they aren't done marching them out in support of this "new era of Fed transparency" in which we get to bask. Awfully giving of them, isn't it?