Even Richard Fisher Thinks the Fed Has Overstayed Its Welcome...
...at least when it comes to encouraging the easy money machine to keep on a-chuggin'.
Check out 'Is America's Decline Exaggerated or Inevitable?' The Role of Monetary and Fiscal Policy before the Society of American Business Editors and Writers 2011 Annual Conference, April 8th:
Personally, I felt the liquidity needed to propel our economy forward was sufficient even before the FOMC opted last November to buy $600 billion in additional Treasuries on top of the committee’s pledge to replace the runoff of our $1.25 trillion mortgage-backed securities portfolio. I argued as much at the FOMC table. I considered the risk of deflation and of a double-dip recession to have receded into the rearview mirror. In fact, I gave an interview to my introducer here, Mr. [Brendan] Case, that was published under his byline in the Dallas Morning News on Aug. 26, 2009, in which I said the recession was over and the long slog of recovery from the Great Recession had begun. Last November, I felt the problem was not the lack of liquidity in the economy, but that regulatory and fiscal uncertainty―the handiwork of fiscal authorities and lawmakers, not the Fed―was inhibiting the deployment of that liquidity into job creation. I also worried that these simultaneous programs would have the effect of buying up—of “monetizing”—the equivalent of most all of the U.S. government’s issuance of new debt through June of this year, a dangerous course for any central bank to embark upon.
The majority of my colleagues on the FOMC felt differently, and the committee voted to initiate the program now known as QE2. Whether you feel that we are providing a prudent amount of liquidity, as they do, or too much, as I do, I think you would be hard-pressed to dispute that there is now plenty of fuel in the tanks of American businesses to finance expansion and put unemployed and underemployed Americans back to work.
Having done our job, I see many risks to the Fed overstaying its welcome.
There are perceptional risks, for example. Our duty is most distinctly not to monetize―or even be perceived as monetizing―the debt of fiscally imprudent government. Throughout the history of nations, monetizing the budgetary excesses of governments has proven to be a direct path to economic perdition. Having already peeked inside that door, I feel strongly that we must now shut it, lock it and throw away the key.
Sorry, my dear favorite Fedhead, but it is a bit to late to repair the perception of monetization, that precedent has already been set and it is clear that the easy money whores have won. That kind of bad press can't be fixed, even by former Enron PR tramps.
JDA continues to be a one-woman Fisher cheering section, now if only someone at the overly excessive mahogany table would join me.