Earlier I showed you the gaping hole in the heart of our prosperity: If you remove the job- creating machine of Texas from the U.S. economy, the nation has experienced job destruction that has occurred over the past 12 years in the middle-income quartiles....
Over the past six years, the monetary base has increased 340 percent, 10 times the rate at which the economy would have expanded in nominal terms had we not suffered the recent recession. One is hard pressed to argue that there is much efficacy derived from additional expansion of the Fed’s balance sheet. This is why I’ve been such a strong proponent of dialing back our large-scale asset purchases.More neoliberalism. More confidence fairy.
It is my firm belief that the fault in our economy lies not in monetary policy but in a feckless federal government that simply cannot get its fiscal and regulatory policy geared so as to encourage business to take the copious amount of money we at the Fed have created and put it to work creating jobs and growing our economy. Fiscal policy is not only “not an ally of U.S. growth,” it is its enemy. If the fiscal and regulatory authorities that you elect and put into office to craft taxes, spending and regulations do not focus their efforts on providing incentives for businesses to expand job-creating capital investment rather than bicker with each other for partisan purposes, our economy will continue to fall short and the middle- income worker will continue being victimized, no matter how much money the Fed prints.
I don’t want to ruin your evening after such a pleasant dinner. But if you wish to know who is at fault for hollowing out the welfare of middle-income workers and the American economy, kindly do not look at me or my colleagues at the Fed. When you go home tonight look at yourself in the mirror. We at the Fed are providing more than enough monetary accommodation. You elect our fiscal and regulatory policymakers. It is time for them to do their job, to ally themselves with us to achieve a fully employed, prosperous America. Only you, as voters, have the power to insist that they craft policies that are needed to restore American prosperity. Please do so.
Well, at least it ends the myth of monetary policy being the answer. ZIRP and QE 1, 2, and 3 haven't done squat other than elevate asset prices higher "than they would have been otherwise," according to the Fed.
Bank For International Settlements
Richard W Fisher: Policies needed to restore American prosperity
Richard W Fisher | President and Chief Executive Officer of the Federal Reserve Bank of Dallas, from concluding remrks before the Dallas and Fort Worth chapters of Financial Executives International, Dallas, Texas, 11 February 2014
5 comments:
He really doesn't understand anything. "Copius amounts of money?" Seriously? Put it to work? Doing what? Adding to inventories of goods that no one will be able to buy?
Holy Cow this is bad!! How can someone is such a position of power be so utterly wrong, not just about the macro economy but the institution he is a part of!!
Fisher: "banks lend out the reserves..."
Moron.
It's true, Fisher has absolutely been begging congress to spend money or cut taxes to make the economy grow and provide better regulation to encourage business. He is the most vocal of all the Fed heads to directly criticize the austerity policy of the American public. I'd love for him to be in the same room as Ted Cruz. When he says that current shrinking, "Fiscal policy is not only “not an ally of U.S. growth,” it is its enemy," What else could he do? Run into the halls of congress and light off fireworks? Seriously, what other power does he have besides giving speeches goading congress several times a week. He gets on CNBC a few times a year and says it, where they are hostile toward fiscal!
The other economists, like Yellen can't go a week without talking about the dangers of unsustainable debt while at the same time promoting greater free trade deficits which is what suck demand out of the economy along with savings and requires larger deficits and debt than otherwise.
The problem with this view is that it replaces lowering interest rates to stimulate investment with lowering (corporate taxes and taxes that chiefly affect investment, as well as reducing regulation on business to stimulate investment.
People that take this approach are supply siders that don't agree that demand drives investment. They think that business has to cajoled into investing by removing barriers and providing incentives.
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