Dallas Fed Head Fisher - Dissension in the Ranks?
The only FOMC member that voted against the recent rate cut, Dallas Fed Head Fisher:
The Pot calls Kettles Black... some glaring examples today of the destruction that can be wrought by governments with direct control over monetary policy.
A year ago, after having let monetary printing presses run wild to cover up problems created by misgovernment, President Mugabe famously declared inflation illegal.
Just last week it was announced that Zimbabwe’s inflation reached 26,470% in November.
The economy of Zimbabwe has been destroyed and its people cast further into poverty as their savings disappear.
Venezuela’s government has taken effective control of the central bank and printed trillions of bolivars to finance ambitious social programs.
The result has been an official inflation rate of 22.7%. The Venezuelan consumer has been decimated.
To counter the inflation the government itself has created, Venezuela recently introduced a new currency, the “bolivar fuerte,”
which is basically the old bolivar with three zeros trimmed off.
The drunken orgy... (former Fed Chairman) William McChesney Martin...
famously said that the job of a good central banker is to take away the punchbowl just as the party gets going.
For the past few years, we have had a raucous party of economic growth fueled by an intoxicating brew of
credit market practices that financed a housing boom of historic, and late in the cycle, hysteric, proportions.
With the benefit of perfect hindsight, some have argued that the Fed failed to take away the punchbowl
as the subprime party spun out of control, leaving rates too low for too long...
and not using our regulatory powers to restrain excessive complacency in the pricing and monitoring of risk.
Paying the piper... As big banks and other financial agents confess their acts of
fiduciary omission and excesses of commission, credit markets have effectively de-leveraged important segments of the economy.
Instead of taking the punchbowl away, the Federal Reserve is now faced with the task of replenishing the punch.
Monetary policy acts with a lag. The Fed has to be very careful now to add just the right amount of stimulus to the punchbowl
without mixing in the potential to juice up inflation once the effect of the new punch kicks in.
The best scenario that I can perceive presently is that we will have slow economic growth for this quarter...
and the next quarter, and I expect that to pick up at the end of the year.
The Pot calls Kettles Black... some glaring examples today of the destruction that can be wrought by governments with direct control over monetary policy.
A year ago, after having let monetary printing presses run wild to cover up problems created by misgovernment, President Mugabe famously declared inflation illegal.
Just last week it was announced that Zimbabwe’s inflation reached 26,470% in November.
The economy of Zimbabwe has been destroyed and its people cast further into poverty as their savings disappear.
Venezuela’s government has taken effective control of the central bank and printed trillions of bolivars to finance ambitious social programs.
The result has been an official inflation rate of 22.7%. The Venezuelan consumer has been decimated.
To counter the inflation the government itself has created, Venezuela recently introduced a new currency, the “bolivar fuerte,”
which is basically the old bolivar with three zeros trimmed off.
The drunken orgy... (former Fed Chairman) William McChesney Martin...
famously said that the job of a good central banker is to take away the punchbowl just as the party gets going.
For the past few years, we have had a raucous party of economic growth fueled by an intoxicating brew of
credit market practices that financed a housing boom of historic, and late in the cycle, hysteric, proportions.
With the benefit of perfect hindsight, some have argued that the Fed failed to take away the punchbowl
as the subprime party spun out of control, leaving rates too low for too long...
and not using our regulatory powers to restrain excessive complacency in the pricing and monitoring of risk.
Paying the piper... As big banks and other financial agents confess their acts of
fiduciary omission and excesses of commission, credit markets have effectively de-leveraged important segments of the economy.
Instead of taking the punchbowl away, the Federal Reserve is now faced with the task of replenishing the punch.
Monetary policy acts with a lag. The Fed has to be very careful now to add just the right amount of stimulus to the punchbowl
without mixing in the potential to juice up inflation once the effect of the new punch kicks in.
The best scenario that I can perceive presently is that we will have slow economic growth for this quarter...
and the next quarter, and I expect that to pick up at the end of the year.
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