Posted on 12/12/2013 4:39:11 PM PST by Son House
Saying that the cost of the Fed's $85-billion-a-month asset-purchase program "far exceeds" its benefits, Fisher urged reducing it "at the earliest opportunity," and to articulate a clear, well-defined path for ending it by a certain date.
Doing so, he said, could make the Fed's change of policy course easier for markets to digest.
When the Fed last signaled it was gearing up to end its bond-buying program, in May and June, investors pushed up market rates faster and farther than the Fed had expected. The rise in rates threatened to slow an already fragile recovery, and was one factor in the Fed's decision not to pull back on bond-buying at its September meeting.
"We should make clear that, barring some serious economic crisis, we will stay the course of reduction," Fisher said.
On Monday he repeated that view, warning as well that continuing to add liquidity to the U.S. financial system could set the stage for "financial shenanigans" as investors buy and sell based on the availability of low rates rather than on fundamentals.
Fisher's critical view of the Fed's quantitative easing program puts him in the minority among his colleagues, most of whom credit easy money with helping to bring down unemployment to 7 percent last month, from near 8 percent when the program started.
With inflation running well below the Fed's 2-percent target, several other regional Fed bank chiefs have made the case for the Fed to continue with super-easy monetary policy to help bring inflation back up.
On Monday Fisher took strong exception to that idea.
"Especially given that we have a surfeit of excess liquidity sloshing about in the system, the idea of ramping up inflation expectations from their current tame levels strikes me as short-sighted and even reckless," he said.
(Excerpt) Read more at reuters.com ...
Have "most of whom" considered how the unemployment numbers compare against the labor force participation rate, the increasing number of part-time vs full time jobs, and those who can no longer collect unemployment? The numbers should inspire "most of whom" to seek out the actual impact and not hide behind any easily questionable unemployment number manipulation.
no amount of easy money will be enough to get businesses hiring again.
Agreed, easy money does not equal Economic improvement, but it helps make economic data 'clear as...mud', to quote a math teacher. This easy money is NOT coming from businesses making deposits. Likely there are other reasons for printing easy money, but for "most of whom" in charge of the money supply to think they control the labor force participation rate(to be more precise) with easy money is a correlation I don't see evidence of.
I think the elites are stuck and cannot stop buying their own debt to prop up the economy. I believe they know what will happen when they do stop blowing the biggest economic bubble in world history.
I agree with you that the long term outcome is htat they have to buy our Debt. This public food fight is designed to create uncertainty and to stop the rise in the yield. They can cut back the purchase by $5 billion a month and scare the Market back into Bonds with a pullback in the Equities Market. Ultimately, they will have to continue buying our junk... nobody else will.
They are also going to regulate that the banks buy back the bonds in 2015, as I recall from another article.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.