Fed Pres Fisher, the 3rd member to dissent against the Aug 9 FOMC decision, today is also the 3rd to give their reason for it. After cutting the fed funds rate from 5.25% to basically zero, cutting the discount rate spread from 100 bps to 50bps and expanding their balance sheet from $900b to $2.9T by buying MBS, Agency debt and US Treasuries, Fisher finally said enough is enough and didn’t want to put a date on the length of the zero rate policy. On the economy, he thinks “nonmonetary factors, not monetary policy, are retarding the willingness and ability of job creators to put to work the liquidity that we have provided…Those with the capacity to hire American workers are immobilized. Not because they lack entrepreneurial zeal or do not wish to grow; not because they can’t access cheap and available credit. Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy.” He also blames the debt ceiling debacle as creating major hesitancy on the part of business to do business. “What is restraining our economy is not monetary policy but fiscal misfeasance in Washington…Pointing fingers at the Fed only diminishes credibility.” While I agree with Fisher’s points on fiscal and regulatory policy, deflecting criticism AWAY from the Fed only diminishes his credibility.

Category: MacroNotes

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5 Responses to “Fisher gives reason for his dissent”

  1. klhoughton says:

    “not because they can’t access cheap and available credit”

    Would love to believe him, but when Mark Bleeding Cuban made his boondoggle suggestion last week,* the comments field was filled by people noting that banks are denying them credit.

    *I hasten to note that it was an interesting idea–Government as VC, as it were–until he put on “minimums including: The company must be in business for at least 10 years. They must be have at least 100 full time employees. They must do 100mm in revenues,” at which point you have to realize that, if those people don’t have access to regular credit markets, it really is time to nationalize the failed banks, write down the debt, and start again.

  2. Francois says:

    “Rather, they simply cannot budget or manage for the uncertainty of fiscal and regulatory policy.”

    This “businesses need certainty, otherwise they won’t invest” meme needs to get its keister kicked out of the galaxy ASAP.



    This piece of propaganda is getting worse than “the CRA caused the mortgage meltdown” BS! And that is saying something.


    BR: What certainty can there EVER be about the future?

  3. DeDude says:

    He is right that banks don’t need any more Fed money. They need businesses with realistic expansion plans. That will not happen until businesses get more costumers. The “uncertainty of fiscal and regulatory policy” meme is moronic. Businesses expand when they have more costumers, regardless of fiscal and regulatory policy. When there is money to be made they jump in – and deal with fiscal and regulatory policy issues as they come.

  4. boveri says:

    Whenever I hear some person complaining about “uncertainty of fiscal and regulatory policy” as the reason why business isn’t investing I know I’ve just met another right-wing blockhead ideologue. I had been wondering about this fellow Fisher but now I know.

  5. Francois says:

    BR ask:
    “What certainty can there EVER be about the future?”

    1) There shall be taxes.
    2) Life is a sexually transmitted disease with a guaranteed mortality rate of 100%.
    3) We will all make mistakes.
    4) Ideologues will always suck.