Fiscal Policy. Oy!
(With Reference to Ben Bernanke, Ken Arrow, Thomas Jefferson, William Shakespeare and the Oracle of Omaha)
Richard W. Fisher
Remarks at the 2013 National Association for Business Economics
Houston, TX · May 16, 2013
Thank you, Ken (Simonson). I am delighted that the National Association for Business Economics (NABE) has chosen the Dallas Fed’s Houston Branch as the venue for this meeting on the oil and gas boom as a possible engine for “Reigniting the Economy.” As you will shortly hear from my Dallas Fed colleague, Mine Yücel; my wise old colleague from my days at Treasury in the 1970s, Phil Verleger; the incoming chairman of our San Antonio Branch, Curt Anastasio; and others, this is an intriguing proposition. The technical and entrepreneurial genius of Houston and Texas is playing a key role in unlocking our nation’s energy potential. Indeed, there are many here in Texas and abroad—in places as distant as Illinois, Michigan and New York—who argue that reigniting their local economies and the nation’s economy calls for more “Texification,” above and beyond the frontiers of energy.
But I am not here today to discuss oil and gas or engage in “Texas brag.” I have been asked to provide a broader perspective on the nation’s economic and monetary policy.
Current Predicament of Monetary Policy: A Grand Experiment
I’ll begin with a summary of the current predicament of monetary policy.
The Federal Reserve has undertaken a grand experiment to reignite the economy through unprecedented monetary accommodation. We cut to zero the base rate that anchors the yield curve and have pursued a policy aimed at driving rates throughout the curve to historic lows by buying Treasuries and mortgage-backed securities (MBS). Our portfolio totals about $3 trillion, which we have recently been expanding at a rate of $85 billion per month.
Here is a picture of the domestic securities of the current System Open Market Account (SOMA) portfolio. [1]

Category: Federal Reserve, Think Tank
Click to enlarge ~~~ I am a sucker for a good piece of digital media, and CoreLogic hits me right in the sweet spot. The map and chart above provide some great context on the state of the Housing market — were we have been, how silly things got circa early 2000s, how bad…Read More
Category: Real Estate, Think Tank
My morning reads: • Remember This Moment When the Black Swans All Had Their necks Broken (The Reformed Broker) • Soros Joins Gold-Stake Cuts Before Bear Market Drop (Bloomberg) • Indulge Your Appetite for Stocks (for now) (Barron’s) but see also Longer odds for short-selling success (The Austrailian) • US financial advisers drive ETF growth…Read More
Category: Financial Press
Several comments in yesterday morning’s post sent me back to GMO’s archive to pull some of Ben Inker’s work. You should read yesterday morn’s commentary (here), than come back and read Inker. In particular, his piece Explaining Equity Returns. The five takeaways are as follows: 1) GDP growth and stock market returns do not have…Read More
Economists Michael Bordo, Marvin Goodfriend, Barry Eichengreen, and Allan Meltzer share their opinions on the Fed—past, present, and future.
Category: Federal Reserve, Video
My afternoon train reads: • Of course “hedge funds” lose money (Noah Opinion) see also A Professional Preps for the End of QE (Forbes) • The Buffett Formula — How To Get Smarter (Farnam Street) • The super soaraway Nikkei (FT Alphaville) • Retirement: How They Do It Elsewhere (NYT) • Even economists need lessons…Read More
Category: Markets
click for ginormous graphic Source: United Republic Hat tip Fabius Maximus
Category: Digital Media, Politics, Really, really bad calls


