Richard W. Fisher: Monetary Policy Responsibility Cannot Substitute for Government Irresponsibility

Richard W. Fisher is President and CEO of the Federal Reserve Bank of Dallas and serves as a member of the Federal Open Market Committee, the Federal Reserve’s principal monetary policymaking group.

You therefore might have expected Mr Fisher to toe the FOMC ‘party’ line on all things to do with the $14 trillion dollar debt of the US government and the pronouncements of Federal Reserve Chairman of the Board, Ben Bernanke. However, the bubbled pressures within the federal reserve system are finally beginning to generate some deep visible cracks upon the marbled public edifice of the Marriner S. Eccles Federal Reserve Board building.

Take a look at these fascinating quotes from Mr Fisher, in a speech he gave on January the 12th. The first sentence alone is remarkable enough:

Today, I will speak to the truth as I see it. I speak only for myself and my colleagues at the Dallas Fed and not for anybody else on the FOMC or elsewhere in the System. I suspect this will immediately become clear.

It does…

The Federal Reserve has held rates to nil. We have expanded our balance sheet to unprecedented levels. After much debate―which included strong concern expressed by one member with a formal vote and others, like me, who did not have voting rights in 2010―the FOMC collectively decided in November to temporarily undertake a program to purchase U.S. Treasuries that, when added to previous policy initiatives, roughly means we are purchasing the equivalent of all newly issued Treasury debt through June.

By this action, we have run the risk of being viewed as an accomplice to Congress’ fiscal nonfeasance. To avoid that perception, we must vigilantly protect the integrity of our delicate franchise. There are limits to what we can do on the monetary front to provide the bridge financing to fiscal sanity.

There’s little Kreminology required to translate this uncoded 32 pound ball across the bows of USS Bernanke.

And there’s more…

The entire FOMC knows the history and the ruinous fate that is meted out to countries whose central banks take to regularly monetizing government debt. Barring some unexpected shock to the economy or financial system, I think we have reached our limit.

Perhaps we should invite Mr Fisher to become our central banking analyst here at the Cobden Centre?

The [recent US] election tapped into a foreboding sense that the cost of that comfort now exceeds its benefits, as manifest in looming megadeficits, deep if not unfathomable unfunded liabilities, egregious abuse of fiscal powers symbolized by earmarks and other methods used by politicians to grease the skids of their reelection.

Tapping into that foreboding in the recent election was the easy part. Talk of reform is cheap. Enacting reform will be painful.

Without dwelling too long upon earmarks, the paragraphs above could almost have been written by Congressman Ron Paul.

To make things even more interesting, the next section could almost have been written by President Andrew Jackson, the heroic destroyer of the Second Bank of the United States (a central banking predecessor to the Federal Reserve).

We shall see if the new Congress will prove worthy of the power the American people have “loaned” them, and, together with the president, actually draw the spirits of fiscal reform and sanity from the “vasty deep” to at long last implement meaningful fiscal and regulatory policy that incentivizes private-sector job creation here at home while arresting the hemorrhaging of our Treasury. If they do, then more Americans will find work and be better off, better paid and freer to make their own decisions about the economy.

If they don’t, then woe to our children, their children and the American Dream.

This potentially watershed speech is worth reading in its entirety.