The Federal Reserve Bank of Dallas’ Richard Fisher said Monday that the economy is progressing and “more things are moving in the right direction than in the wrong direction,” which is why he is against additional quantitative easing.
“General economic conditions are improving slightly and are expected to continue doing so,” the president and chief executive of the Dallas Fed told an audience in San Antonio in prepared text of his remarks.
“The risk of a double dip in economic activity has lessened, as has the risk of deflation,” he said. “Financial speculation and excess, however, is beginning to raise its hoary head.”
Fisher said he was skeptical about the benefits of further asset purchases.
One cost of those purchases is the perception of taking a path of debt monetization.
“I worry that by providing monetary accommodation, we are reducing the odds that fiscal discipline will be brought to bear,” he said.
Another problem is that engaging in further accommodation when the U.S. is not in crisis may create expectations of continued Fed purchases of Treasury securities as normal operating procedure.
“Monetary accommodation by itself is not the answer to our current woes,” he said.
“The Fed, as I see it, has taken a leap of faith that our political leaders will forge a sensible budgetary and regulatory path that incentivizes businesses to put to work the money the Fed is printing to invest in creating jobs for American workers,” he said.
