WASHINGTON — Dallas Federal Reserve Bank President Richard Fisher warned Tuesday the Fed has "no hope" of achieving its mandate of full employment unless the government gets its fiscal act together, and not only are the very accommodative monetary policies of little use, they risk creating an "inflationary conflagration."

Fisher resorted to Shakespeare, a You Tube video and a graphic depicting a car dashboard panel to illustrate the severity of the risk he warns of, even while he said inflation right now is "benign" and unlikely to become a problem this year, and growth could beat the 2.4% consensus expectation.

The key problem with the economy is jobs, not inflation, but the Fed has limited ability to influence job creation in the current environment, Fisher said in a speech prepared for delivery to the C.D. Howe Institute Directors' Dinner in Toronto.

At the same time, "Today, inflation is benign," he said. "Provided the public remains confident in the Fed's commitment to price stability, anchored by the stated 2% long-term target of the Federal Open Market Committee (FOMC), the chances of inflation rearing its ugly head in 2013 are presently extremely low."

"As a hawk in the aviary of policymakers, I have for some years now said that the issue of the moment is not a meaningful threat to price stability. The issue is job creation," he said. "And the questions I keep raising at FOMC meetings regard our limited ability to affect it with our uber-accommodative monetary policy."

Fiscal policy is a "formidable brake on growth," and is "inhibiting the transmission of monetary policy into robust job creation," said Fisher, who does not vote on the policymaking Federal Open Market Committee this year.

"I argue that the Fed has no hope of moving the economy to full employment, despite having pulled out all the stops on the monetary front, unless our fiscal authorities get their act together," Fisher warned. "Until then, I argue that the Fed is, at best, pushing on a string and, at worst, building up kindling for speculation and, eventually, a massive shipboard fire of inflation."

In his Shakespearean summary of the economic situation, the descriptors were even more dire:

"Should the FOMC try to compensate for fiscal authorities' inability to act by provisioning still more monetary fuel, it may risk an explosion of speculative excess, or worse: an eventual inflationary conflagration, the debasement of money and the ruination of our economy and lifestyle."

Fisher pointed to credit markets for signs of trouble, saying, "The warning light for the yield curve should be pink, if not yet red, for, if anything, it is robust to the point of possibly becoming problematic in giving rise to speculative impulses."

He blasted fiscal policymakers, saying the situation is preventing the U.S. economy from achieving its long-run potential, as uncertainty on policies is keeping businesses from investing and hiring.

And "the divisive nature and petty posturing of those who must determine the fiscal path of the nation are further undermining confidence, hindering the upward momentum needed for a full recovery and limiting the effectiveness of monetary policy," Fisher said.

"Decision-making under conditions of uncertainty is always a challenge for businesses; decision-making in a thick fog of uncertainty is well-nigh impossible," he said. "It negates the power of hyper-accommodative monetary policy to propel our economic vessel forward.

"The restraining influence of rudderless fiscal policy is readily seen in the piling up of excess reserves on the balance sheets of banks and in the coffers of operating businesses," he warned.

On the outlook, he said the U.S. economy "is cruising along at what appears to be near-stall speed" but "there is a better-than-even chance that the present GDP growth consensus forecast of 2.4% by professional economists may be underestimating the underlying pace of growth. The housing market is in resurgence, contributing significant impetus to the economy."

He also pointed to the Fed's senior loan officers survey which shows banks are lending more, while state and local governments are seeing improved finances.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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