one Fed governor understands the Bernanke Fed's hyper-accommodative monetary
policy has no exit.
Today on CNBC "Squawk Box", Dallas Fed governor Richard Fisher
complained Fed Risks
'Hotel California' Monetary Policy.
Dallas Fed President Richard Fisher told
CNBC that he's worried the U.S. central bank is in a "Hotel
California" type of monetary policy because of its "engorged
balance sheet." Evoking lyrics from the famous song by The Eagles, he said
he feared the Fed would be able to "check out anytime you like, but
Fisher said on "Squawk Box" that he argued against revealing the
new inflation and unemployment targets set by the Fed this week, saying he's
worried that the markets will become "overly concerned" with the
Fisher would not comment on any contingency plans at the Fed should
Republicans and President Barack Obama fail to strike a deal to prevent the
automatic tax increases and spending cuts from taking effect in the new year.
"What you see is what you get here," Fisher said. "We have a
hyper-accommodative monetary policy here ... cheap and abundant money that
the Fed has made widely available."
No Exit Strategy
Any rational thinking person understands the Fed has no exit policy. I have
stated that for years, most recently in Exit Strategy? What Exit Strategy? just a couple
Recall when the Fed pretended it was
working on an exit strategy to reduce its balance sheet at the appropriate
It was a lie then and it's an even bigger, more apparent lie now (which is
why you no longer hear Bernanke mentioning it) . The
simple fact of the matter is that every Fed asset purchase makes it more
difficult to exit.
When interest rates do start to tick up (which could be a while based on Fed
statements), interest on the national debt would soar if the Fed unloaded
treasuries. Likewise, mortgage rates would soar if the Fed unloaded agencies
at a time interest rates were creeping up.
There never was an exit strategy and there never will be one.
Unfortunately, the average Joe on the
street has no idea what is happening at all, and one of the reasons is
mainstream media is often devoid of rational thinking.
Perhaps this comment by Fisher will wake some people up as to what is
happening, but don't count on it.
Hotel California Video
In Tribute to the Eagles, and also Fed governor Richard Fisher I present this
video from the Eagle's Farewell Tour.
Link if video does not play: Hotel California