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Dallas Fed's Fisher Says Fed's Duty Is "Not To Monetize" Debt

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Some stunning remarks from Dallas Fed's Dick Fisher: " Our duty is most distinctly not to monetize - or even
be perceived as monetizing - the debt of fiscally imprudent government
Throughout the history of nations, monetizing the budgetary excesses of
governments has proven to be a direct path to economic perdition.
Having already peeked inside that door, I feel strongly that we must
now shut it, lock it and throw away the key."
Well, thanks Dick. You are only $2.6 trillion dollars late.

More comments from Dick:


What tipping point? The Fed is merely helping Netflix holders cash out at a 1 trillion fed P/E. Everything else is a function of surging global demand for $112 WTI.

Full Speech:

'Is America's Decline Exaggerated or Inevitable?' The Role of Monetary and Fiscal Policy
(With Reference to St. Peter, Calvin Coolidge, Walter Bagehot, Paul Volcker, Winston Churchill and T.R. Fehrenbach)
Remarks before the Society of American Business Editors and Writers 2011 Annual Conference
Dallas, Texas
April 8, 2011


In the fall of 2006, I was asked to draw upon
some 30 years of experience in Germany and speak at the American
Academy in Berlin, addressing the question: “Is Germany’s Decline
Exaggerated or Inevitable?”[1]
This was against the backdrop of reforms that had been initiated by
the former German Chancellor Gerhard Schroeder, and carried on by his
successor, Angela Merkel. I argued that Germany’s economic fate and
position as primus inter pares in Europe was at a tipping
point. The answer to the question of whether Germany was fated for
decline or ascent depended upon how Germans would adapt their education
system, labor laws, health care system, financial infrastructure,
corporate governance, tax regime and myriad other changes needed to
advance their economic competitiveness in a world being transformed by
the forces of globalization and cyber-ization. I ended that speech by
saying I was encouraged that changes had been initiated, but drew on
St. Peter and Calvin Coolidge, neither of whom would have considered
themselves economists, to underline the essential ingredient for
success in these critical initiatives. For it was St. Peter who urged,
“Be serious and discipline yourselves.”[2]
And it was Silent Cal who said, “Nothing in this world can take the
place of persistence. …The slogan ‘press on’ has solved and always will
solve the problems of the human race.”

Two weeks ago, I was
back in Germany. My interlocutors there, having been serious,
determined and persistent in implementing change and who are now
sitting rather pretty, turned the question back on me, asking: “Is
America’s Decline Exaggerated or Inevitable?” I thought I would speak
to that question today.

For those of you who are
impatient, the answer is: “It depends.” It depends not upon the
outcome of the conflicts in North Africa and the Middle East, nor upon
the effect of the tsunami and the disruption of nuclear facilities in
Japan, nor upon any of the other pressing issues of the moment that are
the subject of day-to-day angst assiduously reported by your
colleagues in the press.

It depends upon monetary and fiscal policy.

It depends upon whether the United States can get its economic house in order.

It depends, in the end,
upon whether the Federal Reserve, as the nation’s central bank, and the
Congress, working with the executive branch in discharging its duty as
the nation’s fiscal authority, will adhere to the maxims of St. Peter
and President Coolidge-whether each of these institutions has the will
to be serious and discipline itself, and be persistent in pressing on
with their respective duties.

Monetary Policy

I’ll start with the Federal Reserve.

In contemplating future
policy of the Federal Reserve, it is important to remember the
frightful predicament we faced in the fall of 2008. The financial gears
of our economy-the most powerful and important economy in the
world-had ground to a halt. The entire panoply of markets for financial
instruments essential to the daily lives of businesses and individual
citizens-interbank lending, commercial paper, asset-backed lending,
money-market mutual funds and the mortgage markets-seized up. In the
blink of an eye, liquidity and trust in financial counterparties
disappeared. In those darkest of days, a colleague of mine wittily
summed up what had transpired by noting that on the balance sheets of
the most important financial institutions, “nothing on the right is
right and nothing on the left is left.”

We could have an endless
discussion of who was responsible for this so-called black swan
scenario. We would likely agree that it resulted from a combination of
factors, including the speculative excesses that occur when interest
rates remain too low for too long; the consequences of systemically
important bank and financial intermediaries embracing risk-management
tools that are formulaic and dependent upon “quant jocks” rather than
upon common sense and good judgment; the abuses that ensue when
regulatory authorities let down their guard; the comeuppance that
inevitably occurs when policymakers and their advisers are lulled into
complacency with theoretically comforting, but nonsensical, shibboleths
like “efficient markets”; or just the financial tomfoolery that
disturbingly repeats itself at periodic intervals throughout history
when, in the memorable words written in 1856 by the English essayist
Walter Bagehot, “[A]t particular times … people have a great deal of …
money…. At intervals … the money of these people … is particularly large
and craving: it seeks for some one to devour it, and there is [a]
‘plethora’; it finds some one, and there is ‘speculation’; it is
devoured, and there is ‘panic.’”[3]

Regardless of how it came to be, when the Panic
of 2008 occurred, the Fed did what central banks are called to do when
pandemonium strikes: As the lender of last resort, we stepped into the
breach, used the powers given to us by our government to create money
and credit, and deployed the considerable array of tools at our
disposal to calm and restore the financial markets.[4]

The Bernanke-led Federal
Open Market Committee (FOMC) had confidence in the programs we
undertook, for they were well-vetted, disciplined and carefully
considered. We persisted with them even though our actions gave rise to
great consternation and warnings of bleak consequences from an
understandably anxious Congress, skeptical financial pundits and
frightened citizens. Teddy Roosevelt once said, “When people lose
money, they strike out unthinkingly, like a wounded snake, at whoever is
most prominent in the line of vision.”[5]
The Fed-as the nation’s central bank and first responder to a
financial crisis-was front and center in dealing with the panic, and we
felt the sting of a rattled public and its elected representatives.
Still, we “pressed on.”

We now know that the
exigent measures we undertook worked. The end result of the Fed’s
efforts was that the credit markets and the lifeblood of liquidity
needed to conduct commerce and sustain the economy were restored. The
economy responded and began a recovery in the middle of 2009 that is
slowly gaining steam and now appears to be self-sustaining.

Imagine that! A
government agency that (a) devised programs that actually worked, (b)
shut most of them down when they had done their job and (c) made money
for the taxpayer in the process.

This is not to say there
was no cost to what we accomplished. There were trade-offs and
unintended consequences, some of which were distinctly unpleasant.

In saving the system,
for example, it can be argued that we protected imprudent lenders and
investors from the consequences of their decisions; we rescued sinners
and penalized the virtuous.

Postcrisis, the “too big
to fail” financial behemoths that had placed our economy in jeopardy
have ended up with even greater financial power. (And, adding insult to
injury, by the grace of their shareholders, most of their leaders
retain their posts and few, if any, have suffered financial setbacks).
This concentration of power comes at the expense of community and
regional banks, an imbalance that the Federal Reserve and other
authorities must now address through tough-minded, clear-eyed

At the individual
citizen’s level, we eased the pain of overextended homeowners with
mortgages by buying up $1.25 trillion in mortgage-backed securities and
driving mortgage rates to historic lows. The Fed’s interventions to
drive interest rates to historically low levels resulted in significant
capital gains for bondholders and equity investors in the most
plain-vanilla securities and mutual funds. Yet, by taking interest
rates to zero and making money cheap and abundant so as to reliquefy
the economy, those who invested the most conservatively-tucking their
savings away in the safest of vehicles, like CDs, money market funds,
and Treasury bills and notes-saw the income earned on their hard-earned
savings dramatically reduced.

I personally fret over
these and other costs, but on net, I believe the Federal Reserve did
what is expected of a responsible central bank: We stemmed a panic and
averted a depression.

While we have wound down
most all of our exigent programs, we remain with a bloated balance
sheet, with footings in excess of $2.4 trillion, roughly triple the
size of our precrisis balance sheet. And the composition of our balance
sheet has changed: We hold about $937 billion in mortgage-backed
securities and over $1.3 trillion in Treasury securities, including
those of longer duration than is typical.

When we buy an
interest-bearing security from the market, we pay the seller of that
security. This expands liquidity in the system. Whereas in the Panic
there was no liquidity, today our large-scale asset purchases have made
for abundant liquidity. Banks have $1.4 trillion in excess reserves
parked in the 12 Federal Reserve Banks; other financial intermediaries
are flush with cash; there is a surfeit of cash on the books of
corporations and nonfinancial businesses, and more is available at
little cost through a robust bond market and a fully recovered stock

Personally, I felt the
liquidity needed to propel our economy forward was sufficient even
before the FOMC opted last November to buy $600 billion in additional
Treasuries on top of the committee’s pledge to replace the runoff of
our $1.25 trillion mortgage-backed securities portfolio. I argued as
much at the FOMC table. I considered the risk of deflation and of a
double-dip recession to have receded into the rearview mirror. In fact,
I gave an interview to my introducer here, Mr. [Brendan] Case, that
was published under his byline in the Dallas Morning News on Aug. 26, 2009, in which I said the recession was over and the long slog of recovery from the Great Recession had begun.[6]
Last November, I felt the problem was not the lack of liquidity in the
economy, but that regulatory and fiscal uncertainty-the handiwork of
fiscal authorities and lawmakers, not the Fed-was inhibiting the
deployment of that liquidity into job creation. I also worried that
these simultaneous programs would have the effect of buying up—of
“monetizing”—the equivalent of most all of the U.S. government’s
issuance of new debt through June of this year, a dangerous course for
any central bank to embark upon.

The majority of my
colleagues on the FOMC felt differently, and the committee voted to
initiate the program now known as QE2. Whether you feel that we are
providing a prudent amount of liquidity, as they do, or too much, as I
do, I think you would be hard-pressed to dispute that there is now
plenty of fuel in the tanks of American businesses to finance expansion
and put unemployed and underemployed Americans back to work.

Having done our job, I see many risks to the Fed overstaying its welcome.

There are perceptional
risks, for example. Our duty is most distinctly not to monetize - or even
be perceived as monetizing - the debt of fiscally imprudent government.
Throughout the history of nations, monetizing the budgetary excesses of
governments has proven to be a direct path to economic perdition.
Having already peeked inside that door, I feel strongly that we must
now shut it, lock it and throw away the key.

There is the risk that
we might breach our duty to hold inflation at bay. Inflationary
impulses are gaining ground in the rest of the world. At the core of
the euro zone, Germany, where unemployment is actually lower than
before the crisis, wage inflation is pressing up against 3 percent.
Retail price inflation in the United Kingdom now exceeds 5 percent,
despite very high unemployment. Reported inflation now exceeds 4.5
percent in China, 6 percent in Brazil and 8 percent in India.

We know from anecdotal
soundings that American businesses, like businesses in other countries,
are doing their utmost to offset with higher prices the surging costs
of inputs such as fuel, other commodities and materials, and
components, parts and processes sourced from abroad. My gut tells me
that this will result in some unpleasant general price inflation
numbers in the next few reporting periods, even though the trimmed-mean
inflation rate we calculate at the Federal Reserve Bank of
Dallas-based on the price movements of 178 personal consumption
expenditure items-while rising, has over the past six months run at a
sedate rate of 1.2 percent.

Given that we still have
significant excess capacity of unemployed workers, extremely subdued
wage growth, strong productivity growth and weak domestic demand, one
might reasonably posit that the general inflationary pressures we are
experiencing presently are transitory. Nonetheless, adding still more
liquidity, or not withdrawing in a timely manner what we already
provided in abundance, would do nothing to quell emerging inflationary
pressures and might well compound them, proving doubly injurious to
savers and the earnings of those who do have jobs.

And there is always the
risk that, having provided so much liquidity, we might unwittingly abet
a resurrection of the tomfoolery so well-described by Bagehot. Some
disturbing practices are beginning to rear their ugly heads again: We
have seen a resurgence of “covenant-lite” loans, with some $24 billion
issued in the first quarter versus $100 billion for all of 2007;
private-equity firms are back in size and turning to leverage to pay
dividends; credit-boom acronyms most thought would never return after
the Panic, such as “payment-in-kind,” or PIK, and “toggle” notes, are
prominent once again; traditionally unleveraged asset managers, such as
insurance companies and pension funds, are turning to leverage and
exotic asset classes to juice returns. These are all signs of the
intoxicating effects of the ambrosia of inexpensive and plentiful
money. Further spiking the punch bowl with accommodative monetary
policy would do nothing to rein them in.

In summarizing the
monetary side of the equation, I would argue that the Federal Open
Market Committee did its job. In the face of great skepticism and
cynicism, we persisted and pressed on with doing what central banks are
supposed to do to pull an economy back from the brink. We reliquefied
the financial markets: Liquidity is no longer scarce. Money is no
longer dear; it is cheap. Job-creating businesses have the financial
means to get on with putting Americans back to work. Continued
accommodation presents significant risks. In my view, no amount of
further accommodation by the Fed would be wise—either by prolonging or
“tapering off” the volume of purchases of Treasuries past June, or
adding another tranche of large-scale asset purchases. Indeed, it may
well be that we should consider curtailing what remains of QE2.

Now, we at the Fed are
nearing a tipping point. Just as we pressed on in doing our duty
through extraordinary, exigent measures, we must now discipline
ourselves to just as persistently normalize our operations in a timely

Fiscal Policy

As for the fiscal side
of the equation, you know the story. I have been harping on this for
years. I spoke of the dangers of what in polite parlance might be
called the fiscal incontinence of Congress when I addressed the
Commonwealth Club of California in May of 2008.[7]
Under both Republican and Democratic leadership, past Congresses have
created a fiscal sinkhole that is so deep and so wide, it threatens to
swallow up our prosperity and render our economy an abattoir. They have
forsaken the most sacred responsibility they have to successor
generations of Americans: Instead of passing the torch to our children,
they have passed them the bill.

Past Congresses have
made promises they cannot keep. Now, the new Congress is embarking on a
corrective course. This is just the beginning of what I expect to be a
long, arduous exercise. Here I evoke St. Peter: Congress, “be serious
and discipline yourselves.” You have no choice but to go through a
painful and gut-wrenching rehabilitation and begin leading a sober life
of living within your means. You must press on with getting your
accounts in order, however politically unpleasant it may be to do so.

This will be a titanic
struggle. Our Congress must find a way to align spending with income
through taxation that (a) does not cut off the incipient economic
recovery, (b) provides a credible path toward bringing their
accounts-including the unfunded liabilities of Medicare and Social
Security-to solvency and (c) respects the fact that in a globalized,
cyber-ized world, those with the ability to create jobs may create them
in places that offer more compelling fiscal and regulatory

This last point is not
unimportant. Permanent jobs are created by the private sector.
Businesses, large and small, publicly or privately held, have a duty to
earn a return on investment for their shareholders. In a globalized,
cyber-ized world, they need not invest or expand their payrolls in the
United States; they are free to go practically anywhere on the planet.
This is the result of one of our greatest accomplishments as a nation:
We won the Cold War. Before the demise of the Soviet Union and the
death of Mao, we lived in a world of mutually assured destruction;
today, we live in a world of mutually assured competition. This is what
we spent an entire generation of blood and national treasure to
achieve. Now, those with the power to levy taxes and direct spending
must get with it and adjust to the new world as they seek to
incentivize job creation through businesses that, thanks to monetary
policy, now have the financial means to put Americans back to work
right here at home.

There cannot be robust
direct investment in the United States without confidence in the
nation’s ability to reverse its budgetary death spiral, especially the
inexorable accumulation of national debt and unfunded liabilities of
Medicare and Social Security. The need to break the back of that spiral
is as dire now as was the need for Paul Volcker to break the back of
inflation in the 1980s. Those who are leading the charge to restore
fiscal sanity, be they Republican or Democrat, will no doubt recall the
personal vitriol hurled at the then-Fed chairman; they should steel
themselves against it. They should remember that, as a result of his
steadfast determination to press on with exorcising inflation, Mr.
Volcker is today among the most respected living Americans and widely
considered an exemplar for public servants worldwide.

Getting our fiscal house
in order will not be an easy task. But there are worse alternatives.
Resorting to protectionism or capital controls or sustained negative
real interest rates or inflation, in lieu of real fiscal reform, would
be pyrrhic solutions.[8]
Corrupting the independence of the Fed would surely lead the nation to
the same fate that befell Weimar Germany and Peron’s Argentina when
their central banks took to monetizing debt. The nation cannot, must
not, and, in my view, will not go down those sordid paths. Indeed, I
sense we have turned the corner and are on the road to fiscal
redemption, however bumpy it might be.

My German interlocutors
asked why I am encouraged that we would now finally get on with the
business of cleaning up our fiscal house. Central bankers are, after
all, genetically programmed to be sourpusses; we are inherently wary of
the capacity of politicians to be serious and discipline themselves.

My answer is admittedly
emotional. I am the son of immigrants; my parents came to this country
because it is the land of promise. Moreover, I am a naturalized Texan,
and Texans are a persistent people who have always pressed on against
the odds. The great historian of Texas, T.R. Fehrenbach, wrote that
Texans understand that “men who exist get overrun by men who act.”[9]
I believe deep in my heart that this is not unique to Texans—it is a
quintessential American trait. I believe that the people of this great
country will reward those members of Congress who act and will overrun
those who exist only to encumber us with unsustainable debt and an
imbalance of taxes and spending that threatens our prosperity rather
than advances it. So, yes, I am hopeful that our elected leaders will
get on the stick.

Besides, I believe
Winston Churchill had it right: “Americans can always be counted on to
do the right thing … after they have exhausted all other

Thank you. In the best tradition of central bankers, I would be happy to avoid answering your questions.


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Fri, 04/08/2011 - 10:28 | 1149725 slow_roast
slow_roast's picture

WHY NOT?  I thought I paid into the debt monetization entitlement programs!

Fri, 04/08/2011 - 11:06 | 1149905 flacon
flacon's picture


Fri, 04/08/2011 - 13:43 | 1150582 6 String
6 String's picture

Zero Hedge already nailed it, t wit: 2.6 trillion too late. The problem is, Mr Fisher, do you really believe the pebs should pick up that tab now for the rest of their lives, their childerns lives, etc. when the money printing stops and this fucker falls off a cliff?

Thanks a bunch pal.

Fri, 04/08/2011 - 11:50 | 1150118 quintago
quintago's picture

"The Fed Says..."

How about "The Fed Does..."

Fri, 04/08/2011 - 12:38 | 1150353 tawdzilla
tawdzilla's picture

Bernanke already promised Congress that he wouldn't monetize the debt.

However, he didn't say anything about digitizing.

Fri, 04/08/2011 - 10:30 | 1149730 unwashedmass
unwashedmass's picture

gee, ya think they are getting a little scared?

ya think they now recognize the catastrophe looming is the ONE THEY CREATED?

ya think?

Fri, 04/08/2011 - 10:33 | 1149749 MarketTruth
MarketTruth's picture

Too late... the inmates are running the asylum.

Fri, 04/08/2011 - 11:37 | 1150055 FreedomGuy
FreedomGuy's picture

I would submit that Congress actually is the primary instigator of the problem while the Fed is the enabler.

Based on this speech, which I actually enjoyed reading, I would say that Congress is an alcoholic while the Fed is a bartender who supplies the drinks. As the Fed pours the drinks he admonishes Congress to get on the wagon and sober up. How do you suppose that will work out?

Time to cut off the liquor of liquidity.

Fri, 04/08/2011 - 10:28 | 1149733 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

I'll show you politics in America. Here it is, right here. "I think the puppet on the right shares my beliefs." "I think the puppet on the left is more to my liking." "Hey, wait a minute, there's one guy holding out both puppets!" "Shut up! Go back to bed, America. Your government is in control. Here's Love Connection. Watch this and get fat and stupid. By the way, keep drinking beer, you fucking morons."

- Bill Hicks.

Fri, 04/08/2011 - 10:34 | 1149751 JimBobOMG
JimBobOMG's picture

I drink beer AND buy gold.

Fri, 04/08/2011 - 10:49 | 1149823 scratch_and_sniff
scratch_and_sniff's picture

Is that all?

Fri, 04/08/2011 - 10:37 | 1149763 Boilermaker
Boilermaker's picture

Oh, yes, politics and governments in the US are much worse than in Europe or Japan.  Those models just work wonderfully.

Can you please shove your ignorant anti-US rhetoric in your asshole?


Fri, 04/08/2011 - 10:48 | 1149819 Paul Bogdanich
Paul Bogdanich's picture

Actually Australia, Germany, Canada, the Baltics and even France are better off than we are.  Economically the Russian and Chinese are doing very well but the broader societies still have some issues.  That said bankers ripping off everyone else including the government is not one of them.  So while we put the anti-US rhetoric in a bag please do the same for the US exceptionalism rhetoric.  Thank you in advance.   

Fri, 04/08/2011 - 11:24 | 1150003 Boilermaker
Boilermaker's picture

As soon as I start my American exceptionalism rhetoric, I'll promptly stop it.

Fri, 04/08/2011 - 10:47 | 1149817 SheepDog-One
SheepDog-One's picture

Blue team ready? Red team ready? Ok FIGHT! Distract the sheeple.

Fri, 04/08/2011 - 10:32 | 1149740 zaknick
zaknick's picture

Not a word on this from ZH either..... hmmmm!


Bretton Woods 3 is coming for you gold and silver bugs! All crazy for PMs yet not one word on the biggest threat to them:



Two years ago, George Soros said he wanted to reorganize the entire global economic system. In two short weeks, he is going to start - and no one seems to have noticed.


On April 8, a group he's funded with $50 million is holding a major economic conference and Soros's goal for such an event is to "establish new international rules" and "reform the currency system." It's all according to a plan laid out in a Nov. 4, 2009, Soros op-ed calling for "a grand bargain that rearranges the entire financial order."


The event is bringing together "more than 200 academic, business and government policy thought leaders' to repeat the famed 1944 Bretton Woods gathering that helped create the World Bank and International Monetary Fund. Soros wants a new 'multilateral system," or an economic system where America isn't so dominant.


More than two-thirds of the slated speakers have direct ties to Soros. The billionaire who thinks "the main enemy of the open society, I believe, is no longer the communist but the capitalist threat" is taking no chances.


Thus far, this global gathering has generated less publicity than a spelling bee. And that's with at least four journalists on the speakers list, including a managing editor for the Financial Times and editors for both Reuters and The Times. Given Soros's warnings of what might happen without an agreement, this should be a big deal. But it's not.


What is a big deal is that Soros is doing exactly what he wanted to do. His 2009 commentary pushed for "a new Bretton Woods conference, like the one that established the post-WWII international financial architecture." And he had already set the wheels in motion.




This is all easy to do when you have the reach of George Soros who funds more than 1,200 organizations. Except, any one of those 1,200 would shout such an event from the highest mountain. Groups like or the Center for American Progress didn't make their names being quiet. The same holds true globally, where Soros has given more than $7 billion to Open Society Foundations - including many media-savvy organizations just a phone call away. Why hasn't the Soros network spread the word?


Especially since Soros warns, all this needs to happen because "the alternative is frightening." The Bush-hating billionaire says America is scary "because a declining superpower losing both political and economic dominance but still preserving military supremacy is a dangerous mix."


The Soros empire is silent about this new Bretton Woods conference because it isn't just designed to change global economic rules. It also is designed to put America in its place - part of a multilateral world the way Soros wants it. He wrote that the U.S. "could lead a cooperative effort to involve both the developed and the developing world, thereby reestablishing American leadership in an acceptable form."


Anybody catch Glenn Beck yesterday squealing like a stuck pig about Soros? I think Beck represents the drug warrior redneck mooching off humanity, trying to dress and act like civilized folks and failing miserably due to all that inbred inferiority complex which expresses itself as racism.


Fri, 04/08/2011 - 10:34 | 1149753 NOTW777
NOTW777's picture

get help

Fri, 04/08/2011 - 12:14 | 1150224 ceilidh_trail
ceilidh_trail's picture

zaknic- you fail to remember that  soros is a private person who has NO governmental authority to change anything. He can try to influence tptb to change, but, that's what he's always doing. The only difference is that they are gathered in one place, instead of scattered about as usual. I've been thru that part of New Hampshire every summer for the past two decades. Bretton Woods is open to anyone who can pay their rates to stay there. This meeting of like minds could have been scheduled at the Americas Best Value Inn and it would have the same effect on things. He's just trying to steal the cachet of the symbolism of Bretton Woods. And really, most of the attendees are probably not tptb but just the usual lefties, etc. The only issue that I see is the despoiling of a beautiful place by their mere presence...

Fri, 04/08/2011 - 10:32 | 1149743 LRC Fan
LRC Fan's picture

Which is the bigger lie?

A. "There is no monetization"

B. "People don't want to buy gold"

Everyone knows this monetization is just transitory /sarc

Fri, 04/08/2011 - 10:30 | 1149746 John Law Lives
John Law Lives's picture

Sounds like somebody wants a clean conscience before the great R-E-S-E-T button is pressed.

Fri, 04/08/2011 - 11:01 | 1149876 Clampit
Clampit's picture

More like; "sure hope throwing congress in front of yonder speeding bus about to flatten me..."

Fri, 04/08/2011 - 11:08 | 1149902 John Law Lives
John Law Lives's picture

The attached article is from a presentation by Fisher in 2008.  He realized then how bad things were, and the federal debt level has exploded since then.  The Fed is not going to be able to print $100+ Trillion and eradicate the exploding debt.  The R-E-S-E-T button will be hit long before then.

Fri, 04/08/2011 - 11:44 | 1150087 Clampit
Clampit's picture

Skimmed the article, and what stands out to me is the deflection; "This situation is of your own creation." Rather like blaming the child when an emptied candy jar was left open.

It's all political posturing as to who will take the fall after pressing the button, which is patently absurd in a tango.

Fri, 04/08/2011 - 10:31 | 1149750 Life of Illusion
Life of Illusion's picture


The every 30 day talk shit Fisher. I guess its just part of his lip servicing job assigned from the top down.

Fri, 04/08/2011 - 10:35 | 1149755 DonnieD
DonnieD's picture

Send Fisher to Squawk Box so Joe and Becky can explain the benefits of the "wealth effect" to him. That will change his mind.

Fri, 04/08/2011 - 10:33 | 1149756 slaughterer
Fri, 04/08/2011 - 10:44 | 1149804 alexwest
alexwest's picture

yep hello mr freid alx

Fri, 04/08/2011 - 15:50 | 1151110 duncecap rack
duncecap rack's picture

All the rich people got off the titanic. The poor people were locked downstairs to go down with the ship.

Fri, 04/08/2011 - 10:35 | 1149758 Sutton
Sutton's picture

US deficit-about 100 billion a month.

Fed POMO schemes-about 100 billion a month.

These "Hawks" are just as bad as BernankYellenBullshittard etc...

Fri, 04/08/2011 - 10:38 | 1149764 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

{ Dup. }

Fri, 04/08/2011 - 10:38 | 1149768 RobotTrader
RobotTrader's picture

Funny thing how all this liquidity sloshing about is actually piling into retail stocks.

Fisher must be worried about a blowoff top in the XRT...

Each and every day, another consumer name blasts off.

Yesterday, it was BBBY.  Today, a mattress company.

Go figure....

Fri, 04/08/2011 - 10:40 | 1149784 slaughterer
slaughterer's picture

Retail, historically, shows good gains in a rate hike cycle. 

Fri, 04/08/2011 - 10:53 | 1149832 scratch_and_sniff
scratch_and_sniff's picture

Robo, mate, old chum, dont you ever get tired of the hostility?

Fri, 04/08/2011 - 10:52 | 1149833 SheepDog-One
SheepDog-One's picture

And it will all be suddenly gone soon, leaving most all people holding a bag of smoking ashes. So sad.

Fri, 04/08/2011 - 11:00 | 1149873 DonnieD
DonnieD's picture

Edible mattresses going parabolic

Fri, 04/08/2011 - 10:41 | 1149772 Debtless
Debtless's picture

The whole idea of a private corporate entity being able to receive interest on self-printed money for a govt to borrow is ludicrous. The rest of the conversation just becomes noise & spin.

Fri, 04/08/2011 - 10:45 | 1149800 LawsofPhysics
LawsofPhysics's picture

And that, in a nutshell, is the bottom line.

Fri, 04/08/2011 - 10:37 | 1149775 slaughterer
slaughterer's picture

Anybody want to chime in on WHAT YEAR the dollar will reverse:

A.) 2011

B.) 2012

C.) 2013

D.) 2014

E.) Some year out in the future which we will never live to see.

Fri, 04/08/2011 - 10:43 | 1149798 depression
depression's picture


Fri, 04/08/2011 - 10:54 | 1149836 SheepDog-One
SheepDog-One's picture

Sometime in 2011, there will be no more dollar.

Fri, 04/08/2011 - 10:42 | 1149782 overmedicatedun...
overmedicatedundersexed's picture

ben asks" Are you talking to ME, are you talking to ME??' as he picks up the hand gun. Fisher you useless piece of shit..

Fri, 04/08/2011 - 10:41 | 1149789 InconvenientCou...
InconvenientCounterParty's picture

OK Fischer; think you are committed? Prove it with gasoline and a match.

Fri, 04/08/2011 - 10:45 | 1149796 Everybodys All ...
Everybodys All American's picture

Another comedian working at the Fed ... er Greece er Ireland ...

Fri, 04/08/2011 - 10:43 | 1149797 Hondo
Hondo's picture

Well, either he doesn't really understand monetary policy or he's a complete fool or thinks you are.

Fri, 04/08/2011 - 10:45 | 1149802 Rikki-Tikki-Tavi
Rikki-Tikki-Tavi's picture

Clearly lacking that big picture and complex thinking skillset coming from having done a PhD - he simply doesn't get it's "transitory"! Can't imagine how the other Fed Presidents most feel at the meetings with such a simpleton in the room.

Fri, 04/08/2011 - 10:47 | 1149805 Rockfish
Rockfish's picture


Noun: (in Christian theology) A state of eternal punishment and damnation into which a sinful and unpenitent person passes after death. 
Fri, 04/08/2011 - 10:53 | 1149829 InconvenientCou...
InconvenientCounterParty's picture

LOL! That explains why no one is getting justice in this life.

Party on then.

Fri, 04/08/2011 - 11:15 | 1149957 assumptionblindness
assumptionblindness's picture

Justice is the concept of moral rightness based on ethics, rationality, law, natural law, religion, fairness, or equity, along with the punishment of the breach of said ethics.  

Is it just me or does this defitnition elicit an urge to giggle among a lot of us? 

It may take several lifetimes, my friend.

Fri, 04/08/2011 - 10:52 | 1149808 TruthInSunshine
TruthInSunshine's picture

I made a prediction on the silver over 40 thread last night that it's already been decided behind the scenes that The Bernank is out.

This isn't just talk of political cover from Fischer. I don't believe so.

04-08 10:46: Fed's Fisher says QEII may need to end early, Reuters reports

The scary aspect for those not in the club is what we're about to see when the smoke clear, which is anybody's guess.

Does the Fed pull a Tunisian Fruit Peddler self-immolation, only to come back in some even more devious, scheming, stealthy and destructive form?

"We'll see," says the Zen Master.

Fri, 04/08/2011 - 11:01 | 1149865 SMG
SMG's picture

I agree with you.   But that's the problem when your government is run by a cabal, only they know, all you can do is react like a peasant.

Fri, 04/08/2011 - 11:07 | 1149910 Ignatius J Reilly
Ignatius J Reilly's picture

In a desperate move to quell the inflation uproar that will come this summer from the people, Obama will fire Bernanke this fall.  QE3 will already be in full swing, but might be cut back at that point.  That is my bold prediction.

Fri, 04/08/2011 - 11:24 | 1150004 TruthInSunshine
TruthInSunshine's picture

Team NerObaMao are watching their approval ratings from white and independent voters erode faster than the speed of light.

And retirees with savings...oh, Maximus, you can literally hear the rage of the blue hairs. And they vote.

Fri, 04/08/2011 - 12:00 | 1150160 Sunshine n Lollipops
Sunshine n Lollipops's picture

If voting changed anything, they'd make it illegal.

Fri, 04/08/2011 - 11:16 | 1149913 Ignatius J Reilly
Ignatius J Reilly's picture


Fri, 04/08/2011 - 10:47 | 1149811 Sutton
Sutton's picture



New girl?

Fri, 04/08/2011 - 10:57 | 1149849 RobotTrader
RobotTrader's picture

Yep, I promised lieutenantjohnchard that I would get rid of the "catfish mouth" Alessandra if silver ever crossed $40.

Fri, 04/08/2011 - 12:06 | 1150180 lieutenantjohnchard
lieutenantjohnchard's picture

was alessandra a squeeze of yours?

Fri, 04/08/2011 - 10:51 | 1149821 Milton Waddams
Milton Waddams's picture




Fri, 04/08/2011 - 10:57 | 1149848 scratch_and_sniff
scratch_and_sniff's picture

That avatar sums up blankfein perfectly, a patronising manipulating browbeating psychopath. I would gut the motherfucker like a fish.

Fri, 04/08/2011 - 10:52 | 1149826 Misean
Misean's picture

The only thing preventing cascading cross defaults is the Feral pouring money into the banking system. Withdrawal of monetization ends the ponzi.

Fri, 04/08/2011 - 10:57 | 1149845 SheepDog-One
SheepDog-One's picture

Exactly right. 

Fri, 04/08/2011 - 12:33 | 1150326 mendigo
mendigo's picture

bernanke has been supplying crack to the junkie

the junkie now has him by the balls with pliers

Fri, 04/08/2011 - 10:53 | 1149839 MGA_1
MGA_1's picture

Now, if we could just monetize the debt and keep commodity prices down.....  hmmm....

Fri, 04/08/2011 - 10:55 | 1149843 oc
oc's picture

Dollar close to breaking below 75. gold up.

Out roll the mouthpieces. Same old.



Fri, 04/08/2011 - 10:59 | 1149850 earnulf
earnulf's picture

In order to put our fiscal house in order, there must be an agreement on what the problem is.   For Democrats, the fiscal problem is that the tax rate is too low and not enough people/companies are paying their "fair" share.    There are too many weapons and not enough flowers.   For Republicans, the fiscal problem is that the tax rate is too high and that well-to-do taxpayers/companies would create jobs if we just cut their taxes more.   There are not enough weapons and too many social programs where the leeches bleed off hard earned tax dollars.


I think the problem is that there are not enough mirrors in Washington.


Our problem is greater than the sum of the politicians gathered in Washington, crying about the problem and proposing thier solutions.   NIMBY is alive and well on both sides of the asile.   Let someone else bear the burden of cutting the debt.   Let's blame "speculators" and "transitory pressures" for the problems.


Where are the mirrors?   

When congress approves weapons programs that the Pentagon doesn't want or need.

When they cut taxes to the top 1% of Americans because jobs will trickle down

When pork barrell spending is required to get re-elected, after all, isn't that why they are in Washington to begin with?

When 20% of the american population is being fed each day thanks to the government food stamp program.

When more than 10% of the work force is out of work and another ten percent is under-employed (okay, the numbers are not precise, but they are in the ballpark for this purpose)

The only fiscally prudent way out will no longer work.   Raise the interest rates and you crash the economy.   Stop QE and you crash the economy.   Cut government spending and raise taxes and you crash the economy.   Do nothing and you will eventually allow the economy to crash because you did nothing.      I can't see the future, but the indicators are the other side of the fiscal hurricane wall cloud is approaching and i think the storm is continuing to grow in strength.   Enjoy the eye while you can.


Fri, 04/08/2011 - 11:46 | 1150094 FreedomGuy
FreedomGuy's picture

Personally, I err on the side of spending. When you look at tax revenue charts of the past three or four decades you see very nice, even impressive growth of revenues. In fact, in the late nineties revenues grew so fast that it overtook spending. That in turn (as I predicted back then) gave a green light to the Congress to spend even faster rather than retire debt. It was meth to an addict. So, I believe that spending is and always has been the primary problem. That is closely related to promising things we cannot pay for in entitlements.

I also believe that we will not solve the problem. We have a fiscal problem that is simply to large, too close and too dangerous to solve. The Republicans may make things better, but they will not solve it. They are not asking government to actually get any smaller...just a little cheaper. Every agency stays in place. When they cannot even defund Planned Parenthood or PBS or the NEA, peanut sized ticks on the government corpus, there is no real hope.

Fri, 04/08/2011 - 10:57 | 1149854 Muir
Muir's picture

"Well, thanks Dick. You are only $2.6 trillion dollars late."


Not really, hyperinflation is not a given...yet.


Fri, 04/08/2011 - 11:05 | 1149887 buzzsaw99
buzzsaw99's picture

What an assclown! The fed's duty is to monetize the toxic assets of imprudent joo banksters who puppeteer the imprudent frauderal gubbermint bitchez!

Fri, 04/08/2011 - 11:06 | 1149906 THE DORK OF CORK
THE DORK OF CORK's picture

Long winded......... I must confess I only got half way before I gave up - but regards incorporating debt on the CBs balance sheet - it must do so if it bails out everybody.

There is only so much cream to go round although their efforts to continue to push a artificial yield on paper is a effort to reduce the opportunity cost of players who may want or feel the need to rush to the PMs maybe logical from their perverted view of things

If they really belived in their paper empire they should have defaulted on a significant amount of their bank debt and then raised rates - seems simple to me but obviously the entire matrix is beyond compromised.

Anyhow anybody could see something coming down the tracks - thanks for holding everything together so I could transfer paper claims into physical.

Now F$£k off.

Fri, 04/08/2011 - 11:08 | 1149919 Lord Peter Pipsqueak
Lord Peter Pipsqueak's picture

Who would a thunk it? A lying central banker?My god,what next - lying politicians?

Fri, 04/08/2011 - 11:55 | 1149946 web bot
web bot's picture

"We would likely agree that it resulted from a combination of factors, including the speculative excesses that occur when interest rates remain too low for too long; the consequences of systemically important bank and financial intermediaries embracing risk-management tools that are formulaic and dependent upon “quant jocks” rather than upon common sense and good judgment; the abuses that ensue when regulatory authorities let down their guard; the comeuppance that inevitably occurs when policymakers and their advisers are lulled into complacency with theoretically comforting, but nonsensical, shibboleths like “efficient markets”; or just the financial tomfoolery that disturbingly repeats itself at periodic intervals throughout history when, in the memorable words written in 1856 by the English essayist Walter Bagehot, “[A]t particular times … people have a great deal of … money…. At intervals … the money of these people … is particularly large and craving: it seeks for some one to devour it, and there is [a] ‘plethora’; it finds some one, and there is ‘speculation’; it is devoured, and there is ‘panic.’”


Just take this blog and anywhere you see 2008, replace it with "commodity bubble of 2011".

The market is being goosed. This is just Act 1 of several. Hold on to your physical and buy when the crash comes... because something very ugly is coming. The commodity market is unsustainable and when it crashed, get in PMs... because it won't be long until the US dollar comes crashing down.

Fri, 04/08/2011 - 12:09 | 1150186 Irwin Fletcher
Irwin Fletcher's picture

The comment you highlight illustrates that this is all part of the con game. We might agree with Dick about the speculative excesses, but it stops there. Regulatory authorities didn't let down their guard - they're part of the fraud and he knows it. Policymakers weren't lulled into complacency for the reasons he describes, but because the banksters pay for their election campaigns and write their legislation. He quotes two people making very simple assertions, and makes it clear that they were NOT economists, yet magically they said something smart. Dick's just telling people what they already know in an effort to keep the heat off the real problem - the people who, to his great benefit, perpetuate systemic fraud.

Fri, 04/08/2011 - 11:17 | 1149962 Catullus
Catullus's picture

In contemplating future policy of the Federal Reserve, it is important to remember the frightful predicament we faced in the fall of 2008. The financial gears of our economy-the most powerful and important economy in the world-had ground to a halt. The entire panoply of markets for financial instruments essential to the daily lives of businesses and individual citizens-interbank lending, commercial paper, asset-backed lending, money-market mutual funds and the mortgage markets-seized up. In the blink of an eye, liquidity and trust in financial counterparties disappeared. In those darkest of days, a colleague of mine wittily summed up what had transpired by noting that on the balance sheets of the most important financial institutions, “nothing on the right is right and nothing on the left is left.”

This statement is total bullshit unless you motherfuckers allow an audit. You cocksuckers were protecting profits and bonuses of a handful of trading firms. And guess what, you can't tell me otherwise unless you allow everyone to see the books. Your word is shit right now.

And if that is true, then the system itself stinks. Why let multi-generational and multi-century wealth disappear in the blink of an eye and have the balls the call this stability.

Oh, and a global central bank will be just as bad and even more unaccountable.

Fri, 04/08/2011 - 11:18 | 1149978 aerial view
aerial view's picture

I guess it's time to play "good cop, bad cop" at the Fed while Congress continues it's academy award performance in "As the World Crumbles".

Fri, 04/08/2011 - 11:22 | 1149984 JollyRoger
JollyRoger's picture

Sorry Dick, the US Government is backed into a corner and needs the Fed to monetize the debt.  The alternatives would accelerate your plans to slowly decimate the middle class standard of living.

Fri, 04/08/2011 - 14:18 | 1150734 FreedomGuy
FreedomGuy's picture

I don't think there's any plan or method where the middle class doesn't get creamed. Good plan, bad plan, the bill's coming due. I just hope some heads roll in some final accounting. I am hoping for an economic version of the Nuremburg trials one day.

Fri, 04/08/2011 - 15:33 | 1151037 JollyRoger
JollyRoger's picture


Fri, 04/08/2011 - 11:24 | 1149999 TexDenim
TexDenim's picture

God bless Richard Fisher! Finally, some sense from a Fed banker.

Fri, 04/08/2011 - 23:51 | 1152718 thames222
thames222's picture

yes, finally one of the inmates comes up with something a bit intelligible.  Monetizing debt is absolutely our first avoidance in this whole recovery.  the dollar's done for.

Fri, 04/08/2011 - 11:33 | 1150031 Bansters-in-my-...
Bansters-in-my- feces's picture

Sounds like Fisher is campaigning.
Fuck off and die Bankster.

Fri, 04/08/2011 - 11:39 | 1150073 gkm
gkm's picture

Kind of like that ferry that left the port with its bow door not quite shut.  No problem - we`ll just hammer it back into place on the fly and ....

Fri, 04/08/2011 - 11:41 | 1150079 Bansters-in-my-...
Bansters-in-my- feces's picture

In case I forgot to say it in the last comment...Fuck off and die Fisher.

Fri, 04/08/2011 - 11:55 | 1150140 rlouis
rlouis's picture

I watched while Alan Greenspam and then Ben Bernbank ran over moral hazard like a drunk driver running over a little old lady in a cross walk.  Moral hazard exists wherever integrity and central bankers meet.

Yeah, Ben's 15 minutes of infamy - watching him [not] stop inflation, because it's not in core.  Maybe Ben will play the part of the sacrificial lamb for Obummer over Easter.  /sarc off

Fri, 04/08/2011 - 12:11 | 1150196 jsavage
jsavage's picture

Dick "no balls" Fisher is a fade

Fri, 04/08/2011 - 17:09 | 1151537 PhattyBuoy
PhattyBuoy's picture

"You remember Dick?"

"Come on Dick ...".

"The moral is don't be a dick - Dick!".

Fri, 04/08/2011 - 12:10 | 1150199 Sunshine n Lollipops
Sunshine n Lollipops's picture

Having already peeked inside that door [monetizing gov't excesses]. . . 


Peeked? Oh, that's rich.

Fri, 04/08/2011 - 13:33 | 1150544 Cash_is_Trash
Cash_is_Trash's picture

Pandora's box niggazz

Fri, 04/08/2011 - 12:11 | 1150202 GoinFawr
GoinFawr's picture

@ Yen Cross:
Well, you were fishing for Fisher; so what's the catch?

Fri, 04/08/2011 - 12:25 | 1150276 davepowers
davepowers's picture

ok, the Fed's balance sheet is out for the latest week.

On the asset side, the FEd bought $24 bn in Treasury paper, aka QE. 

On the liability side, the FED unwound $11 bn in the ballyhoo'ed (around ZH anyway) reverse repos, meaning they had to come up with $11 bn in cash to pay back the banks. Maybe some of that accounted for the growth in Treasury paper on the BS, which would mean that QE was wound down a bit for the week. It's been on the slim side the prior week.

Plus, the FED had to cover $18 bn in checks drawn for govt. operations on the Treasury's checking acct at the FED.

All told, the FEd had to cover (assuming no overlap in the reverse repo reversing and Treasury paper acquisitions) roughly $53 bn.

Where did they get it? They typed $47 in new bank reserves, printed another $4 bn in paper FRNs and got $4 bn from 'other liabilities.'

This suggests, again, that for all the focus on quantitative easing via purchase of Tresury paper (or what the heck else they're buying), the better focus may be on level of bank reserves. Those reserves might just keep growing even if the FED drastically curtails QE.

And if the supposedly 'just sitting there' reserves aren't just sitting there, but are the fuel via the Fed Funds market, securities lending and complex repo activity for stock and commodity speculation, then such speculation need not end if there is a formal conclusion to QE.


Fri, 04/08/2011 - 12:27 | 1150305 bbaez
bbaez's picture

We have always considered ourselves insular to the economic flatulents here in Dallas and Texas in general.

We have our own energy in oil, natural gas and separate electrical grid.  We also receive imports in Galveston and export computers/components Dell and HP.

I think Fisher has had his Head in the Sand or somewhere else because I do not see how he missed it.....

Fri, 04/08/2011 - 13:34 | 1150553 nah
nah's picture

dont stop government please... i know we have more money, give it some time SOMEBODY anyways


look the wars pay for themselves

Fri, 04/08/2011 - 14:10 | 1150691 disabledvet
disabledvet's picture

What Fed head Fisher is not adding is that "the biggest beneficiary is Wall Street itself in debt monetizations."  Obviously the government benefits the most WHEN THEY PASS A BUDGET AND PAY THE PEOPLE'S FUCKING BILLS.  When they cannot do or more amazingly in public won't even show an interest in "starting the debate even rhetorically in moving in the right direction" (its the abortion lobby!  the abortion lobby!) then the only thing your government is saying is "don't worry--we have a Wall Street bailout!"  Really?  "You give Wall Street the money and then they just give it right back?"  And of course this is what Bernanke understands.  "Your tax money only flows one way--and that's out into the marketplace and not the other way around."

Fri, 04/08/2011 - 14:23 | 1150746 honestann
honestann's picture

End the federal reserve.

End the federal government.

Remove the balls and chains from individuals.

We do not want masters.  We will not tolerate masters.

Fri, 04/08/2011 - 14:24 | 1150749 sbenard
sbenard's picture

No monetization of the debt?

Wasn't it here on ZH a few days ago that we learned that the Fed is "monetizing" 83.4% of U.S. government debt issuance?

Fri, 04/08/2011 - 16:33 | 1151300 Seymour Butt
Seymour Butt's picture

Dallas Fed's dick must be smoking the same stuff as Charlie Sheen.

Fri, 04/08/2011 - 21:18 | 1152313 tomster0126
tomster0126's picture

You can call it anti-American, but being anti-American would be to settle for something that's less than the best.  We should have the best talent and minds in our nation and running our fiscal/monetary systems, but we have flunkies instead.  Being anti-American would be sitting around and doing nothing about it instead of airing our frustrations and demanding better policy from our leaders.

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