Fed's Fisher To Santelli: "This Can't Go On Forever"

Tyler Durden's picture

While notably 'not' the Fed's opinion, Dallas Fed head Richard Fisher provided more than a few compellingly truthy comments in this excellent discussion with CNBC's Rick Santelli. It is fiscal policy that is holding us back, he warns, "we have a massive fog here," and despite the extremely accommodation monetary policy, we are not seeing the transmission to job creation."

The "conditions of total uncertainty," mean the politicians are holding us back; but it is when Santelli asks him about the Fed's exit that things get a little uncomfortable, "no central bank anywhere on the planet has the experience of successfully navigating a return home from the place in which we now find ourselves." When pressed he exposes the flaw (much to the chagrin of Kuroda and Bernanke we suspect), "somewhere we have to have practical limits as to where we can build the balance sheet. We're moving in the direction of a $4 trillion balance sheet. We know we can't go on forever."

Critically, much as we have pointed out numerous times, Fisher reminds his audience that, "[the Fed] is buying a little more than 90% of new gross mortgage backed security issuance," amnd it is there that Mr. Fisher explains his preference for tapering the MBS purchases since "we have had a rebound in housing."

The discussion extends to Dod-Frank's ineptness, the subsidies for TBTF banks, and Fisher's clear dismay at the 'too-big-to-jail' attitude that pervades Wall Street, but he fears he will be "horribly disappointed with our elected officials."



Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Shizzmoney's picture


"We know we can't go on forever."

Sure you can.....all you have to do is threaten to kill everybody #problemsolved

Pinto Currency's picture



Fisher - Another death bed conversion.

nope-1004's picture

They know they can't go on forever, but they have no other choice.


Supernova Born's picture

This has never been more bizarre.

JPM Hater001's picture

Oh wait.  This has shades of bizarre left that will leave almost everyone's jaw wide open.

Pure Evil's picture

They should replace Obungo with Richard Fisher as POTUS, he lies better and he doesn't need a teleprompter.

Only 2% inflation!?  Must have been remembering the size of his potus when he said that.

Pinto Currency's picture


Fisher fears we will be "horribly disappointed with our elected officials".

Never angry with the vapor dollar creators who blew a bubble in the 1920s and crashed the economy in 1929 and who blew two bubbles (.com and housing) and crashed the economy in 2008.

Only angry with the elected officials.   Repeat.

Not quite the death bed confession at first appearanc.  Passing the irredeemable buck.

AlaricBalth's picture

From the Office of Debt Management 2Q2013 Report ZH posted earlier today.


Projected evolution of Fed Balance Sheet : Assumptions

QE expected to continue a current pace until end 2013
– Fed stops reinvesting paydowns by end 2014
– In “no asset sales” scenario:
Fed balance sheet allowed to run-off until it reaches trend level in 2022.
Trend defined as 2006 level adjusted for nominal GDP growth (5% in 2013/2014 and 4.5% thereafter).

In “asset sales” scenario:
Approximately $100bn/year in MBS sales from 2016 to 2020.
Capital losses on sales reflect projected yield curves described on slide 17. (Yield curve forecast calls for 10yrT at 2.76 in 2013 and rising to 4.83 in 2018)
Fed balance sheet reached trend level by 2020.

{The GDP assumptions seem very aggressive and the 10Y yield projection is quite conservative. It was an interesting piece of fantasy which is worth the time to look through.}

TwoShortPlanks's picture

Arhhh, fuck this shit….let’s get this straight.

QE was intended to take Bonds off the Open market thereby forcing Banks to invest reserves into the Private Sector (Commercial and Retail), as well as the Public Sector (Infrastructure)….ok?!

QE today is completely the opposite; Banks and large Companies have been recap’d, then they pumped cash into Bonds and now they’re pumping cash into Indices and Equities.

The reason the US economy hasn’t recovered is two fold. The first is that the debt is too great however, the largest factor by far was that there were no conditions placed upon the pathways in which QE fund flows were to be directed (Infrastructure projects etc). The money never ended up anywhere near the real economy, it was spent at the Casino Americana.

When you throw unlimited amounts of cash at the banks without conditions, do you really think that they’ll feed it into the economy? NO. FUCKING. WAY.

If the Fed guaranteed all deposits, paid-out $XYZ onto either existing debt or asset deposits, and funded large scale infrastructure works, while the US Gov nationalised any failing Banks, then the US probably would see some level of recovery by now.

…..unless this is all about supporting the Derivative Market and the Shadow Banking nightmare

The only thing that would make me happier than that is to see someone, someday, walking around in a Blythe Suit.

"Say blythe, are you about a size four-teen"

NoDebt's picture

Agreed.  When this monetary madness started even the Fed stated outright that they were measures DESIGNED to buy time for recovery.  They said OUTRIGHT that they were playing for time- they made no bones about it.  That language has subsequently disappeared and QE is S.O.P. with vague pegs to things that will never happen (and if they do they'll move the peg).

I know a few memebers of the Fed would love to see an exit to QE.  They wish they could.  They're not so completely blind as to think there isn't damage being done and bubbles being blown (they read ZH, too, you know plus they have access to the REAL data we don't).  But the minute they try it and the markets and economy tank they'll stomp right back down on the pedal.  Politicians will force them to, even if they somehow have the stomach to refuse on their own.

They're in a TRAP.  To whatever extent they want out of the trap, the reality is it will requiring gnawing off a leg at this point.  They aren't desperate enough yet.  They will keep going.  That's why it's a trap.


Pinto Currency's picture


The Fed's been running a monetary scam for a century.

Now they are just buying time?  For what?  They've suppressed interest rates and blown a debt bubble so the US is in a total debt position (fed, state, corp, municipal, consumer) of $55 trillion now and the economy is collapsing (in real, non-BLS b.s. terms).

So what is the Fed buying time for.  Hopefully buying time so that we can end the fed, put the US onto  gold & silver money and end fiat debt currency.  Any other "we were just (whimper) buying time" argument is hogwash and simply pathetic.

TwoShortPlanks's picture

The Fed is buying-time to try and get China to blink first. China is the BRICS.

caShOnlY's picture


I read everyone of your posts yesterday from the JPM eligible post and the links you also provided.   You know your stuff and I enjoy reading them.  I felt almost compelled to, strange but the info seems solid.  I was taught statistics in the 80's to apply in the manufacturing sector for quality assurance.  Using statistics you can surgically dissect something with math and math doesn't lie (ok ok forget the guvmint right now).  So I tend to give credence to statisticians over economists, market monetarists and the like.  There is only one statistician right now I feel almost compelled to seek out and read or listen to what he has to say and that is the infamous GOLDEN JACKASS

After reading your comments on ZH last night I got that same compelling feeling and put 2 + 2 together with the intellegence that was written.  Glad to see you here, Mr. Willie, I appreciate your synopsis.

EscapingProgress's picture

The leg that will be knawed off will mostly likely be millions of eaters who don't even know what monetary policy is. We are all only about a week without food away from becoming cannibalistic savages, keep that in mind.

Ness.'s picture

'How Bizzare?'  I like the song...  Man,  those was good times//


At one point in the video I think I saw Benny Bucks raining down on the peeps!!

Al Gorerhythm's picture

Fisher - Another death bed conversion.

There are no atheists in a fox hole, particularly when there is a tank rolling over them.

MrBoompi's picture

The sun will also burn itself out someday.

rsnoble's picture

It can't, but they will try.  They need it to so they can get what they want........the guns, world gov't, who knows what the US fucktards have planned.  It's never going to fucking work and I suspect many of us will die before these goddamn clowns are fucking flushed.

max2205's picture

Who isn't horribly disappointed with our POS elected, if they really are, elected officials?

Stockmonger's picture

Paul Krugman teaches us that this is nonsense.  The Fed and government can't default and the Fed has proven it can defeat the bond vigilantes.  If spending creates inflation that's good because it will raise output thanks to the Inflation Fairy and export competitiveness, as long as everybody doesn't devalue.

The solution to our problem is taxing and spending to raise aggregate demand and pauperize those selfish thrifty individuals who are keeping this slump going.

venturen's picture

Did the FED get it right last time? The same idiots are on Wall Street and they are controlling virtually the same FED. They are happy to kill the host beast for one more bonus. Next time is going to be ugly. If you look in Greece the far right are now gaining 30% of the vote. The people getting ripped off by the wonton fraud on Wall Street aren't going to wait for police next...there will be direct action!

Hedgetard55's picture

Wanton fraud. The wonton fraud is in Chinatown.

ziggy59's picture

Spelling Cop^....be awhere...:)

Ropingdown's picture

It makes me laugh:  We have ZIRP because, supposedly, people are consuming too little.  Yet the theory has always been that the deposits of savers are to be channelled to deserving investments through credit extended to producers.  Any push to make our own national economy efficient enough to increase export share has been abandoned.  Indeed, we have US companies taking US-created tecnnology offshore, producing the goods, selling them back into the US, but keeping the profits in the (or 'a') foreign subsidiary.  Politicians spoke about "the ownership society."  Well, congratulations.  We have it.  Those of us who own steer our assets to corps producing abroad.  Sayonara to "the production society." 

booboo's picture

Fisher bad cop
Benanke good cop
Nuff said

Bay of Pigs's picture

Kocherlakota the Village Idiot?

CrimsonAvenger's picture

So much competition for that role. Do we have to have just one?

ebworthen's picture

Dodd-Frank is a joke.

Restore Glass-Steagall.

Zero Bailouts.

No derivatives or securities.

20% down and bank holds the loan for life.

Enforce the rule-of-law.

End the FED.

Too simple, I know.

p.s. - Funny how he compares MBS purchases by the FED to the Hunt brothers buying Silver.

Mojeaux18's picture

"Best looking horse in the glue factory" 

Hedgetard55's picture

It can't go on forever, but it will go on until Ben leaves the FED.

I am a Man I am Forty's picture

"not forever", now that's some good intel, quick, hit the sell button they are going to stop buying bonds in "not forever"

logicalman's picture

No point in Dorothy clicking her heals

Hedgetard55's picture

Heels. You went to public school, right?

TwoShortPlanks's picture

and Wall Street is run by cunts which attended Private Schools...who's more dangerous?

Tuffmug's picture

 Fisher was not honest.

He should have admitted that this whole mess was caused by the Fed and the Fed should be abolished. Then he should have taken a gun to his head and fired.



sgorem's picture

+16 trillion...........and counting

mendigo's picture

Dirty trick, telling the truth when people have learned to assume that he is lying. Next they will find he is sending inappropriate emails to clerks. So people with associate financial honesty with perversion.

sitenine's picture

WTF? I used to admire this man, but WTF? He's straight up asserting now that the Fed is doing the right thing? And it's the government's fault that there are no new jobs being created? Seriously? We're so fucked.

logicalman's picture

You have to understand that the government is irrelevant - they just dance to the tune of the banksters.


Nearly all the world's ills are the responsibility of the banksters.



Dewey Cheatum Howe's picture

He is partially right. Government policy aka regulations and taxation are absolutely killing the entrepreneurial spirit and choking how the remaining money might be invested. You try getting money to do a non tech or green business start up that the government won't subsidize or back stop in some form. There is that old catch 22 it takes money to make money and with little to no resources it grinds small business creation which in turn creates employment to a halt. Reality is kicking in on this level and more off the books cash work is going on to keep things moving. The keep it in the family operating procedures becoming more common again as of late. Like a family business if you make $100 and employ your kid giving him a $10 salary the family income still is $100 at the end of the day not $90 if you had to employ someone from the outside. Smaller businesses as of late are doing the same when they need work done instead of contracting out for normal things like landscaping for example they will pay cash to their employees who want to make some extra dollars on their day off. Obamacare is going to be a job and wage killer also once it is fully phased in though I do know some businesses that are only putting people on the books for 29 hours a week but at the same time having the people work 40 hours and paying the 11 hours in cash under the table also so the people can afford to buy Obamacare insurance.

QQQBall's picture

"Where we find ourselves." Correction - where you put us...

We are right, the politicians are wrong. 

Money not going into the economy - asset prices have been inflated against low yield; low IRs are allowing some cash flows at low cap rates...there is uncertainty from Washington DC, but also what happens when you end the bond buying?  Too many marginal investments, businesses, underwater homemoaners etc., continue to limp along and I have NO IDEA what comes next from DC or the FED... also, the rule of law is being ignored - its like a 3rd world country and NOBODY is gonna accept super-low yields.


fonzannoon's picture

Fisher is just laying the groundwork for when the fed aborts QE and throws this whole disaster at the politicians feet.

Bay of Pigs's picture

You've been connecting the dots quite nicely lately.

Now, what about that JPM gold vault...

Ctrl_P's picture

AND the community and regional bankers...  nothing like thinning out the competition - again.

Kirk2NCC1701's picture

Nothing goes on forever.  So, who cares!

The only relevant questions for them/anyone to answer are: 

   1. How long will it go on?  Weeks, months, years? 

   2. How will it end and what comes after?

I can use my broken clock twice a day, so I expect more from 'experts' and I really don't give a damn who best tea-leaf readers or intellectual masturbators are.