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."