Monday, May 20, 2013

Jeff Cox — The Market Is Not the Economy: What the Fed Misses

"We've made rich people richer," Dallas Fed President Richard Fisher told CNBC in a Monday interview.... 
"This is great for the (Warren) Buffetts and for others who can take advantage of this multiple of great money and cheap money that's been available," he added. "The question is, what have we done for the working men and women of America?"....
As for the "wealth effect" the Fed had hoped to achieve by boosting the stock market with $85 billion of money creation every month, it indeed, as Fisher suggested, has been skewed to upper income levels....
A skeptic on the current Fed approach, Fisher said the tide won't turn until government fiscal policy complements Fed monetary policy.
CNBC NetNet
The Market Is Not the Economy: What the Fed Misses
Jeff Cox | Senior Writer

5 comments:

Unknown said...

Yep, the tide will turn - into another boom-bust cycle.

The aircraft industry has mostly replaced its boom-bust engines with smooth, powerful turbines that require far less maintenance. But we can't figure out how to do the same with finance?

Ignacio said...

It's time for central banking to accept they can't central plan the economy with the current institutional frame, maybe they can create endless demand for paper assets (MBS's) and help out their dead man walking friends at the financial world, but that's about it. Is our entire economic stimulus going to depend on banksters McMansion's purchases financing by central bank infinite back-up and price setting?

- Interest rate manipulation = does not work (at least not how they think it works, it just creates chaos and uncertainty).
- Swapping assets for reserves = does not work (people doe snot borrow more money regardless of bank's balance sheet composition).
- Expectations voodoo = does not work for 99.9999% of the population who do not care about what Bernanke says (neither understand, can't blame them though, for all the silliness going on in financial and central banking world).

Just say that any government liability owned by central banks won't account as debt for the State owning that CB and clearly state deficits are going to be financed by CB's purchase of these debt obligations (like the Japanese have done). Then we can start doing something, so easy!

Unknown said...

He who oppresses the poor to make more for himself or who gives to the rich, will only come to poverty. Proverbs 22:16

Sounds like central bankers won't have much "treasure in Heaven" - assuming they get there.

Anonymous said...

Bingo. However the Fed has had four years to make this point more directly and forcefully and has declined.

Matt Franko said...

Fisher is a GOPer:

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/03/18/paul-ryan-sarah-palin-and-dallas-fed-president-richard-fisher/

Better wise up soon Dems, or the GOP may wise up and take over the high ground wrt economic justice...

GOP made a long term mistake with Nixon's 'Southern Strategy' years ago... maybe Obama's 'Wall St Strategy' will end up being a longer term Democrat mistake..

rsp,