Dallas Federal Reserve Bank President Richard Fisher spoke with FOX Business Network’s (FBN) Peter Barnes about the United States economy and solutions for recovery. Fisher said he was “not concerned about a double dip,” but that “we’re on an edge.” He also spoke about the effectiveness of Federal Reserve monetary policy, saying, “I believe the Fed has done its job and we’ll be pushing on a string if we continue to move down this path unless the fiscal and other authorities incent our businesses to put that money to work.” Fisher said the nation’s fiscal authorities “have done a horrible job” and that “the debt service negotiations were a horrible setback.” Excerpts from the interview can be found below, courtesy of Fox Business Network.
On the outlook for the economy right now:
“It’s a slow slog. It’s anemic, the good news is it wasn’t minus 1.3%, but there’s not much range between those two. This is not robust growth; it’s not enough to replace jobs. People are drawing down their savings in order to consume. We have too many people out of work, so until we put people back to work we are not going to have robust economic growth.”
On if he’s concerned about a double dip recession:
“No I’m not concerned about a double dip, but we’re on an edge here and 1.3% is not overwhelmingly strong.”
On if monetary policy is about tapped out at this point:
“We don’t need more monetary stimulus, we need a more efficient fiscal mechanism. We’ve refueled the gas tanks of the automobile of the economy, but people need to be incented to press on the gas pedal and engage the transmission and move that car forward, the car being job creation and economic prosperity. The liquidity is there, the cost of money is almost null. I believe the Fed has done its job and we’ll be pushing on a string if we continue to move down this path unless the fiscal and other authorities incent our businesses to put that money to work.”
On if the fiscal authorities are doing a good job at incenting businesses to put money to work:
“They’re doing a horrible job. They’ve confused the American people. The debt service negotiations were a horrible setback. Money is abundant; it doesn’t cost very much to borrow. We’ve driven interest rates to the lowest since I was born in 1949. It’s there, it needs to be engaged. The best way to engage it is to provide more certainty.”
On if he’s optimistic about fiscal authorities resolving the problems of our economy:
“When I say they’re doing a terrible job, I’m talking about generations of senators and Congress people, Republicans and Democrats, to me there’s no difference between them. We’ve dug a sinkhole, and we’re throwing our children and grandchildren in the sinkhole. I think it’s shameful. We know as central bankers, if they just rest on that one leg of that three-legged stool that is on us, on the fiscal guys and on the regulators, that always leads to a disaster. We won’t let that happen. We need to have the fiscal authorities get their act together. I’m encouraged they are finally talking about this because it’s gone on like a narcotic for so long.”
On if he’s worried about the financial problems in Europe:
“Our biggest market for selling into is Europe. It’s not for us to prescribe what they need to do to pull the socks up for that economy. We hope they come up with solutions that will lead to economic growth without spurring inflation. Their job is to keep price stability so they’re caught between a rock and a hard place.”
On if we need QE3:
“I don’t believe we do.”
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