Side note: I haven’t seen it since I was a kid, but I vaguely remember Innerspace being one of the greatest movies ever. Worth revisiting?
Federal Reserve Bank of Dallas President Richard Fisher, Today, signaling he may vote against QEII (my bold):
“Having done our job, I see many risks to the Fed overstaying its welcome,” Fisher said during the Society of American Business Editors and Writers 2011 Annual Conference.
“Inflationary impulses are gaining ground in the rest of the world,” he said. With businesses grappling with higher commodity prices, “my gut tells me that this will result in some unpleasant general price inflation numbers in the next few reporting periods,” and “there is the risk that we might breach our duty to hold inflation at bay.”
Fisher also checked his gut in March, 2008, right before Bear Sterns collapsed (my bold):
Here, of course, I refer to the potential harm to the consumer and the business and financial sectors alike by unwittingly allowing the perception to take hold that, as the New York Times editorialized in its lead front page article last Thursday, “the Federal Reserve, signaled [its] readiness … to bolster the economy with cheaper money even though inflation is picking up speed.” Talk of “cheap money” makes my skin crawl. The words imply a debased currency and inflation and the harsh medicine that inevitably must be administered to purge it. So you should not be surprised that I consider the perception that the Fed is pursuing a cheap-money strategy, should it take root, to be a paramount risk to the long-term welfare of the U.S. economy….
…We cannot, in my opinion, confidently assume that slower U.S. economic growth will quell U.S. inflation and, more important, keep inflationary expectations anchored. Containing inflation is the purpose of the ship I crew for, and if a temporary economic slowdown is what we must endure while we achieve that purpose, then it is, in my opinion, a burden we must bear, however politically inconvenient. To some, this may appear a Hobson’s choice. I don’t see it that way. Our obligation is to prevent inflation in order to sustain long-term employment growth. I believe that the best way to cut through the treacherous economic waves that are upon us and keep our ship steaming forward is to stick to our purpose. [Speech, March 4, 2008]
With the economy about to go into the deepest recession since the Great Depression, with shadow banking runs starting to rev up, with massive deflationary pressures being put on the entire economy, Fisher’s gut tells him to fight inflation.
He also was worried about inflationary pressures last August. And every single other time anyone has ever heard him speak. How’s inflation doing during this time period?
Keynes changed his mind on monetary policy, giving us the great quote “When the facts change, I change my mind. What do you do, sir?” Will any of the regional bankers actually change their minds to re-learn old facts?