Last Friday, I had the good fortune to hear a speech by Richard Fisher, President and CEO of the Federal Reserve Bank of Dallas. Fisher has been known for his hawkish views on monetary policy and candid comments as the President of the Federal Reserve Bank of Dallas.
Fisher became head of the Dallas Fed — one of twelve banks in the Federal Reserve system — in 2005 after spending seven years in Washington, D.C., as a top trade negotiator in the Clinton administration and working with former Secretary of State Henry Kissinger as Vice Chairman of Kissinger McLarty Associates, a strategic advisory firm headed by former U.S. Secretary of State Henry Kissinger. In his role as President of the Federal Reserve Bank of Dallas he oversees about 1,300 employees and a district of 27 million people in Texas, northern Louisiana, and southern New Mexico.
As always it was an entertaining yet very on point discussion of what is happening economically in Texas, the rest of the country, and where our monetary policy needs to head.Below is the link to his presentation.
Here are some of the strong points made in the speech
• Texas drink a lot of beer. 34.4 gallons annually. That is a lot of longnecks.
• The concept that too much liquidity can be a very dangerous thing (with beer or finance).
• Texas has led the nation in employment growth for a number of years. If you remove the jobs created in Texas over the last 12 years, the US has actually experienced job loss over the last 12 years in the middle income quartiles. Most of us understand how blessed we are to live and work in Texas, however, the bigger concern is the amount of unemployment and job creation in the rest of the US. The lack of job creation and continued lending regulation is a concern for the long term health of the national economy.
• “It is fiscal policy that is leading to the Californication of our national economy rather than the Texification.”
• “QE (quantitative easing) puts beer goggles on investors by creating a line of sight where everything looks good.”
• “When money is made available at close to free and is widely available, there is a presumption that the central bank will keep it that way indefinitely…a bull market for stocks and the financial world looks rather comely.”
• “Fiscal policy is not an ally of US growth, it is its enemy.”