Fed official blames Congress for US economic woes
The Dallas Fed president would rather the central bank had stood pat after expanding its balance sheet to $2.8 trillion.
The Federal Reserve has done its part to jumpstart the U.S. economy but a lack of action by Congress has prevented a recovery, Dallas Fed President Richard Fisher told CNBC.
Speaking just a few days after the central bank took the unprecedented step of declaring an open-ended quantitative easing initiative, Fisher said he objected to the program but understands why the Open Market Committee acted as it did.
Fisher is a nonvoting FOMC member who has been critical of previous QE programs.
"The efficacy of this program is where we disagree. There are costs and benefits. I argue more on the cost side, others argue on the benefits side," Fisher said on the "Squawk Box" program. "A decision was taken. But instead of hammering the Federal Reserve, point your fingers at Congress."
Specifically, Fisher said business owners are plagued with questions of "what are my taxes going to be, what kind of spending patterns are going to come out of the federal government, how do I deal with this explosion of regulatory morass that we have come out of Washington?"
With only FOMC member Jeffrey Lacker dissenting, the Fed said it would buy $40 billion per month of mortgage-backed securities in an effort to drive down interest rates on home loans. The stock market reacted positively to the news Thursday and Friday but the momentum has not carried through this week.
Mortgage rates have fallen about a quarter percentage point since the announcement — "pretty much what I expected," Fisher said — but getting banks to lend money remains a problem.
He said he would have preferred the Fed to stand pat after expanding its balance sheet to $2.8 trillion.
"I think we're at stall speed. I think if we didn't do this we just keep ambling along," he said. "There are too many people out of work. We have a mandate. We're following that mandate given to us by the Congress of the United States."
The Fed actually has a dual mandate — to maintain both full employment and price stability.
But with the unemployment rate above 8 percent for three and a half years and core inflation — not including food and energy prices — within the Fed's acceptable range, the central bank has chosen to target jobs now and worry about inflation later.
Though he disagrees with the decision, Lacker said the Fed has filled its role and now needs Congress to do the same.
"The government has the ability to incent the private sector through tax and spending programs. Get on with it," he said. "We're providing the fuel. It is cheap and abundant. We've provided a lot. It happens to be my personal view we've provided too much."
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Get out out of debt, stay out of debt, save an emergency fund to help cancel future emegencies.
The Republican Congress has become a Black Op. As has its Rovian Political Machine. I love my Republican friends, but something very dark has happened to their political elite.
"cut spending, produce more, and consume less."
See that sounds good and sensible - but tickle down economics created a consumption based economy
tie in NAFTA - american companies shipped jobs overseas and foreign countries that received those goods and jobs - did not reciprocate the favor
In turn - you have a stagnant economy - hardcore staunch capitalism from the dot.com, retail industry, fast food dining - all that stuff is slowing down and globalizing -
In order to get this economy going again - you need a serious infusion of investment in infrastructure projects in this country - people laugh at it now, but if they took it serious in working on solar projects, win projects, roads, bridges, HIGH SPEED RAIL (we are 30 years behind our Asian competitors) - you would see demand in work, high tech jobs again - in turn - you will see the spending thats necessary for our CAPITALISTIC society to function - because as long as people are spending - then small businesses thrive and new businesses are created.
But you have knuckle head conservatives - wanting to get credit for all of it under their watch and not Obama's watch - in turn holding the country hostage by complaining about social policies, in a crappy economy!
DEMOCRATS NEVER VOTED A BUDGET! NEVER VOTED ON ANY
REPUBLICAN BILLS! NEVER VOTED ON ANYTHING TO HELP
TAKE REGULATIONS OF CHEAP ENERGY SO GAS WOULDN'T
BE $4 AND 5 A GALLON! NEVER VOTED ON ANYTHING BUT
DREAM ACT, OBAMADEATHCARE TAX PLAN, STIMULUS,
BAILOUTS AND MORE UNEMPLOYMENT AND WELFARE
AND FOODSTAMPS! YEAH THEY ARE THE PARTY OF THE
POOR AND MIDDLE CLASS MY ****! THEY ARE THE PARTY
OF THE LAZY AND THE SOCIALIST LIBERAL DOPES!
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Breaking up big banks is an untested solution to the too big to fail problem that attempts to isolate and dismantle large, troubled institutions while protecting the rest of the economy.
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