Ann Saphir and Pedro Nicolaci da Costa |of Reuters report that two Federal Reserve governors are warning that the organization should not participate in unlimited credit issuance to help solve the large budget deficits. Dallas Fed President Richard Fisher said to the Dallas/Fort Worth Minority Supplier Development Council that such credit creation would let loose the "sinister beast" of inflation. Thus such an action "is not an option." He stated, "Our nation has a crying need for public leadership to correct what's wrong in the economy," and that Federal Reserve monetary policy "cannot do it alone" and it "must be complemented by responsible fiscal policy."
Another Fed President, Charles Plosser of the Philadelphia Fed, told a conference at his headquarters that any effort to "resort to the printing press" would fail and could lead to hyperinflation. "Despite the well-known benefits of maintaining price stability, there are increasing calls to abandon this commitment in both Europe and the U.S.," Plosser said.
The Fed bank president for Boston, Eric Rosengren, said that coordinated action by central bankers a few days ago "has been quite successful in changing people's perception about the pressures that were going to be occurring in the euro-dollar market," but he noted that the European governments have "a long way to go."
Plosser thinks governments are partly to blame for the fiscal problems, especially central banks, who crossed the line from monetary policy into fiscal policy with actions during the financial crisis of 2007 to 2009.
"Central banks are under increasing pressure to act, both because fiscal authorities have been unable to make credible commitments to maintain fiscal discipline and because central banks have been willing to engage in actions that stray into the realm of fiscal policy -- for example, purchasing assets of the housing sector," he said.
Plosser would prefer to go back to using the federal funds rate as the primary tool for monetary policy. He says he opposes any plan to ease fiscal policy through large purchases of housing debt. He views such action ads de factor credit allocation to a specific sector.
Fisher gave no indication he favored further easing. He referred to a recent conversation he had with Juergen
Stark of the European Central Bank, who spoke at the Dallas Fed two days ago. Fisher said that Stark reminded him that the U.S. has an even larger debt burden than Europe.
Summarized from: http://news.yahoo.com/fed-hawks-central-banks-cant-solve-fiscal-woes-160347409.html;_ylt=AnatlQ4j3IlEpciWa0RaYDOs0NUE;_ylu=X3oDMTNtYTd1Y2xhBG1pdANUb3BTdG9yeSBGUARwa2cDZDEyOTBjM2EtZjdkNC0zNGI4LTliNWItZjUxZmU1NWYxNjM4BHBvcwMxNgRzZWMDdG9wX3N0b3J5BHZlcgM1MzBmZDM0MC0xZDJmLTExZTEtYmZmZi0xMzMxOTAxMGNmY2M-;_ylg=X3oDMTI3bzhoY2JpBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QDY29udHJvbF9ub3Byb21v;_ylv=3
Another Fed President, Charles Plosser of the Philadelphia Fed, told a conference at his headquarters that any effort to "resort to the printing press" would fail and could lead to hyperinflation. "Despite the well-known benefits of maintaining price stability, there are increasing calls to abandon this commitment in both Europe and the U.S.," Plosser said.
The Fed bank president for Boston, Eric Rosengren, said that coordinated action by central bankers a few days ago "has been quite successful in changing people's perception about the pressures that were going to be occurring in the euro-dollar market," but he noted that the European governments have "a long way to go."
Plosser thinks governments are partly to blame for the fiscal problems, especially central banks, who crossed the line from monetary policy into fiscal policy with actions during the financial crisis of 2007 to 2009.
"Central banks are under increasing pressure to act, both because fiscal authorities have been unable to make credible commitments to maintain fiscal discipline and because central banks have been willing to engage in actions that stray into the realm of fiscal policy -- for example, purchasing assets of the housing sector," he said.
Plosser would prefer to go back to using the federal funds rate as the primary tool for monetary policy. He says he opposes any plan to ease fiscal policy through large purchases of housing debt. He views such action ads de factor credit allocation to a specific sector.
Fisher gave no indication he favored further easing. He referred to a recent conversation he had with Juergen
Stark of the European Central Bank, who spoke at the Dallas Fed two days ago. Fisher said that Stark reminded him that the U.S. has an even larger debt burden than Europe.
Summarized from: http://news.yahoo.com/fed-hawks-central-banks-cant-solve-fiscal-woes-160347409.html;_ylt=AnatlQ4j3IlEpciWa0RaYDOs0NUE;_ylu=X3oDMTNtYTd1Y2xhBG1pdANUb3BTdG9yeSBGUARwa2cDZDEyOTBjM2EtZjdkNC0zNGI4LTliNWItZjUxZmU1NWYxNjM4BHBvcwMxNgRzZWMDdG9wX3N0b3J5BHZlcgM1MzBmZDM0MC0xZDJmLTExZTEtYmZmZi0xMzMxOTAxMGNmY2M-;_ylg=X3oDMTI3bzhoY2JpBGludGwDdXMEbGFuZwNlbi11cwRwc3RhaWQDBHBzdGNhdANob21lBHB0A3NlY3Rpb25zBHRlc3QDY29udHJvbF9ub3Byb21v;_ylv=3
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