Back in 2011 Dallas Fed President Richard Fisher voiced his concerns about QE and how he thought “monetizing the debt” was a dangerous path on the way to insolvency:
“If we continue down on the path on which the fiscal authorities put us, we will become insolvent. The question is when.”
Now Fisher is saying QE did nothing, but he’s also not pointing out that it didn’t cause us to go bankrupt either. Fisher was against QE from the start, but not because he thought it would do nothing, but because he was worried about the precedent of monetizing the debt and how we would ever be able to control our fiscal situation once the central bank engaged in such a policy. At the time, I said it was a bunch of nonsense. I explained how QE was a simple asset swap that likely wouldn’t have much of an impact on the real economy and that it certainly wouldn’t contribute to bankrupting the USA.
So, I find it odd how he’s now so blithe about the whole thing. Did he forget all the bankruptcy predictions he made? The reason this irritates me is because he’s not really shifting his position. He’s just moving the goal posts to claim he was right. It would be one thing to come out and say “QE did nothing, but I was also wrong about the insolvency concerns because I may have misinterpreted exactly what QE’s impact is”. Of course, a voting Fed member would never say that in public, but still – what is it these days where people can be so incredibly wrong and just sweep it under the rug. Worrying about government insolvency and explicitly contributing to such silly fears are a big deal coming from a Fed President. When such a person is so colossally wrong I think the public deserves to hear an explanation. Not these days though….Instead, we just shift the discussion to something similarly misguided based on the same politically motivated nonsense.
Related: Why the USA Isn’t Going Bankrupt