Richard Fisher might be the only Fed President who has displayed any level of risk management in recent months. As I’ve previously noted Mr. Fisher is increasingly concerned about the unintended consequences of QE. In remarks today, he sums up QE in one perfect paragraph:
“The remedy for what ails the economy is, in my view, in the hands of the fiscal and regulatory authorities, not the Fed. I could not state with conviction that purchasing another several hundred billion dollars of Treasuries—on top of the amount we were already committed to buy in order to compensate for the run-off in our $1.25 trillion portfolio of mortgage-backed securities—would lead to job creation and final-demand-spurring behavior. But I could envision such action would lead to a declining dollar, encourage further speculation, provoke commodity hoarding, accelerate the transfer of wealth from the deliberate saver and the unfortunate, and possibly place at risk the stature and independence of the Fed.”
This is so spot on. QE is a continuation of failed monetary policy that promotes the financialization of our country, emboldens the imprudent, mis-allocates resources and causes market distortions that ultimately prove destructive. Unfortunately, Mr. Fisher isn’t a voting member of the FOMC.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.