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Discussion: (2 comments)

  1. Todd Mason

    It doesn’t take much guessing to know what Fisher thinks. Here is what he said to the NY Harvard Club in
    Sept http://www.dallasfed.org/news/speeches/fisher/2012/fs120919.cfm

    ” Nobody really knows what will work to get the economy back on course. And nobody—in fact, no central bank anywhere on the planet—has the experience of successfully navigating a return home from the place in which we now find ourselves. No central bank—not, at least, the Federal Reserve—has ever been on this cruise before.

    This much we do know: Our engine room is already flush with $1.6 trillion in excess private bank reserves owned by the banking sector and held by the 12 Federal Reserve Banks. Trillions more are sitting on the sidelines in corporate coffers. On top of all that, a significant amount of underemployed cash—or fuel for investment—is burning a hole in the pockets of money market funds and other nondepository financial operators. This begs the question: Why would the Fed provision to shovel billions in additional liquidity into the economy’s boiler when so much is presently lying fallow?”

    So what’s wrong?

    “My assessment of the efficacy of further monetary accommodation in encouraging job-creating investment among operating businesses was recently confirmed by a more rigorous analysis in the Global Business Outlook Survey of chief financial officers by the Fuqua School of Business at Duke University—the Harvard of the South—in September.[4]

    Of the 887 CFOs surveyed, only 129, or 14.5 percent, listed “credit markets/interest rates” among the top three concerns facing their corporations. In contrast, 43 percent listed consumer demand and 41 percent cited federal government policies. Ranking third on their list was price pressures from competitors (thus affirming most hawks’ sense that inflationary pressure is presently sedentary); fourth was global financial instability. The analysts at Duke summarized their findings as follows: “CFOs believe that a monetary action would not be particularly effective.”

    Consumer demand. Maybe we should be asking if Fisher is a Keynesian.

  2. Bill George

    Less undertanty about taxes, health care costs, future regulation, out of control national debt / spending and the ways the current administration might seek to futher redistribute wealth (capital) might help consumers decide to buy goods and services. Fisher seems to recognize that Keynsian QE’s haven’t encouraged consumption, so I don’t think you can call him a Keynsian. Actually I understand that there is a debates whether Keynes would be considered a Keynsian considering the permanancy of the government’s role as constant stimulator.

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