January 13th, 2011
02:30 AM GMT
New York (CNN) – “The ships of job creating investment remain, for the most part, tied to the docks, or worse, choose to sail for foreign ports.”
That's just one of the many analogies used by Dallas Federal Reserve President Richard Fisher, to describe the current U.S. employment picture. Not a particularly pretty one, but Fisher says the U.S. central bank has pretty much done enough:
“The key to correcting the underperformance of the American economy and American job creation does not rest with the Federal Reserve. It is in the hands of those who make fiscal and regulatory policy,” Fisher said.
The Fed’s controversial decision, known as QE2, to inject more cash into the economy through the buying of bonds is moving ahead at a $75 billion clip each month. But Fisher believes "the engines are full but the car isn't moving forward. There is something wrong with the transmission.”
“The leaders of our government cannot talk their way out of this … it is akin to rancid wine in new bottles." In other words, the prospect of further stimulus post-QE2 may do little to actually create the much needed jobs.
Fisher has a bit of Aussie blood in his background, as do I, so I appreciate his constructive use of analogy. His good old American values, however, become more evident when he describes just why he likes the Harvard Club (where he addressed a gathering of business and media professionals) for its inexpensive and musty rooms, sturdy, soundproof walls that block out the noise from passing snow plows. Fisher can command a diverse audience even when the subject may be considered by some, a bit heavy: monetary policy and its possible ramifications.
So why has QE2 done little to prop up the employment picture?
Fisher says the gravity of what is facing the new Congress "is a sinkhole so deep that it will swallow our children's future" and the Federal Reserve "runs the risk of being an accomplice to Congress' fiscal nonfeasance.”
There is a way to fix this but in Fisher's view it does not land at the doorstep of the Fed. A Dallas man at heart, Fisher is quick to point out that his city has created more jobs than New York, Boston, Chicago, Philadelphia or San Francisco in the last 20 years. And it is not monetary policy, but rather fiscal and regulatory incentives that have made Texas the headquarters of more Fortune 500 companies than any other state in the union.
Whether the U.S. Congress heeds Fisher’s advice remains to be seen.
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