January 13th, 2011
02:30 AM GMT
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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.



soundoff (25 Responses)
  1. Klauz

    so wtf is his recommendation?

    January 13, 2011 at 4:45 am |
  2. Humble American

    The Federal Reserve has made a huge profit in all these hard times and it is the American transmission's fault? Wrong

    The Fed gave out money to big banks and companies around the world and no American agency arrests them? Wrong again

    January 13, 2011 at 4:52 am |
  3. Reduce

    Reduce regulation...pro business, less tax, less regulation, no worker comp, etc... the manufacturing jobs will be back quickly... that's what texas has done...reduce regulation just like in China, India, Brazil, Viet Nam etc... Give people jobs that can provide 3 meals a day and 2 weeks vacation every year... Don't ask business for 60 inch flat tv and a bmw for a job that doesn't required intelligent or intellectual know how... You pay the working class what its worth...

    January 13, 2011 at 5:12 am |
  4. Jojo

    The transmission is fine.

    Some punk just siphoned out all the gas so he could drive his Bentley to the Harvard Club.

    January 13, 2011 at 5:38 am |
  5. jjhon stolkolm

    whether ITS the FED BANKS FAULT OR NOT HES RIGHT ON THE MONEY.In the next 2-5 years progess will still be marginal in terms of job growth.also most of manufacturing jobs will go to china and other parts of the world and never come back.as for altenative energy development companies backed by new legislation and tax payers dollars as well those only hang around 5 years or so as as required by us handouts ..A new set of rules or mechanisn needs be put on the senate floor if we are to this get this car moving again its that simple....so its up to the big chesses to stop doing favors and think about their gandchildren next time they let another ship head to china..........or maybe they want this mighty legendary force to seize and put are geat ameican empire to sleep...

    January 13, 2011 at 5:53 am |
  6. Reinaldo

    The US (us) is doomed. And people still watchig TV and buying iPads.

    January 13, 2011 at 5:56 am |
  7. Greg

    Job relocation is not job creation. If A Fortune 500 headquarters moves from New York to Dallas and reduces its staff that is job loss.

    January 13, 2011 at 6:29 am |
  8. raoul

    "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"

    One again, I ask, what is the solution to the problem?

    January 13, 2011 at 7:22 am |
  9. salayem

    What is so obviously wrong is that the US $ is manipulated in the opposite direction than the one it ought to go in a jobless economy. The only way to stop that downward spiral is simply a forced and steep devaluation to stop bleeding the resources of the nation in an outdated lifestyle. Once inflation sets in, the mechanism of self correction will offset all excessive public and private expenditure and the economy will heal itself.

    January 13, 2011 at 7:23 am |
  10. joe

    14.x triion in debt.. this country is finished..

    January 13, 2011 at 8:20 am |
  11. Andreas, Stockholm

    His analogy is quite revealing and accurate I think. This Quantitate Easing practise seems theoretically viable until you look at how it is conducted. It is akin to a corporate share buyback but only via direct transactions with a few large owners. Who in their right mind would agree to such behavior?

    Flooding markets with liquidity is not going to solve the underlying problem which is confidence in the future market. The US is for all sense and purpose going through a grand chapter 11 right now but without anyone overseeing the process.

    A tough society can work if there are ample opportunities but once they vanish trust does not return quickly. Be careful American politicians because old rhetoric may soon prove futile if too many lose trust.

    January 13, 2011 at 8:32 am |
  12. Raj

    Sack Mr. Obama... and find someone better to drive this country forward...

    January 13, 2011 at 9:00 am |
  13. macilane

    USA need a new thinking and formulation in todays time of what it means by modern capitalism. After the colapse of the soviet empire and also the colapse of all, so called, socialism socity around the world, West Europe and USA did not, untill now, readjusted its economic,social, and political strategy.
    Example: what do you mean by outsourcing all or part of your industry moving it to comunist china? Are you suprised with what is happening now? What is for USA the meaning of state capitalism? Is it possible to increase the gap between poors and richers? In todays modern politics what do you mean by left, right and center? Is it the same as the time before during the soviete era?
    I think that there is some thing wrong in the USA and the West are aproaching the new politics when it comes to economic growth and development.
    USA and the West should think twice otherwise all the world will sink.
    Macilane

    January 13, 2011 at 9:05 am |
  14. Richard

    America is the biggest economy in the world and if any country can get back in the black it is the US. Owing more money than your GDP is not a good look especially when the figure is in excess of $14T.
    At this point you have to stop your government spending money, you can't afford health care or other social benefits at this time. Maybe someone should look at Reagonism. It seemed to work before.

    January 13, 2011 at 9:42 am |
  15. go america

    for those of you who don't fully grasp what's going on here, let me try to make it easier for you.

    the fed uses monetary measures for a number of reasons, to fight inflation is just one of them. now let's say another is to make funds very inxpensive (lowering the interest rate) in order to stimulate the economy. this makes the cost of borrowing (for businesses and ultimately consumers) go down. when the cost of borrowing goes down, people borrow more money. for a business, this is great b/c it allows them to take addional risk (i.e. they spend money to expand).

    the fundamental point of what you're missing is THAT BUSINESS ARE NOT CREATING JOBS IN THE US. THEY ARE SENDING JOBS OVERSEAS (and yes, it's all caps for emphasis).

    the fed IS NOT RESPONSIBLE for creating jobs, that is for business to do (and they're NOT doing it). the government can choose to create jobs, but this means higher taxes (i don't want to stray too far off tangent). but for those of you who belive in less regulation, then the govenment has no business telling (or forcing) companies NOT to hire abroad / expand business overseas (which is exactly what they're doing). and since the cost of labor overseas is a lot cheaper (especially in manufacturing) than in the US, those jobs aren't going to come back (or be started here). the government (local / state / federal) CAN create incentives for companies to hire here instead of abroad, but this is not a mandate of the FED. they have no say in the matter. (but they can do is to play w/ the $ supply / interest rates, that's it).

    but in the end, as a consumer, ask yourself if you really want manufacturing to come back. do you want to pay 3-4x the price for anything? $3K tv? $4K computer? given that 1) $ doesn't grow on trees and 2) most of us have to choose what we spend our money on, it's human nature to want to spend less on a comprable good so we have more $ to buy other things.

    if you really want to help out, don't have any kids. don't subject future generations to what is basically a sinking ship. america has been on top all these years, and now that's starting to change. the problem w/ being on top is that there's only 1 way to go. and that's down.

    or if you actually want a viable 'solution', then try this. if you're one of the people that says 'what's the answer', then go out and hire someone in america (if you have the ability / authority to do so). or if you're working on a project where you know they're moving jobs over, do your best to influence management to keep the jobs at home. and start telling your bosses that there's too much of a workload and they need to hire more people. (but the point of being a public company is to be as profitable as possible, so you do more w/ less, and you buy the best talent at the least cost ... ergo jobs overseas).

    good luck.

    and Humble American, please stop posting nonsense. just b/c you have the right to post your opinion, doesn't mean you have to.

    January 13, 2011 at 10:15 am |
  16. virj

    @Richard: Reagonism was also the concept that deficit spending is not a problem because growth and inflation will take care of the deficits. This is not happening now. If Reagon had tried balanced budget and reduced spending (which is what real Republicans wanted), the US would of have been much better off today. The problem isn't going to get better anytime soon because currently the politicians don't have anything to gain from setting the US right.

    Till the public decides that there is no free lunch and vote for politicians that offer no free lunch, it's a downhill ride for the US and any country that doesn't takes this path. The problem is that the public doesn't have any great leaders anymore. Politicians don't serve the public or the country anymore. They serve their own personal interests (their religion, business interests, family interests, future interest, etc.), at the expense of the country. This is not going to change anytime soon.

    Passively waiting for things to get better will not bring any improve for a very long time.

    January 13, 2011 at 10:51 am |
  17. jon

    What can i say, in some cases better quality comes from overseas. If you want to buy "American" then beat out the competition by producing a better product. No one can say it is not so because I have dealt with it numerous times before.

    January 13, 2011 at 3:01 pm |
  18. rele

    It is quite simple really; think of the economy as water. The law of gravity dictated that it will flow from a high elevation (high cost, high expense, stricter laws or regulations i.e. time & money) to a lower one (lower cost, less headache.)
    Now let look at our present economic environment, with higher wages, higher living standard and more rules & regulations, our water is filled to the rim.
    What prevent the water from flowing out in the past was that we had many dams holding our water in our lake but with free trade deal and TWO, we have took down many if not all our dams. The result water will continue to rush out until it reached a point of equilibrium (same playing ground as the rest of the world, same wages, same living standard etc.)
    We have only two realistic long term solutions that may work,
    1, Put back the dams (protectionism) or 2, Lower our standard to the same level as the rest of the world.
    Any route other than the two above is only temporary patches.

    January 13, 2011 at 3:31 pm |
  19. Edward Anokwu

    The philosophy has been the same, even before President Calvin Coolidge said “the business of America is business”. When all is said and done, the United States government does what business wants it to do. When business pushes the wrong priorities, the cumulative long term consequence is large inefficiencies. It is time for big business to stop the finger pointing, and work very diligently with the government to move the centrifugal impetus of aggregate demand away from healthcare, housing and the military; into alternative energy, infrastructure, environmental sustainability and space exploration. In addition to making us more competitive internationally, any excesses generated in improving these areas do eventually pay for themselves, much less so as do healthcare, housing and armament.

    January 13, 2011 at 4:26 pm |
  20. trbll

    I cannot believe how many people think the solution to our problems is to take away social security,Medicare,workers comp,ect. To pay down our dept.Calling them entitlement programs like it's dirty word for lazy,ignorant,greedy,working class people.Working class people built this country and should be proud of themselves.We need people who know how to use there hands for something more than a keypad.How dare you treat people as if they are disposable,someone has to do the work,and doing the actual work can sometimes be dangerous,wear your body out, or you just get old.Maybe you would like to return to slavery,that would save millions.

    January 13, 2011 at 4:37 pm |
  21. trbll

    Here's an idea. If big business can go to foreign countries for cheap labor than maybe labor unions should follow them and try to organize people to get a fair deal.Teamsters Mexico local #1,or India.China may be more difficult.

    January 13, 2011 at 4:48 pm |
  22. trbll

    Ronald Reagan was no friend of the working class.Ask the air traffic controllers.

    January 13, 2011 at 4:52 pm |
  23. einar dyhr

    The FED has done its job and their tools and actions are expended.
    For the future the US must rely on its industry and export combined with dollar devaluation to pull out; Its going to be a long tough haul but eventually they will prevail; Watch out China

    January 13, 2011 at 7:35 pm |
  24. Manuel Vilhena

    Very Interesting.

    January 13, 2011 at 8:23 pm |
  25. waynebernard

    This is how well the Bank of Japan's decade-long experiment with quantitative easing worked at fixing Japan's unemployment issues:

    http://viableopposition.blogspot.com/2010/12/quantitative-easing-its-impact-on.html

    I can't imagine why the Fed would think that Mr. Bernanke's QE2 experiment would work any better.

    January 14, 2011 at 12:44 am |

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