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Dallas Fed President Richard Fisher says he sees “extraordinary speculative...

Dallas Fed President Richard Fisher says he sees “extraordinary speculative activity” in the U.S. after the Fed pumped record amounts of stimulus into the economy. He reiterates his view that no further stimulus will be needed after the Fed finishes its planned $600B of Treasury purchases through June.
Comments (10)
  • wyostocks
    , contributor
    Comments (8852) | Send Message
     
    Duh..........When the banks borrow at zero cost sure there is speculation.
    23 Mar 2011, 09:37 AM Reply Like
  • Fueled By Randomness
    , contributor
    Comments (292) | Send Message
     
    Y, QE 2 has managed to spur speculative activity but not productive economic activity. Aside from the fact that this policy doesn't actually work, what other possible reason could there be for NOT doubling down like a drunk at the Vegas blackjack tables?
    23 Mar 2011, 09:41 AM Reply Like
  • tigersam
    , contributor
    Comments (1711) | Send Message
     
    If you ask me you need QE3, QE4 etc, etc..
    23 Mar 2011, 09:45 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1213) | Send Message
     
    The guys at the Fed are slippier than an Illinois politician.

     

    Wasn't their primary goal with QE2 to pump up the stock market and ignite inflation? At least that's what they said back in August.

     

    Now that they've succeeded on both fronts, and they know the market is going to come flopping back down, they want to distance themselves from the mess they created.
    23 Mar 2011, 09:49 AM Reply Like
  • richjoy403
    , contributor
    Comments (11345) | Send Message
     
    Richard Fisher's comment sounds appropriate to me. Speculative activity always accompanies a growing economy...what else is new? However, there is great danger in allowing it to continue at 'excessive' levels for a long period.

     

    I would go 'one-up' on Fisher's suggestion that (only) QEII be allowed to expire--I'd initiate a modest increase in rates...maybe 0.25% at each FOMC meeting, so long at the stats continue to show economic improvement. As the FMOC meets 10 times per year, an improving economy might justify 2.5% increases before a halt was appropriate. If businesses knew of the Fed's plan, they could accommodate their borrowing to the plan.

     

    I believe this would demonstrate an appropriate level of (also modest) confidence that the economy is improving (true by almost any measure) and thus result in improved confidence in the economy. It would also reduce the likely need of large and frequent rate increases down the road that are needed to curtail an overheating economy (and usually lead to a 'garden-variety' recession).
    23 Mar 2011, 09:56 AM Reply Like
  • Lakeaffect
    , contributor
    Comments (1213) | Send Message
     
    Richjoy - I agree interest rates need to increase.

     

    But - - Fisher commented on "extraordinary speculative" levels. These are not consistent with improving economic conditions, but with excessively loose money policy and too much liquidity. If the Fed pulls back on the liquidity, then the "extraordinary" part of the equation disappears and the market goes down.

     

    The Fed has created an opium addict of the US Economy with their QE2. Now, they will find out what it looks like when the Economy goes "Jonesing for a Fix".
    23 Mar 2011, 09:51 PM Reply Like
  • richjoy403
    , contributor
    Comments (11345) | Send Message
     
    Lake -- Paragraph 1: I don't know what to make of your comment...are you suggesting the economy is not improving?

     

    As for QE2, there is little doubt it will end as scheduled in June...are you forecasting a QE3?

     

    (QE2 is miniscule compared to QE1, if I wanted to show my disgust with a loaded term like 'opium addict', I would have applied it to QE1.)
    24 Mar 2011, 06:48 AM Reply Like
  • KJP712
    , contributor
    Comments (458) | Send Message
     
    " Extraordinary Speculative Activity " = Daily Stock Market.
    23 Mar 2011, 10:17 AM Reply Like
  • richjoy403
    , contributor
    Comments (11345) | Send Message
     
    KJP -- Your note is so cryptic, I don't know its meaning...

     

    are you saying any day in which YOU purchase stocks, your purchase is speculative?
    23 Mar 2011, 10:40 AM Reply Like
  • KJP712
    , contributor
    Comments (458) | Send Message
     
    Yes,pretty much.Although Wednesday seems to have a cleaner feel to it.Computers resting that day?
    23 Mar 2011, 03:32 PM Reply Like
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