Speaking in California, Dallas Fed President Richard Fisher opposes more Treasury purchases and...

Speaking in California, Dallas Fed President Richard Fisher opposes more Treasury purchases and says "we will have to 'pull the trigger' of tightening policy well before it is politically convenient." He sees "beginnings of a faint recovery."

Comments

[RiskReturnOptimizer]

Long TBT if Fisher and others truly stop buying treasuries ... lets see if the market follows through tomorrow and next week with higher yields (10-year @ 4.0% looks like good target).

[puravidavid]

On Jul 23 02:06 PM CautiousInvestor wrote:

> Bernanke's recent testimony was designed to assure us that, since
> we have an arsenal of tools to regear monetary policy, we can wait
> to the last minute to reverse monetary policy upon signs of reflation.
> Recognizing various policy lags and the difficulty of calibrating
> monetary policy, Fisher would correctly prefer to pull the trigger
> sooner than later.

We saw how well closing the tap worked during the Great Depression. Congress then sought to reign in fiscal stimulus and it was accompanied by another terrible leg down in the markets and higher unemployment. The effect of the Fed withdrawing liquidity during a solvency crisis may well have similar or worse effects with the death of additional financial institutions.

History doesn't repeat precisely, but it paraphrases and echoes.

[puravidavid]

His observation of "a faint recovery" will come as a surprise to the millions who are joining the ranks of the millions already hard pressed or insolvent. If this is the beginning of the recovery, I'll faint.

[CautiousInvestor]

Bernanke's recent testimony was designed to assure us that, since we have an arsenal of tools to regear monetary policy, we can wait to the last minute to reverse monetary policy upon signs of reflation. Recognizing various policy lags and the difficulty of calibrating monetary policy, Fisher would correctly prefer to pull the trigger sooner than later.