Richard Fisher, president of the Federal Reserve Bank of Dallas, has posted a new study on his website, Ultra Easy Monetary Policy and the Law of Unintended Consequences by economist William White.
The 45-page paper outlines what most sensible observers already know: “There are limits to what central banks can do.”
Flooding the world with easy money doesn’t even help banks in the end, and it juices our government’s reckless spending habits.
“Ultra easy monetary policies can eventually threaten the health of financial institutions and the functioning of financial markets, threaten the “independence” of central banks, and can encourage imprudent behavior on the part of governments,” the paper says.
Mr. Fisher has long argued that the Fed has done enough already. ( Click here to see my previous posts and columns on Mr. Fisher.) Fed Chairman Ben Bernanke, meanwhile, has said he’s willing to ease even more if necessary.
The Fed meets Friday in Jackson Hole, Wyo., but despite Mr Bernanke’s pronounements, there’s a good chance it will disappoint those awaiting another round of Fed easing, particularly given the growing sentiments Mr. Fisher is expressing.