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Archive for March 24th, 2011

US Approaching Insolvency, Fix To Be ‘Painful’: Fisher

Posted by WARREN MOSLER on 24th March 2011

I waited a couple of days before doing this thinking there might be some retractions.
Or some serious mainstream push back.
But apparently not.
Apparently this high ranking Fed official, as well as the mainstream financial press,
actually believes the US Government could lose it’s ability to make payments,
demonstrating they all have no grasp of actual Fed monetary operations.

This is further confirmed when he goes on to discuss
‘tightening’ where he indicates that in addition to rate hikes,
‘tightening’ can be done by reducing reserves per se.
He doesn’t seem to realize that this went out with the gold standard.

Highlights below:

US Approaching Insolvency, Fix To Be ‘Painful’: Fisher

March 22 (Reuters) — The United States is on a fiscal path towards insolvency and policymakers are at a “tipping point,” a Federal Reserve official said on Tuesday.

“If we continue down on the path on which the fiscal authorities put us, we will become insolvent, the question is when,” Dallas Federal Reserve Bank President Richard Fisher said in a question and answer session after delivering a speech at the University of Frankfurt. “The short-term negotiations are very important, I look at this as a tipping point.

But he added he was confident in the Americans’ ability to take the right decisions and said the country would avoid insolvency.

“I think we are at the beginning of the process and it’s going to be very painful,” he added.

Fisher earlier said the US economic recovery is gathering momentum, adding that he personally was extremely vigilant on inflation pressures.

“We are all mindful of this phenomenon. Speaking personally, I am concerned and I am going to be extremely vigilant on that front,” Fisher said in an interview with CNBC.

Fisher also said that the U.S. Federal Reserve had ways to tighten its monetary policy other than interest rates, including by selling Treasurys, changing reserves levels and using time deposits.

He added that he does not support the Fed embarking on an additional round of quantitative easing.

“Barring some extraordinary circumstance I cannot forsee…I would vote against a QE3,” Fisher told CNBC. “I don’t think it’s necessary. Again, we have a self-sustaining recovery.”

Posted in Deficit, Government Spending | 244 Comments »

Claims/DGO

Posted by WARREN MOSLER on 24th March 2011


Karim writes:

  • More positive signs for the labor market as initial claims fall another 5k to 382k; more importantly, claims are now steadily below 400k (5 of the past 7 weeks)
  • DGO ex-air and defense fall 1.3%; Core shipments rise 0.8%
  • Slight upward revisions to both core orders and shipments for January
  • DGO remains highly volatile, with the machinery component in particular driving the volatility. Machinery orders up 16.3% in December, followed by -12.7% and -4.2% in Jan and Feb.

Nothing in today’s data that would alter the baseline view for the Fed expressed in last week’s FOMC statement (hawkish)

Posted in Employment, GDP | No Comments »