Al Lewis: Dallas Fed's Fisher Isn't 'Anybody's Pigeon'

Richard Fisher, Federal Reserve Bank of Dallas President, smiles and tells a group of business writers and editors: "In the best tradition of central bankers, I would be happy to avoid answering your questions."

Did the Fed run up oil prices by flooding the world with free money? a reporter asks.

"I don't think you can isolate the Fed's impact," Fisher says, noting that turmoil in the Middle East and increased demand from China are perhaps larger factors.

"You'll notice central bankers are very good at not answering questions," he smiles again.

Another reporter asks, what do you consider "full employment?"

"Nobody knows," Fisher responds. "The point is to continually create more jobs. And whether you have a specific number in mind or not .. we have to do a better job of it."

Fisher was not answering questions at the annual meeting of the Society of American Business Editors and Writers in Dallas on Friday. But he was far less vague when it came to talking about what a great job the Fed had done averting another Great Depression.

"When the Panic of 2008 occurred, the Fed did what central banks are called to do when pandemonium strikes: As the lender of last resort, we .. used the powers given to us by our government to create money and credit...

"The Fed -- as the nation's central bank and first responder to a financial crisis -- was front and center in dealing with the panic, and we felt the sting of a rattled public and its elected representatives...

"We now know that the exigent measures we undertook worked," he declared. "Our job is done."

Most Americans probably don't know this. Apparently, the Fed's job is to push for deregulation of financial markets, sit pat as all kinds of ne'er-do-wells game an increasingly loose financial system, sing the praises of adjustable-rate mortgages for unwary consumers, claim all these subprime loan losses will be contained, scoff at predictions of a looming recession, and when the whole thing blows, be a "first-responder" to the inevitable financial crisis.

Imagine a fire department that acted this way.

What about unemployment? What about the housing crisis? Why can't the trillions of dollars the Fed created fix these?

"There is now plenty of fuel in the tanks of American businesses to finance expansion and put unemployed and underemployed Americans back to work," Fisher said.

It's now up to Congress and the President to put our nation's fiscal and regulatory houses in order, and private enterprise to get moving. The Fed can't keep handing out free loot forever.

"We provided the fuel, but the ships are still tied to the dock," Fisher complained.

Fisher has opposed the Fed's continuing effort to buy up U.S. Treasuries known as QE2, arguing that the recovery was already on the way. He is also among a minority at the Fed who advocate raising interest rates, and pulling back the Fed's unprecedented stimulus.

The danger is that all this free Fed money slogging around the system will lead to rampant inflation, a concern Fed Chairman Ben Bernanke and others dismiss, even as commodity prices rise and inflation undeniably surges in other nations.

U.S. companies make purchases all over the world, so it may only be a matter of time before significant inflation spreads here, Fisher notes. But Fisher also defended the Fed's argument that it should respond to actual inflation, not commodity spikes that may prove temporary.

"I do expect this is going to become a much more difficult process in a highly globalized world where there is inflationary pressure moving around," Fisher said.

In the end, we are asked to believe that the Fed, which didn't see the recession coming, is somehow going to see inflation coming.

At least it has Fisher, the inflation hawk.

"I like to remind people that doves are part of the pigeon family, ornithologically, and I don't want to be anybody's pigeon," Fisher said.

I approached Fisher after his presentation to see how he would not answer my question.

The way I view it, the Fed has indeed succeeded, for now. But the U.S. economy has been artificially juiced with 0% interest-rate loans. This is the same trick car dealers play, but as soon car loan rates goes up, car sales plunge.

What's going to happen when interest rates rise to more historically normal levels and America has a $15 trillion credit card tab?

"Let's just see what the markets do," Fisher said. "The markets are powerful."

Yes, powerful enough to get us into this mess in the first place.

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at or