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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: ild who wrote (46455)	12/2/2005 4:06:52 PM
From: ild	Read Replies (2) of 110194

DJ Fed's Fisher: Fed Should Not Monetize Budget Deficits DJ Fed's Fisher: Fed Will Continue 'Countering' Inflation DJ Fed's Fisher: Long-Term Deficit Projections 'Daunting' DJ Fed's Fisher: Deficits Not A Threat To Econ Right Now DJ Fed's Fisher: 'Left Unchecked' Deficits Threaten Econ DJ Fisher: Globalization Challenges Social Security Outlook DJ Fed's Fisher: Fed Should Not Monetize Budget Deficits By Michael S. Derby Of DOW JONES NEWSWIRES PHILADELPHIA (Dow Jones)--Federal Reserve Bank of Dallas President Richard Fisher warned Friday U.S. government budget deficits must be reined in at some point, and said the central bank must act to counter any inflation pressures that might arise from fiscal profligacy. "Longer term deficit projections are daunting, even if they do not present a clear and present danger to an expansion now entering its fifth year," Fisher said at a conference held by the Federal Reserve Bank of Philadelphia. But he added, "left unchecked they will become a grave danger to our prosperity and run the risk of seriously undermining the progress we have made in taming inflation." Fisher, a voting member of the interest rate setting Federal Open Market Committee, didn't directly address the near-term outlook for interest rates. But he did say that the central bank mustn't make it easy for the government to pursue deficits. "When fiscal policy gets out of whack, monetary authorities face pressure to monetize the debt," Fisher said. He said that to do so would be a "cardinal sin" and "it is the duty of the Fed to refrain from the slightest temptation to monetize deficits or embrace any other inflationary policy." He said that the Fed "can be expected to continue countering inflationary pressures should they arise."

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