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Richard Fisher: The Fed Has Done Its Job, Congress Needs To Do Theirs

Aaron Task
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Dallas Fed President Richard Fisher has a message for Congress: "They have to do their part; we've done ours."

Last week's disappointing data reports (first-quarter GDP, April durable goods and weekly jobless claims) as well as Monday's weaker-than-expected Chicago PMI and Dallas Fed survey and Tuesday's construction spending data reinforced concerns about the U.S. economy weakening in springtime, just as it did in 2010 and 2011.

That's a risk says Fisher, but it's not his baseline scenario. "Growth is more anemic than any of us would want but it's positive," he says in the accompanying video, taped at the Milken Institute Global Conference.

Regardless, Fisher won't support additional Fed stimulus "unless truly horrific data were the come forward."

This should come as no surprise for those who've been watching and listening to President Fisher in recent years. He is not a voting member of the FOMC this year but dissented last year when he was and continues to oppose additional monetary stimulus. (See: "We've Done Our Job": Why Dallas Fed President Fisher Opposes More Action

"If you want the bottom line: what we do is necessary but not sufficient," he says. "Unless you have right fiscal and regulatory policy, and of course demand, all the amount of monetary policy in the world isn't going to do the trick."

Repeating a line he's used before, Fisher compared the U.S. economy to a car engine: the Fed has filled the gas tanks -- overfilled in his estimation -- but job creators are not stepping on the accelerator.

Accusing the Congress of "malfeasance," Fisher believes uncertainty over tax policy, government spending and the future of regulation is the real impediment to faster economic growth. As a result, he says the onus is on both Republicans and Democrats to get their collective act together and deal with the fiscal issues confronting the country.

"No amount of monetary accommodation can substitute for failure to deal with the fiscal cliff everyone talks about," he says.

Chairman Bernanke and the rest of the Fed may feel differently but Fisher believes the Fed's easy money is exacerbating the problem by taking the pressure off Congress to act - and act in a fiscally responsible manner.

"The more we do in terms of accommodation...we give Congress a pass," Fisher says. "We're basically saying...Congress you better eat your vegetables and if you don't we have a big plate of monetary cookies we're going to give you. It cannot be sustained."

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com

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