Richard W Fisher: Of moose and men (with no reference to Steinbeck) Remarks by Mr Richard W Fisher, President and Chief Executive Officer of the Federal Reserve Bank of Dallas, before the National Association for Business Economics, Dallas, Texas, 12 September 2011. *  *  *  The views expressed by the author do not necessarily reflect official positions of the Federal Reserve System. Thank you, Pat [Faubion]. Thank you all for inviting me to speak at this National Association for Business Economics (NABE) annual meeting. The Federal Reserve Bank of Dallas has long been involved with NABE. Our director of research and my trusted senior policy advisor, Harvey Rosenblum, is a former NABE president (2001–02). Another of my policy advisors, Tom Siems, is a two-time winner of NABE’s Edmund A. Mennis Contributed Paper Award. And Ken Rogoff, winner of this year’s Adam Smith Award, is a member of the Dallas Fed’s Globalization and Monetary Policy Institute advisory board. I benefit greatly from the insights of these talented people, as well as those of Mine Yücel and Roberto Coronado, who are also speaking to you at this conference, and one of my mentors, our Dallas Fed board chairman, Herb Kelleher, who entertained you at lunch. Herb may be the only person on the planet who discovered the formula for making a retail business with high fixed costs and intense regulatory oversight not only fly but soar; his insights into how the economy works in practice, as opposed to theory, are invaluable.
The point is that while I feel the most important role for a central banker is to maintain price stability – and I am always on watch, hawk-like, on the inflationary front – I share with equal intensity the concern of my FOMC colleagues about the employment picture and the overall fragility of our economy. I am keen on finding ways to close the income and output gaps depicted in these two slides and restore economic momentum. I find the last employment report and the recent Federal Reserve Bank surveys of activity, including the Dallas Fed’s, to be discouraging in this regard. When people are frightened, they understandably look for a “fix.” Yet, my colleagues and I are professionally beholden to beware of short-term fixes that might contradict, or place in jeopardy, the long-term duty and credibility of the central bank. I am wary of adopting any policy that might have the unintended consequence of becoming a veterinary fix rather than a more salutary repairing of the ability to propagate jobs. It is no secret that I thought the second round of quantitative easing (QE2) ran that risk. I could not support it when it was proposed because I saw no analytically sound justification that its purported benefits would outweigh its likely costs.