Richard Fisher was the president and CEO of the Federal Reserve Bank of Dallas from A.D. 2005 to A.D. 2015 . He’s now a director of PepsiCo and ATT, a senior advisor to Barclays, and a CNBC contributor. The man is accomplished and “connected”. We he talks, we’d do well to listen closely.
In reaction to the dramatic stock market sell-off during the first week of A.D. 2016, Mr. Fisher “talked” in a recent article entitled “Don’t blame China for the sell-off”:
“Recent volatility and downside slippage in the equity markets has been ascribed to China and the potential for slowing global economic growth. To be sure, these are factors worth watching but they are hardly newsworthy.
“While I would not completely pooh-pooh the effect of developments in China on the rest of the global economy, I believe another factor is of greater importance in pricing the U.S. stock market going forward: the effect of accommodative Federal Reserve policy.”
Mr. Fisher is telling us that, contrary to popular opinion, the recent US stock market fall was not triggered by China’s economic problems—it was caused by Federal Reserve policies.
Few would be surprised by Mr. Fisher’s statement. We all pretty much suspect that the Fed is responsible for the current economic problems. Still, given that a former president of the Dallas Federal Reserve Bank is making these admissions, they are amazing.