Fischer's speech is here. Too long to paste, it is an excellent read that shows the Fed Governor's viewpoint (that, surprising differs from the Fed Apologists on this forum) on a whole host of things. Some excerpts: The renewed expansion of MBS holdings that began in October 2012 as part of QE3 was motivated less by any sense that the mortgage-finance market was dysfunctional than by the notion that normal frictions in that market potentially provided monetary policy with leverage to stimulate the housing sector—and thus the economy as a whole—at a time when more-traditional policy tools had been exhausted. The FOMC majority pushed aside concerns that providing targeted support to housing is more properly the province of fiscal policy, and voted to proceed. What of the expansion of the Federal Reserve’s holdings of longer-term Treasury securities under QE3? Fed purchases of longer-term Treasuries amount to nothing more than the transformation of long-term Treasury obligations into short-term obligations of the Federal Reserve. Essentially, long-term government obligations are transformed into short-term government obligations. The government benefits from lower interest costs in the near term, but its future net revenues become more sensitive to future interest-rate increases. Government finance problems are reduced today, at a cost of potential future problems. The larger bank reserves become, the greater is the government’s future interest-rate exposure. Chairman Ben Bernanke famously said that “the problem with QE is that it works in practice, but it doesn’t work in theory”—QE3 seemed to succeed in pushing interest rates lower out along the yield curve, energizing the bond market and lowering the hurdle rate for discounting cash flows and earnings of companies whose shares traded in stock markets.[1] This came, of course, at the expense of savers who kept their money in the most basic of short-term investments. But this was a cost that the committee felt was exceeded by the expected wealth effect. Indeed, I would rather we had never had QE3 in the first place. To this day, I feel that the costs of accumulating another $1.7 trillion of Treasuries and MBS will be shown to exceed the benefits. For those with access to capital, it was a gift of free money to speculate with. (One wag—I believe it was me—quipped that there was, indeed, a “positive wealth effect… the wealthy were affected most positively.”) Together with the healthy rejuvenation of the balance sheets and equity prices of investment grade companies, we have seen what I consider to be a manifestation of an indiscriminate reach for yield, a revival of covenant-free lending, and an explosion of collateralized loan obligations (CLOs), pathologies that have proved harbingers of eventual financial turbulence. It goes on. There's a TON of great commentary in here. Kudos for Fischer for having the courage to say it.
To be sure, this is Richard Fisher, not Fischer (who is a Stanley)... Just thought I'd point this out, as these two guys are confusing and often confused.
More QE coming. Japan and next Europe ..the only way to prevent a recession or to get out of a slowing economy, everyone is now pushing forth stimulus .... Where are the free fu$king markets?????? Everything is inflated and everything is being completely manipulated ...show me real growth....show me real earnings.... show me an economy that doesn't need to be propped up everytime there is a hint of a slow down and I will actually believe this country is on the path to prosperity until then this entire global economy is make believe to me.....