In a scathing indictment of the Fed’s zero interest rate policy, Dallas Fed President, Richard Fisher said the Fed’s policies are hammering bank margins and pose a significant risk to the insurance industry, who rely upon treasuries to finance their chicanery.
Shockingly candid.
The companies Fisher said he’s most worried about are insurers.
“Insurance companies, particularly life companies, are like noble oxen. They pull the cart forward steadily forever and ever and ever. They’re living in a 1 percent world in this country, but they’re pulling a 3-to-6 percent liability cart. It doesn’t square,” he told CNBC’s “Squawk Box.”
Low interest rates are a major risk for insurers because the income they derive from investments — mostly in safe assets like Treasurys — may be insufficient to fund payouts to customers in low-rate environments.Fisher said Fed policymakers did not anticipate the scope of easy money’s impact on the financial sector.
“Bank’s interest margins are being hammered. Money-market funds are trying to squeeze out a return. This is the kind of stuff, to be honest, sitting at the table, we did not foresee at the FOMC,” he said, referring to the Federal Open Market Committee.
Fisher is a hawk and wants the Fed to hike and then hike some more.
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Welcome Devil Dog, Fisher. All he needs is one of those fleece vests. I think all the Devil Dogs should wear them. Then people could recognize them right away.
Then, any time you could use a little more gloom and doom in your life, you just look for the fleece vest.
I don’t think so much that he is a “hawk”; rather, he is trying to disassociate himself from the inevitable debt implosion.
When the sun finally blows up, there will be an Austrian Economist there to blame debt for the event.
“This is the kind of stuff, to be honest, sitting at the table, we did not foresee at the FOMC”
The problems will be contained.