posted on Mar, 23 2011 @ 12:04 PM
Dallas Fed Chief warns US debt near ‘tipping point’
By Bruce Tyson Mar 22, 11 | Updated Mar 22, 11
Calls for an end to stimulus spending and Fed debt purchases
Americans may find out sooner rather than later that their country is insolvent, if Richard Fisher of the Dallas Federal Reserve Bank is correct in
his remarks made to a German university.
In his speech he declared that the U.S. is headed to an insolvent condition, meaning that the nation could collapse under the weight of the massive
debt it continues to accumulate with no apparent sign of abatement.
Although he seems to believe that American politicians will act in time to avert a fiscal disaster, he said that the nation is currently at a
"tipping point" which presumably does not leave the country with much room for error.
According to CNBC, Fisher made the observation in remarks made during a question and answer session. He referred to the current American predicament
as a "tipping point," although he asserted his confidence that the United States will take the necessary action to avert financial cataclysm.
No more stimulus
While appearing at the University of Frankfurt, Fisher called for an end of the controversial stimulus program, Reuters reports. Fisher seems to
believe that the U.S. economy is now growing enough to sustain itself rather than relying on artificially high rates of deficit spending to stoke
demand for products and services.
End quantitative easing
While dismissing the potential of additional stimulus programs, Fisher also suggested that the Federal Reserve will stop purchasing additional
American debt when the current quantitative easing program expires in June. Quantitative easing has been controversial because it involved in the
creation of hundreds of billions of dollars used to purchase more federal debt.
The move also seems to have had an inflationary affect in the United States and has exacerbated the financial condition of foreign countries like
Egypt, contributing to the spreading unrest in the Middle East.
Although Fisher confirmed that the Federal Reserve is working to reign in some of its liberal financial policies, he also said that the same types of
traders are emerging on commodities markets that could spark another financial meltdown if not addressed.
When queried about Japan, Fisher said that right now it was impossible to gauge how the tsunami and earthquake in Japan would reverberate into the
American economy. Additional concerns over the chaos in the Middle East could also impact the economy, but right now he said it is "too early to