Not more hyperbole from me… this is the title of a speech given yesterday at the Commonwealth Club of California by Richard Fisher, president of the Dallas Federal Reserve Bank. There have been a number of doom-mongers out there in recent years warning of trouble, along with Comptroller David Walker, who’s been ranting on this subject for a few years now. When one of the big-wigs at the Fed pipes up, you’d hope more of the sheep raise their heads and listen.
Tonight, I want to talk about a different matter. In keeping with Bill Martin’s advice, I have been scanning the horizon for danger signals even as we continue working to recover from the recent turmoil. In the distance, I see a frightful storm brewing in the form of untethered government debt. I choose the words—“frightful storm”—deliberately to avoid hyperbole. Unless we take steps to deal with it, the long-term fiscal situation of the federal government will be unimaginably more devastating to our economic prosperity than the subprime debacle and the recent debauching of credit markets that we are now working so hard to correct.
The whole speech is worth your time, and when you next debate someone about the relative health of the economy, pass this link on. It’s hard to write off someone as a Chicken Little whack-job when he’s helping run the monetary policy of the United States.
This speech probably won’t make much of a dent in the mainstream media, which is sad, since as Mr. Fisher points out, bad debt management on the part of the US could very easily wipe our economy out. Keep your eyes open, and stay vigilant.