In his op-ed at today´s WSJ:
I have grown increasingly concerned about the risks posed by current monetary policy.
For a moment I thought he had listened to Benjamin Cole. Alas, no:
First, we are experiencing financial excess that is of our own making. There is a lot of talk about “macroprudential supervision” as a way to prevent financial excess from creating financial instability. But macroprudential supervision is something of a Maginot Line: It can be circumvented. Relying upon it to prevent financial instability provides an artificial sense of confidence.
Second, I believe we are at risk of doing what the Fed has too often done: overstaying our welcome by staying too loose, too long. We did a good job in staving off the deflationary and depression risks that were present in the aftermath of the 2007–09 financial crisis. But we now risk fighting the last war.
Given the rapidly improving employment picture, developments on the inflationary front and my own background as a banker and investment and hedge fund manager, I am increasingly at odds with some of my respected colleagues at the policy table of the Federal Reserve as well as with the thinking of many notable economists. The economy is reaching the desired destination faster than we imagined.
Third, should we overstay our welcome, we risk(!) not only doing damage to the economy but also being viewed as politically pliant.
At the end he puts the blame on the “inability of others”:
Those of us who are the current trustees of the Fed’s reputation—the FOMC—must be especially careful that nothing we do appears to be politically motivated. In nourishing the growth of the economy and employment, we must avoid erring on the side of coddling inflation to compensate for the inability of fiscal and regulatory policy makers in the legislative and executive branches to do their job. We must continue to protect the independence of the Fed.
In other words, he wants carte blanche to “mess up”!
As the chart shows, he´s “miles away” from “destination” (and going the “wrong way”).