Wednesday, July 7, 2010

Dallas Fed President Richard Fisher Explains How the Government is Making Things Worse

Congress and the government have inhibited growth by creating uncertainty about business costs, Dallas Fed President Richard Fisher told CNBC Wednesday.

“We need clarity," said Fisher. "My background [in business] tells me that you can’t eliminate uncertainty, but you have to reduce it as much as possible.”

Questions about healthcare expenses, for instance, have kept businesses from hiring new workers, said Fisher, because executives don't know how much it will cost them. Businesses also have concerns about other costs, such as whether a VAT [value-added tax] will be imposed.

"How do you cost a worker?" Fisher said. "Let’s say you run a delivery-truck system. What’s the price of a new delivery truck driver? You don’t [know]. So how, as the CFO, do you go to your CEO or the board and say, 'I need to budget a new workforce.' And they say: 'What's it going to cost us?' And you say, 'I can’t tell you the answer.' "

Fisher doesn't understand how the money supply growth impacts the business cycle, or that the economy is  headed into a double dip recession, but he sure gets how regulatory confusion gums up the system.

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