Dallas Federal Reserve President Richard Fisher cautioned Monday that protectionist tendencies are dangerous, calling them the “crack cocaine” of economics.
Speaking on C-Span, Fisher addressed a proposed congressional fiscal stimulus law that would offer “Buy America” provisions in an effort to encourage the purchase of domestic goods. However, such provisions are dangerous, Fisher warned. “Protectionism is the crack cocaine of economics … (it) leads to economic death,” he said.
“We just cannot afford to go down that path,” Fisher added.
The Dallas Fed President just concluded his term as a voting member of the Federal Open Market Committee. Known as one of the most ardent inflation hawks in the nation’s policymaking body, Fisher added in his comments that failure to remove added liquidity from the system in a timely manner could result in serious price inflation.
The Federal Reserve needs to be cautious that their excessive lending and record low interest rates, set at a target range between zero and 0.25 percent, Fisher said, warning that an inflation problem could be “baked” into the country’s economic outlook.
LONDON — Visiting Chinese Premier Wen Jiabao on Sunday warned against protectionism in face of lingering global financial crisis.
Speaking at a meeting with former British Prime Minister Tony Blair, Wen said as international financial crisis is spreading, his visit to London was to send a message of confidence for Britain and China to join hands in overcoming current difficulties.
He noted that the two sides should further explore the potential for cooperation, and guard against trade protectionism, in particular.
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