Alumni Event: "Inside the Fed" with Richard Fisher and the Dallas Business Club
The Dallas Business Club is a unique organization comprised of 27 alumni chapters from some of the top business schools around the world including Yale, Harvard, Wharton, Chicago, MIT and INSEAD among others. The more than 3,000 members of the DBC enjoy professional networking and development, engagements with prominent business and political leaders, and the opportunity for civic involvement through a program called Civic Strides Connect that seeks to match the talents within the Club with the needs of local non-profit organizations. Shortly after graduating from SOM and moving to Dallas, I joined the DBC and later served on the board of directors and as the Club's 2014 president.
On Wednesday December 3rd, we hosted an event featuring Dallas Fed president Richard Fisher who offered his final economic outlook for 2014 to an audience of MBAs and members of the press corps at the colossal Federal Reserve Bank building downtown.
Before Mr. Fisher offered his formal comments, though, he acknowledged that unlike many of his fellow central bankers, he is not a trained PhD economist. Among his many educational endeavors at the Naval Academy, Harvard, and Oxford, he noted that his Stanford MBA "prepared [him] best for [a] career as a banker, a money market operator, and for the past decade, a policymaker at the Federal Reserve." His studies at the Naval Academy best prepared him for the sleep deprivation experienced during the Financial Crisis. He also graciously took time to remind the audience, and me personally, about the score of The Game where his Harvard Crimson toppled our Bulldogs yet again, making it 13 of the last 14 meetings.
Highlights of Mr. Fisher's Address
- He proposed rebooting the Fed's plan to stop reinvesting the proceeds of maturing Treasury and mortgage bonds into new holdings after it begins to raise short-term interest rates.
- Why? Reducing the Fed's balance sheet would help alleviate a shortage of so-called "safe" collateral available in financial markets and would indicate that the Fed is serious about ending reliance on a, shall we say, less-than-laissez faire strategy of recent years as markets stabilized.
- He was not in favor of the Fed’s last round of bond purchases and has called for the Fed to start raising interest rates sooner than the targeted window of mid-2015 due to the improved health of the economy.
- On a more Texas-flavored note, he also spent time following the formal comments to highlight (nay, brag) on the strength of the state's economy, in particular: 1) Texas GDP contribution is rising and represents nearly 10% of the total economic output of the US, relatively the same size as Australia 2) highest percentage of mortgages with positive equity (Dallas and Houston over 97%!) and 3) superior job growth relative to the US across all income quartiles which lead all states in job creation with nearly 350,000 added last year.