Dallas Fed governor Richard Fisher: "We keep applying what I call monetary Ritalin to the system. We all know there's a risk of overprescribing, and we have to worry about the long-term consequences of what we do."
The Fed is indeed prescribing monetary Ritalin. The economy's not exactly bouncing off the walls, is it? There's some risk of overprescribing it, but the Fed seems to be doing an okay job since we haven't had monetary deflation.
Of course, Fisher meant Ritalin as a stimulant, rather than Ritalin as a cure for hyperactivity. But - as Milton Friedman pointed out - a bloated monetary base and a low interest rate indicate constrictive, not expansive, monetary policy.
Monetary Ritalin has knocked millions of people out of jobs, and millions more out of the labor force. It's kept inflation below the informal 2% target and unemployment above 8%. It's neutered fiscal stimulus and annihilated millions of people's retirement savings.
It's time the Fed stop prescribing Ritalin and start the economy on a course of Prozac instead.