In a recent speech in Mexico, Richard Fisher, the President of the Dallas regional Federal Reserve bank, admitted that there are troubling signs that financial markets are being overly distorted by the Fed’s easy monetary policies.
Actually, if you read between the lines just slightly, he flat out said Stock and bond markets are in dangerous bubble territory.
Of course, a regional Fed president who also happens to sit on the current FOMC board — which sets the Fed’s macro policies — cannot just come out and say Alert! We’ve blown dangerous bubbles!! Run for your lives!!!
So officials like Fisher have to be circumspect and couch their words with lots qualifiers like ‘may’, and pointing to ‘signs’. But the actual message is really pretty obvious.
Fed's Fisher Warns Bond Buying Could Be Distorting US Financial Markets
A U.S. Federal Reserve policymaker who has long criticized its bond-buying stimulus said on Wednesday the program has lasted too long, and there are signs it is now distorting financial markets and encouraging risk-taking.
In a speech in Mexico City, Dallas Fed President Richard Fisher amplified some lingering concerns that the central bank's policy stimulus is stoking asset-price bubbles that "may result in tears" for investors acting on bad incentives.
"There are increasing signs quantitative easing has overstayed its welcome: Market distortions and acting on bad incentives are becoming more pervasive," he said of the asset purchases, which are sometimes called QE.
(Source)
I’m glad the Fed has finally noticed that it has, once again (*sigh*), blown a massive set of interconnected bubbles. That they’ve done this isn’t a surprise, this is what the Fed primarily does; they are a serial bubble blowing operation and they both enjoy the rock star treatment they get as the bubble is expanding and the increased power they receive during their role as damage control specialists once the bubble(s) burst.
Fisher's speech also revealed that at least someone in the Fed is looking at some of the obvious fundamental metrics that clearly indicate we are in bubble territory:
Fisher, an outspoken policy hawk, pointed to soaring margin debt and the narrow spreads between corporate and Treasury debt as areas of concern.
by cmartenson 
