Dick Fisher vs. Ron Paul

Dallas Fed President Dick Fisher loves everything about Texas. Well, almost everything.

Fisher made a speech Wednesday that is titled "The Limits of Monetary Policy," explaining why we shouldn't blame the Fed for our economic malaise. But like many of Fisher's speeches, this one might as well be subtitled "Don't forget how great Texas is."

A Texas-size jobs boom

Fisher compares the diverging fortunes of various overstretched states with his one and only. The upshot is that places like Ohio, California and Michigan are kidding themselves with their red tape and sprawling governments. Taxes, in short, are what kill growth.

Monetary policy is uniform across the 50 states; the base rate of interest paid on a business or consumer loan or a mortgage in Michigan, California, Ohio or here in New York is the same as that paid in Texas. Yet there is a reason that Michigan and California each lost more than 600,000 jobs over the past decade while Texas added more than 700,000 over the same period. There is a reason that the population of Ohio grew by only 183,000 residents over the past 10 years, while Texas grows by that number every five and a half months. There is a reason that with each passing census, the state of New York has been losing congressional seats and Texas has been adding them; a reason that, in the recent census, California failed to gain any while Texas gained four.

You get the idea. The point is that in Texas, government gets out of the way, Fisher says. Sure, there are those who might take issue with the sustainability of that approach. By some accounts Texas faces an Illinois-sized, $27 billion budget gap over the next two years.

But why wade too deep into the details. The bigger point is that Fisher sees Texas as the model the nation must adopt, if only our elected leaders would get around to doing something useful.

His only quibble with Texas, it seems, is with the Fed-bashing focus of one of the Lone Star state's representatives in Congress, who in Fisher's view might do well to turn his energies to actually doing something rather than grandstanding about the hugeness of the gold standard.

Those lawmakers who advocate "Ending the Fed" might better turn their considerable talents toward ending the fiscal debacle that has for too long run amuck within their own house. The Fed does not create government debt; fiscal authorities do. Deficits and the unfunded liabilities of Medicare and Social Security are not created by the Federal Reserve; they are the legacy of those who control the purse strings―the Congress, working with the president.

In short, audit this, Ron.