Daily Israel Report

Economist: Fischer Could be a 'Disaster' for US

Stanley Fischer was highly regarded when he ran the Bank of Israel - but maybe he shouldn't have been, writes a British economist.
By Yosef Berger
First Publish: 6/17/2014, 2:12 AM

Stanley Fischer
Stanley Fischer
ערוץ 7

In his old job, former Bank of Israel governor Stanley Fischer was highly regarded for his ability to keep the Israeli economy in check. Under Fischer, Israel sustained a long period of economic growth, and weathered the international financial crisis of 2008 with surprisingly little damage.

But now that Fischer is playing in the “big leagues” - as vice-chairman of the Federal Reserve, a position he was elected to just last week – he may find that his wisdom is questioned far more than it was in Israel. According to Forbes guest columnist Jesse Colombo, appointing Fischer to the Fed is a “disaster waiting to happen.” Israel's economy, he claims, is not really thriving; it only appears to be doing well, after Fischer pumped it up artificially.

Colombo, a highly regarded British economist wrote in Forbes that ““While many in the international economics community cheer Stanley Fischer’s appointment to the Fed, I view it as a disaster waiting to happen because of his role as the main architect of Israel’s little-known and still-unpopped bubble economy.”

With Fischer running the Israeli economy, the money supply in Israel “skyrocketed,” wrote Colombo. That resulted in hidden inflation. “The fact that rapid increases of the money supply lead to inflation and bubbles is obvious to nearly everyone but heavily indoctrinated Keynesian and neoclassical economists like Stanley Fischer, who are greatly overrepresented on the boards of central banks, unfortunately,” Colombo wrote.

“Unfortunately, no action is likely to be taken nor will there be much of an outcry while the bubbles in the U.S., Israel, and elsewhere are still inflating and making their creators look like geniuses,” he added.