This evening Jeffery Lacker, Federal Reserve Bank of Richmond President spoke of the need for the Federal Reserve to control its spending on the bailouts stating that too much easy money could knock the markets off balance. He also stated that the Fed may raise rates out of the 0.0-0.25 percent target band before the markets have a chance to stabilize.
Mr. Lacker also stated that he is concerned that the Fed may have gone too far in regards to the slashed interest rate and the hundreds of billions of dollars that have been injected into credit markets to end the year long recession. His concern now is that banks lack credit worthy borrowers rather than by the supply of capital.
Mr. Lacker is one of the most hawkish members on the Federal Reserve board and has voiced this concern as seen in the minutes of the Feds December meeting emphasizing the need for restraint. Otherwise, the United States could suffer a Japan style deflationary period which led to a prolonged decrease in prices and the stagflations seen in that country during the 1990s.