Richard Fisher: Fed Has Markets on Ritalin; Correction Coming. Suck It Up & Deal with It

RICK SANTELLI: I don't think that central banks have adjusted very well to the hiccup of globalization. You know, we have a world that has excess capacity and the central banks keep throwing them lifelines, whether it's in the form of manipulated FX, rates that are probably too low, purchases of paper to keep sovereigns looking healthy, and of course all their holdings whether it's our central bank or others.

So in the end, how are we going to delever? How are we going to clear out the excess capacity? How are we going to see goods prices move up, which the Fed and central banks want, when the very nature of what they're doing prevents that healing?

RICHARD FISHER: That's a great question because monetary policy worldwide, including here in the United States, is leading a distortion in the way monies are distributed and asset allocation, inflating the price of securities or anything that trades, including commercial real estate.

And then you are very hesitant to try to take that away for fear of volatility or for fear of a downside slope which could affect the economy. I've said this over and over again, Rick--the Fed has the markets on Ritalin, trying to keep the mood very smooth, keep volatility down as much as possible. As soon as they hint they might remove that, then they create the problems that they're afraid of. So they've boxed themselves into a corner and the real art will be to see how they manipulate or maneuver to get out of that. it's not clear how it's going to be done, but i think it should be done and the sooner they begin to act, the better.

Other gems from Rick and Richard:

SANTELLI: At one point in my youth, I had a mustache.

FISHER: We have levitating markets.

FISHER: This is theatre of the absurd.

FISHER: I would be prepared when they move and I hope they move some time in June. There'll be a settling in of the marketplace. There will be a correction. Suck it up. Deal with it. That's reality,