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Kansas City Fed chief sounds alarm

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John James Posted: Fri, Jul 1 2011 8:47 AM

You may be familiar with this guy's name because he's been the one dissenting voice on the roster of Fed officials.

From USA Today:

DES MOINES — The president of the Kansas City Federal Reserve Bank issued a scathing rebuke of U.S. monetary policy, Congress and even the American consumer in a sweeping speech here Thursday.

Thomas Hoenig, who will retire from his post in October, said the economy has been artificially inflated by low interest rates and will face more crises in the future unless policymakers and consumers shift their habits to focus on economic production instead of debt-driven growth.

"We have this leveraged economy that we have used to build our growth over the last 10 to 15 years that we cannot carry forward," he said.

Hoenig, long a vocal critic of Fed policy, reiterated his call for the Federal Reserve to raise interest rates. He said the longer interest rates are low, the more the economy will suffer when rates inevitably rise.

"You create certain fragilities in the economy that when you do have to reverse your position, in terms of interest rates, whenever that is, it becomes increasing risk of shock to the economy, whether it's your concerns about the stock market tanking or values of land being affected," he said. "When you artificially hold down interest rates or you artificially bring short-term tools to solve long-term problems, you get worse long-term problems."

Hoenig had harsh words for federal lawmakers for not pursuing the December recommendations of the National Commission on Fiscal Responsibility and Reform, a bipartisan group that issued sweeping proposals now known as the Bowles-Simpson plan.

The plan called on Congress to eliminate all tax credits and deductions, increase the Social Security age, cut 200,000 federal jobs, raise the federal gas tax and increase co-pays for Medicaid and Medicare.


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There is always one.

He is stepping down so we won't have to worry about the fear mongering.

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What do you mean i don't care how your day was?!

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so the rebel on the Fed wants to save the day with higher taxes for all

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