Hoenig Says Fed's Rate Policy Subsidizes Wall Street Banks

[sailingaway]

About Ron's hearing today:

Hoenig Says Fed's Rate Policy Subsidizes Wall Street Banks

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2011/07/25/bloomberg1376-LOXZTA6K50XU01-61QIA8L9DL2G2RMBEC1CNFCE0J.DTL#ixzz1TExmX3Kj

[Bruno]

He is close to retirement, and more and more seems to be on our side.


In Des Moines speech, K.C. Fed president levels criticism at Congress, Fed monetary policy

http://blogs.desmoinesregister.com/dmr/index.php/2011/06/30/in-des-moines-speech-k-c-fed-president-levels-criticism-at-congress-fed-monetary-policy/

The president of the Kansas City Fed offered a scathing rebuke of U.S. monetary policy, Congress, and even the American consumer in a sweeping speech on the economy in Des Moines on Thursday.

Thomas Hoenig, an Iowa native who earned his Ph.D in economics at Iowa State University, 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 who will retire from his post in October, 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.”

He 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 Congress to eliminate all tax credits and deductions, increase the Social Security age, cut 200,000 federal jobs, raise the federal gas tax, increase co-pays for Medicaid and Medicare, and take several other steps. Congress has not acted on the recommendations.

Asked whether the debt ceiling should be raised, he told a lunch crowd at Des Moines Rotary that raising or not raising the debt limit won’t solve the nation’s problems unless the country takes sweeping, comprehensive measures like the ones outlined by Bowles-Simpson.

“You have now given me the choice of whether I want to be destroyed by being shot in the head or strangled — which gives me a little more time before I die — when I want you to heal me,” he said, directing his remarks toward lawmakers in Washington, D.C. “You had a compromise by a joint commission of both parties and you set it aside. For that reason alone, I hold you accountable.”

[specsaregood]

bump

[specsaregood]

http://blogs.reuters.com/macroscope/2011/07/27/the-meaning-of-a-dollar/


The meaning of a dollar

The harshest congressional critic of the Federal Reserve faced the toughest internal questioner of central bank policy across a witness table on Capitol Hill on Tuesday. Surely there would be a meeting of the minds. Alas, it was not to be.

As Congress remained stalemated over avoiding a catastrophic U.S. debt default with a crucial deadline days away, Representative Ron Paul grilled a top Fed official over an issue that has been troubling him: Why is the dollar money and gold not? As Kansas City Fed President Thomas Hoenig testified before the House Financial Services domestic monetary affairs committee, which Paul chairs, the congressman told him:

Last week I learned that gold is not money. I’ve been able to put that out of my mind … so I’m still trying to find out what money is.

That, to Paul begged the question: What is a dollar?

More at link...



and


Hoenig said.

As long as the public and the world understands that the dollar that is produced by the central bank of the United States (serves that function) … it is money.