Clancy
02-20-2010, 09:17 PM
Thomas Hoenig, chief of the Federal Reserve Bank of Kansas City, relayed a warning today in a speech at the Peterson-Pew Commission on Budget Reform Policy in Washington DC. During the first few minutes of his speech, Hoenig explained what steps the Federal Reserve Bank may take in order to reduce the monumental national debt:
We can knock on the central bank’s door and request or demand that it “print” money to buy the swelling amounts of government debt. Second, perhaps more tolerable politically, although damaging to our economy: We can do nothing so long as domestic and foreign markets are willing to fund our borrowing needs at inevitably higher interest rates. Or third, the most difficult and probably the least palatable politically: We can act now to implement programs that reduce spending and increase revenues to a more sustainable level.
His calls for a market correction which would cause short term pain were echos of what Congressmen Ron Paul encouraged during his race for the Presidency in 2008. Hoenig warned that the Federal Reserve may try to inflate the currency in order to lower the national debt. The speed at which trillions of dollars are being printed would have to surpass the speed at which the national debt is increasing if the Fed attempts to lower the national debt by means of inflation. To many who have been following the actions of the Federal Reserve, it is obvious that this isn’t a path that the Federal Reserve is currently considering, but instead, it is the path the the Federal Reserve has been on for years.
The Federal Reserve chief also mentioned a story of a German neighbor of his who gave him a 500,000 mark note as a reminder of the hyperinflation that destroyed Germany in the 1920s. Anyone who thinks hyperinflation cannot infiltrate the economy of the United States is extremely misinformed, Hoenig implied, when he spoke about the rapid growth in entitlement spending, war appropriations, and the unsustainable GDP. The corrective action that the economy needs, according to Hoenig, is a spike in interest rates in order to combat the inflation created by extremely low interest rates. This would obviously cause short term pain, but would prevent a hyper-inflationary crisis in the future.
The speech can be found in it’s entirety here.
Fed Chief: Hyperinflation is Coming | Unelected.org (https://unelected.org/2010/02/16/fed-chief-hyperinflation-is-coming/)
We can knock on the central bank’s door and request or demand that it “print” money to buy the swelling amounts of government debt. Second, perhaps more tolerable politically, although damaging to our economy: We can do nothing so long as domestic and foreign markets are willing to fund our borrowing needs at inevitably higher interest rates. Or third, the most difficult and probably the least palatable politically: We can act now to implement programs that reduce spending and increase revenues to a more sustainable level.
His calls for a market correction which would cause short term pain were echos of what Congressmen Ron Paul encouraged during his race for the Presidency in 2008. Hoenig warned that the Federal Reserve may try to inflate the currency in order to lower the national debt. The speed at which trillions of dollars are being printed would have to surpass the speed at which the national debt is increasing if the Fed attempts to lower the national debt by means of inflation. To many who have been following the actions of the Federal Reserve, it is obvious that this isn’t a path that the Federal Reserve is currently considering, but instead, it is the path the the Federal Reserve has been on for years.
The Federal Reserve chief also mentioned a story of a German neighbor of his who gave him a 500,000 mark note as a reminder of the hyperinflation that destroyed Germany in the 1920s. Anyone who thinks hyperinflation cannot infiltrate the economy of the United States is extremely misinformed, Hoenig implied, when he spoke about the rapid growth in entitlement spending, war appropriations, and the unsustainable GDP. The corrective action that the economy needs, according to Hoenig, is a spike in interest rates in order to combat the inflation created by extremely low interest rates. This would obviously cause short term pain, but would prevent a hyper-inflationary crisis in the future.
The speech can be found in it’s entirety here.
Fed Chief: Hyperinflation is Coming | Unelected.org (https://unelected.org/2010/02/16/fed-chief-hyperinflation-is-coming/)