Wednesday, February 2, 2011

Fed's Hoenig Warns Q3 May Be Coming

The Federal Reserve may consider buying more U.S. Treasury securities than planned if U.S. economic data show weakness, Kansas City Federal Reserve Bank President Thomas Hoenig told Market News International. Got that? A Fed QE3.

The Fed is in a trap. If it stops buying Treasury securities, it will collapse the manipulated economy it has created. If it continues, price inflation will head out of control. Hoenig knows this (or at least the inflation part). He told MMI:
I don’t predict bubbles, but we certainly are beginning to see an acceleration of prices in this part of the country that I haven’t seen since the late 70s or early 80s.

Hoenig is not completely sound with regard to the theoretical understanding of all the implications of interest rate moves versus money supply growth, but he is as close as the Fed gets to someone who understands the serious price inflation threat ahead and that a QE3 would simply act as an accelerant.

1 comment:

  1. How to REALLY Screw the Poor without a Peep from Bleeding Hearts if only we could price them out of the home heating market with cap and trade....we could have a utopia.