Kansas City Fed's Hoenig: Our Only Choice Will Be to Monetize the Debt If This Doesn't Stop
the rest of the Fed just got bitchslapped
by the guy who has no TBTF banks to supervise
and all day to come up with this shit.
This is really funny because A) they have been monetizing it since at least March of 2009 if not forever and B) What else did they expect would happen when they started pulling out the liquidity?
Hoenig is "absolutely sure" that there will be pressure to buy up more garbage if this debt problem of ours doesn't stop, and that might be a scary proposition for the Fed as it is also trying to balance a $2 trillion crap portfolio (micromanaging the worst of it - a time-consuming effort in and of itself), battling the PR mission of its life, AND working hard to beat back Congress at the same time.
The Fed politicized itself, what did they think would happen to the easy money whores once the money started running out?
Kansas City Federal Reserve President Thomas Hoenig warned Thursday that if no action is taken on the high levels of U.S. government debt, the Fed will face pressure to monetize the debt.
"If we don't address the issue ... I am absolutely confident that there will be mounting pressure on the Federal Reserve system to help finance this through monetizaion of debt," he said in testimony prepared for delivery to House Financial Services Oversight and Investigations Subcommittee.
The resulting outcome will a rise in inflationary pressures and a strong impact on the dollar in the long-term, he told lawmakers during a hearing focused on the high debt and leverage levels.
"We will endanger our economy and stagnation is a possibility ... if we don't take action now." Hoenig said.
Hoenig also doesn't like this extended period shit, which obviously further enables the crack-starved easy money whores who are scratching at the Fed's door for more.
"When you keep interests rate exceptionally low for an extended period you add to the incentives by keeping interest rates lower than they would otherwise be under normal market supply and demand conditions," he said.
"That's one of the issues we have to confront," Hoenig said.
Hoenig said financial reform legislation must include "firm" constraints on leverage, even if it restricts growth. "That's the nature of sound, fiscal management -- that your capital requirement limits you."
It seems fairly obvious, so why isn't the rest of the Fed listening?
The ECB is also fighting this battle but in a different way.