Former Federal Reserve insider Thomas Hoenig thinks the U.S. faces a painful reckoning because of high inflation.
Hoenig was a lone dissenter eight times in 2010, when the Fed voted to pursue a then-novel strategy, known as quantative easing, of buying trillions of dollars in Treasury and mortgage-backed bonds. The goal was to flood the U.S. with money and slash interest rates in an effort to juice up the economy.Then and now, Hoenig warned the policy could lead to more harm than good. Recently his warnings have gotten more attention.
On the economy … “It’s going to be a very difficult couple of years for the U.S. economy and the Federal Reserve. If they raise rates to bring inflation down, then the hard part begins. Because when that happens and the economy begins to slow, they’ll worry about recession. There’ll be a likelihood they ease policy again even while inflation remains four to five percent.”On the cost of inflation … “People are if nothing else sensitive to high inflation. They know what it is doing to them.
On Fed’s balance sheet … “I think they will be very slow in shrinking their [$9 trillion] balance sheet. It would affect the housing market because they buy a lot of mortgage-backed securities … they don’t want to do it too quickly … we’re probably talking about a decade to get the balance sheet back to any kind of balance. The thing is, it won’t come without pain.”
On rich getting richer … “If you own an asset, you win just from the inflationary effect … Usually it’s the upper middle [income] and wealthy who are in that position … If you’re a wage earner you’re going to fall behind … you have to borrow more or commit more of your income to housing.”
France Dernières Nouvelles, France Actualités
Similar News:Vous pouvez également lire des articles d'actualité similaires à celui-ci que nous avons collectés auprès d'autres sources d'information.
Ex-cop Drew Peterson’s attorneys interviewing new, former witnesses as he fights murder convictionDrew Peterson’s attorneys asked for more time Monday as they interview witnesses and plan further arguments after the former cop petitioned to vacate the jury’s verdict more than nine years after he was found guilty of killing his ex-wife.
Lire la suite »
NY Fed: Stablecoins Are Not the Future of PaymentsResearchers at the Federal Reserve believe the future of payments is not stablecoins, but it could be tokenized deposits. HeleneBraunn reports
Lire la suite »
Billions Are Flowing to Cash-Like ETFs in ‘Hunt’ Before Fed HikeAs investors brace for an increasingly aggressive Fed, money is flooding into cash-like ETFs — which are seen as relatively less vulnerable to interest-rate risk
Lire la suite »
Opinion | Across-the-Board Rate Hike by the Fed Is a Cure Worse Than the DiseaseAlthough it is anyone's guess what will happen next with inflation, the data show that there is no reason to react rashly with large across-the-board interest-rate hikes. The economy is working through an unprecedented transition that could ultimately be a boon for workers; but only if policymakers let the process play out.
Lire la suite »
Fed: Rapidly rising wages justify projection of seven rate rises in 2022Analysts at Bank of America (BofA) justify their outlook on seven rate hikes by the US Federal Reserve (Fed) this year. Key quotes “Rapidly rising wag
Lire la suite »
Economists Warn Against the Fed Raising Rates at Worst Possible Time'A large across-the-board increase in interest rates is a cure worse than the disease,' says economist Joseph Stiglitz. 'That might dampen inflation if it is taken far enough, but it will also ruin people's lives.'
Lire la suite »