“Fed’s Treasury Purchase ‘Monetizing the Debt,’ Hoenig Says”
“Federal Reserve Bank of Kansas City President Thomas Hoenig said the central bank is “monetizing debt” with its purchases of U.S. Treasuries, a program that he says may spur inflation.
“Yes, we are monetizing debt,” Hoenig said today in a speech in New York. “You buy bonds and you monetize debt. Right now, a lot of that is going into excess reserves so it is not having an immediate effect on inflation. It will initiate inflationary impulses. It takes time.”
Hoenig, the lone dissenter from every Fed meeting last year, warned that the central bank’s near-zero interest rates and record monetary stimulus could lead to asset price bubbles and increase inflation in a few years. He voted against the Fed’s plan to purchase $600 billion in U.S. Treasury securities through June during the final two meetings of 2010.” Read more.
“Fed’s Treasury Purchase ‘Monetizing the Debt,’ Hoenig Says”
Steve Matthews and Caroline Salas
Businessweek, March 2, 2011.
Image by renjith krishnan / FreeDigitalPhotos.net.
