Hoenig Says Fed Should Raise Rate To 1% By End Of Summer

Tyler Durden's picture

From Reuters:

A top Federal Reserve Official said on Thursday the U.S. central bank should raise rates to 1 percent by the end of the summer to avoid having to raise borrowing costs abruptly as the economic recovery gains momentum.

"Based on the current outlook consensus, it seems reasonable that the economy would be well-positioned to accept this modest increase in the funds rate," Kansas City Federal Reserve Bank President Thomas Hoenig said in remarks prepared for delivery to a business lunch.

Hoenig is a voter on the Fed's policy-setting panel and has dissented against the Fed's exceptionally easy money policies at all three meetings this year.

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Cursive's picture

Not an original thought for the jaded ZH regulars, but maybe Hoenig should refrain from boarding small aircraft for his own personal safety.

dpr10's picture

+1. the question is who will buy that junk?

Cursive's picture

Ha, ha.  I wear it proudly.  I certainty would not describe us naive.  Maybe we should take a page from the Keynesian playbook (i.e. disinflation) and just say that we are un-naive.

Caviar Emptor's picture

If China has its way, we'll all be "jaded" ;)

Eally Ucked's picture

Are you crazy, he is doing it just make you happy! When they vote, Shalom always wins. Yes, we need more smoke and stench of burning Euro to make you feel better. I always wondered why most of the fed members got german names, just to make you feel more secure? Of course they don't want another Weimar! 

TooBearish's picture

LIBOR already half way there without Hoenig

Mr Lennon Hendrix's picture

Maybe if the dolarr has half of its value by the end of the summer ok, otherwise the US can not afford to pay the interest on the loans.  This is why the loans are zero in the first place.  The US can not afford to raise interest rates.

kaiserhoff's picture

Exactly.  They don't dare raise rates until they get serious inflation under way.  Comrade Ben hasn't quite got a handle on the -5 % fed funds rate yet, but I've underestimated these crooks before.  They are looking at all sorts of desparate measures, with good reason.

Mr Lennon Hendrix's picture

Desperate times call for desperate measures!  They are desperate men, and this may very well be their last act.

Bam_Man's picture

In the global "race-to-the-bottom currency de-valuation sweepstakes", ALL participants either are already in or will shortly be in perpetual ZIRP mode.

Hoenig must be talking about "The Fed" as it exists in some alternate universe.

Mako's picture

Well, if he wants the system to imploded very quickly that is one way to go.  If he wants an instant nuke of the global credit system they could raise it to 4%.  Let me know so I can go build a bomb shelter.

He is confused, the function of the Fed is to extend the system as long as possible, then it implodes. 

dpr10's picture

his thinking is maybe, dont follow the market..it will implode anyways right::))

Mako's picture

I suspect he is very confused.  You might be able to raise the FFR to 1% without causing an instant implosion, 3-4% and it would be so ugly the next day, he would be looking for a place to run from the riots.

WaterWings's picture

It will be the last words we hear as the door to his underground bunker seals itself for the next three years. Then the Purge begins.

Mactheknife's picture

Kinda brings to mind one of the greatest quotes of all time. While being interviewed before an upcoming fight, he was told that his opponent seemed to have a pretty good plan to win...his response-


"Hell, everybody has a plan. Till they get hit."

Mike Tyson

Frank Owen's picture

Are you sure that was Tyson? Seems waaaay too coherent a statement for him.

unwashedmass's picture


extending a helping hand to JPM in their effort to push down precious metals before the delivery demands eat them alive??????????????



Mr Lennon Hendrix's picture

Gold does well during interest rate hikes.

Mako's picture


- gold does good when the fed funds rate drops

- gold does good when the fed funds rate goes up

- gold does good when the fed funds rate stays the same

- gold does good when the sun rises in the east

Mako's picture

I will take the free insurance if you are offering.

Anyone selling something as risk-free is offering snakeoil. 

Mr Lennon Hendrix's picture

I am not selling anything.

Oh, and if I was....

DISCLAIMER:  Gold does not make money, it merely maintains it.  This because gold IS money. 

Good luck Mako!

Mako's picture

well, if you telling me it always goes up... you certainly are selling something.  I'll take whatever free insurance you have to offer anytime you want.  Offer stands.

Only a fool would sell insurance on the Sun not rising tomorrow.

Only a bigger fool would buy it that insurance.

Mr Lennon Hendrix's picture

What?  I said gold maintains value!  I said nothing about "always going up" you are putting words in my mouth.

Numbers are subjective place holders when it comes to value.  ONE apple is real.  One dollar is not.  One ounce of gold is real.  One paper FIAT is not.

Mako's picture

Sure you did, you are splitting hairs.

You said, "All true" implying there is no bad environment for gold, which is clearly not true nor could ever be true.

Mr Lennon Hendrix's picture

It does do well in all those scenarios.  It does well, Mako....

From here on out there is nothing standing in the way of gold being the best store of wealth.  Nothing.

You can print that one.

Mako's picture

"nothing standing in the way of gold"

Then you can give me free insurance.  No risk, no reward.  Anyone selling something with no risk and telling you there is reward is selling snakeoil.

Can I buy a house and store value or wealth?  What about stocks? What about diamonds? What about dirt?

I love guys like you, just like Cramer, buy, buy, buy, no risk.... hahahaha.

Most of the goldbugs ride the wave up and ride the wave right back down the other side.


Mr Lennon Hendrix's picture

Good god man, where do you get this from? 

Your strawman lies with the fact that your comparisons do not hold WEIGHT.  Paper contracts are nothing more than IOUs.  Houses are NOT investments (arable land IS).  Gold is money, that is all I am saying.  GOLD IS MONEY!

Mako's picture

"Houses are NOT investments (arable land IS)."

Says who?  How is dirt different than metal? Who made you the midde man for all investments and trades?

"Gold is money, that is all I am saying."

Says who?  You wouldn't be whoring yourself out here like Cramer if you believed that, you want someone to buy your crap, but just like a typical goldbug you somehow think gold is different.  I know plenty of gold bugs that ran up the last wave and ran down with it last time.  This time will be somewhat different but the end result will be the same.

I can see you now.. you probably wake up first thing in the morning and check to see how much money you can get for your gold, yet you will say gold is money. 

You say gold is money, well I refuse to sell you my junk for your money. 

You said there is nothing stopping gold, well that means you are 100% sure you are right.  Give me the free insurance or it's very apparent you don't believe that.  

Let me see you think gold can go up forever, are you saying in 100 years I will be able to buy the whole Earth with one gold coin?  When is your projection that this will occur?  Curious minds would love to know.

Mr Lennon Hendrix's picture

Houses are everywhere, go anywhere you will find a house.  Gold is not.  Find me some gold before I find you a house, go!

Gold is money says who?  "By nature gold and silver is not money, but money by nature is gold and silver." -Karl Marx

Humans have used gold and silver as mediums of exchange since the dawn of our time, because it will always be what it is, and it is an accessable store of value.  It has value because it is finite, and now due to technology, it is a functioning commodity.

I post my thoughts on the price of gold in time frames such as daily/weekly/monthly/yearly, but I have also said these numbers are a paradox.  Do I play the money for gold game?  Well, until the end Mako.  Until the end.

Coming Down in Powdery Sparks's picture

I've watched Mako argue with just about everyone on here for a while now and find it amusing.  I've never commented before, but when you say something as idiotic as "how is dirt different than metal" I have to stand up and laugh.

Mako's picture

Of course you would say that, you are gold seller, if you were a dirt seller, you would mad at the gold seller.  You are the same as the houses never go down crowd, and you have nerve to call me an idiot.  Good luck Cramer.

Mr Lennon Hendrix's picture

I am a dirt seller and a gold seller, what do I win?

Edit: Buyer and seller lol!

Mr Lennon Hendrix's picture

I think that went well.  Danny is getting things going nicely.  Now for a nice red pill, eh world?

SDRII's picture

The question is how will the market react, if given the opportunity, to a new "reserve" asset aka printing vehicle? Has the confidence been so lost in the "private" market that the no matter what action is taken the momentum to a hard money or partially backed alternative a fait accompli. Gold looking risk free in this regard

taraxias's picture

Mako, you are starting to get it but let me sum it up for you.

Gold does well when faith in fiat currency is lost.

Mako's picture

"Gold does well when faith in fiat currency is lost."

The dollar has been rising at the same time that gold has been going up on this run. 

All of you guys are riding the same waves as Cramer.

S&P 500 from 1400 to 660 to 1150

Gold from 1100 to 700 to 1250

Gold is getting a slight premium bid as the destruction of the credit system comes into view, you are still riding like a turd in the ocean waves.

Peak Everything's picture

I agree nothing is certain. My conclusion is to be 50/50 cash/gold. I hold gold in CEF (allocated but liquid) so that I can sell in hurry if US comes clean and starts to take contructive actions to deal with their reality. Do you see a flaw in my logic?

akak's picture

Mako said:

"The dollar has been rising at the same time that gold has been going up on this run."

No, the dollar has NOT been rising!  Only the articial US Dollar Index has been rising, but is NOT in any way a measure of the real value, i.e., the purchasing power, of the US dollar.  Your misleading and erroneous use of the Dollar Index as an equivalent to the absolute value of our steadily depreciating fiat dollar only demonstrates, once again, your profound ignorance of financial and monetary issues.

Frank Owen's picture

"Gold does well when faith in fiat currency is lost."
The dollar has been rising at the same time that gold has been going up on this run.

A slightly of a US-centric view. How's England doing? The European Union? 

S&P 500 from 1400 to 660 to 1150
Gold from 1100 to 700 to 1250

Strange example of why gold is shit. Fail.

mdwagner's picture

- gold does good when trust in government and central banks goes down

Mako's picture

Gold mines were being mothballed the last time.

goldfreak's picture

Nadler, still bashing and trolling baby?

bullandbearwise's picture

Why doesn't Hoenig also propose stopping the oil leak in the Gulf?

John McCloy's picture

He certainly would have more luck stoppping the volcano than getting Bubbles to raise rates.

wagefreedom's picture

It's a smart move. He knows this will never happen, but now the kiddies of the future will read on their iPad history book apps that he dissented...

silvertrain's picture

EXACTLY, He has been running around saying that for months now..