Hoenig Says Lower And Middle Classes Pay "Dear Price" For Fed Mistakes, Accuses Fed Of Commodity Price Inflation

Tyler Durden's picture

Hoenig is back, and a few months before his retirement, has released what appears a valedictory exercise in venomous truthiness: "Today, my view has not changed. The FOMC should gradually allow its $3 trillion balance sheet to shrink toward its pre-crisis level of $1 trillion. It should move the U.S. federal funds rate off of zero and toward 1 percent within a fairly short period of time. Then, after evaluating the effects of those actions, it should be prepared to move the funds rate further toward a level that could be reasonably judged as closer to normal and sustainable." At long last, someone admits the obvious: "While some of the increase may reflect global supply and demand conditions, at least some of the increase is driven by highly accommodative monetary policies in the United States and other economies." For those terrified by the ravages of deflation: "I tracked the average growth of money and the price levels in the United States from the 19th century to the present (Chart 3). It should surprise no one that there is a striking parallel between the long-run growth of money and the growth in the price-level index. From the end of World War II alone, the price index has increased by a factor of ten. With such a track record, it is hard to accept that deflation should be the world’s dominant concern." And lastly, for those who refuse to see Bernanke's policies as genocidal (metaphorically speaking but quite literally in MENA) to the lower (and increasingly) middle classes: "Central bankers must look to the long run. If current policy remains in place, we almost certainly will stimulate the growth of asset values and inflation. This may temporarily increase GDP and employment, but in the long run, we risk instability, damaging inflation and lost jobs, which is a dear price for middle and lower income citizens to pay."

Full must read speech link


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Racer's picture

And the first rat has abandoned the ship.....

the mad hatter's picture

Dear Central Bankers of the world,

Go Fuk-u-shima yourself.

Only governments should be able to create money because they can be held accountable. Moreover, they don't have to pay interest when they create the money.

Our current system forces taxpayers to foot the Central Bank interest charges for our incompetant politicians' spending sprees.


TIMMAYYY's picture

Ive recently taken up the hobby of watching sheep line up for slaughter. 

A type of...therapy...for when everything goes tits up...

faustian bargain's picture

Only governments should be able to create money because they can be held accountable.

That is absurd on its face. Governments can obviously NOT be held accountable. They will simply monetize their own debt, which is essentially what is already being done.

The solution is to get rid of fiat central banking altogether. I agree, End the Fed, but don't replace it with the government, please.

Dollar Damocles's picture

Agreed!  Let the market choose whatever it wants for money.  We don't need to replace the counterfeit trash floating around now with some other paper instrument forced on us.  Repeal legal tender laws!  Enforce legitimate contracts made in whatever medium is agreed upon by the parties involved.

Fiat lovers forget that gold and silver WOULD be money currently if it wasn't exluded from the rule of law, and if it wasn't ILLEGAL to refuse green confetti in payment.  Only FORCE keeps fiat in use.  The free market and a free people always choose commodity money.

tellsometruth's picture

Law is force in disguise... or something along those lines goes the quote

Cindy_Dies_In_The_End's picture

Sorry, I can't think right now. I'm fondling my Ipad2 that the other FedRes guy said I could afford...so I bought it on credit.




Ps-- which one of you wants to give me a burger today and I'll pay you back on Tuesday?

pragmatic hobo's picture

what is this guy talking about? Didn't the master, I mean Bernanke, say the rise in commodity price is driven purely by higher demand from BRIC?

TraderMark's picture

Dear everyone,

With my magic wand I can make asset prices go up, but only the asset prices I wave my wand at.  I waved my wand at equity prices.  I did not wave them at commodity prices.  Hence when assets that I want to go up, go up - it is because of my actions.  If assets go up, that I do not want to go up - it is because of global growth.

How many times do I need to explain this.  Damn imbicles.


The Bernank

TruthInSunshine's picture

All of the world is a stage.

And The Federal Reserve Perps are Shakespearean.


Either Hoenig was instructed to say that, or he gets the razor infused cat o' nine tails from The Bernank, while being forced to bend down before moloch, later today, at 33 Liberty.

Shameful's picture

It's all theater. After all imagine inflation expectations if every Fed Chairman was saying "Print to the moon! It's all the BRICs faults!"

So we the public are shown an elaborate dance. If they can do it with the two sides of our Big Government party then why not in the Fed?The talk does nothing, just a way to distract or mollify the masses. We have been given a villain in Dudley and hero in Hoenig, but the decision is outside their hands.

kridkrid's picture

Yup... I think that's right.  The illusion that there is actually confusion over the path we are currently on... that there are some who see things clearly and advocate for truth and justice.  There is no confusion... they know exactly what they are doing... they just don't give a fock about the people who are about to be ground into oblivion.  Theater indeed.

The Profit Prophet's picture

Ditto Gents.....just another scene from the "Good Fed - Bad Fed" script, to keep the more intelligent sheep hopeful of the restoration of fiscal sanity.  Without these little distractions by these well-paid puppets, we would have less tolerance for the continueing Kleptocracy.

T.E.I.N everyone! 

slaughterer's picture

Hoenig was never a rat, but the turd in the punchbowl...  I am sure Benoid is happy to see him go.

Racer's picture

I know he has voted against but he didn't shout loudly enough.


traderjoe's picture

The last time I will post this: www.bigeye.com/griffin.htm. A speech by the author of "The Creature from Jekyll Island" on the history and true purposes of the Fed (and fractional reserve banking) Why does a sovereign country borrow its "own" money from private corporations at interest?

umop episdn's picture

It's a good link, so perhaps you should post it every now and then. However, I am fairly sure that most folks here are well informed re: the Fed, so they miss out on exactly how much stuff there is on bigeye.

Clampit's picture

Sovereignty is as sovereignty does ...

I keep thinking there must be a way to leverage religion and our adherence to taxation laws regarding separation of church and state to eliminate the state - i.e. devote one's life entirely to the church of anarchy.

Oh fuck it, let's just wage revolutionary war instead.

That Peak Oil Guy's picture

That is a good link, but it does not go deep enough.  The Fed is just one of the tools used by the collectivists to bring about their new world order.  I strongly recommend this document, also by Griffin, for a description of the true force underlying the Fed and shaping our modern world even as we speak:



Bob's picture

Thanks, I hadn't seen it.  Funny that the Fed Act was marketed as necessary to "break the Money Trust," i.e., the cartel of billionaires that actually drafted it. 

bothsidesnow's picture

Because my friend the government is not a government it too is a corporation based in get it he "District" Of Colombia. You may ask why does the Federal Government have it's own "District" to operate from. Well here's the answer:


My roommate in Oakland, CA (aka Oaksterdam) who is an attorney but at the time was switching professions to a miner told me that if you are ever charged with a Federal crime you just ask one question about the Federal government - Who are you? They will not answer because they are a corporation and have no authority to prosecute you.

So it's one Corporation the Fed charging interest to another Corporation - United Banana Republic of America. 




AsIseeIt's picture

TJ thanx for the link.  Have you seen the Zeitgeist movies http://www.zeitgeistmovie.com/?  I watched the "Moving Forward" and the "Addendum" films.  Both are well done (though very long) and provided me with a better understanding of the monetary system and how they got us into this mess we're in.  

slaughterer's picture

Hoenig reads ZH, BTW.

TruthInSunshine's picture


So it's not to late for him to go Valkyrie on The Bernank's ass....

theXman's picture

Inflate or die. Inflate then die. Now way out.

firstdivision's picture

Sounds like a 2012 presidency run

cswjr's picture

He and Mervyn King are going to get "polonium'd" if they don't shut their traps.  So nice of them to admit the truth, at least.

Racer's picture

Oops here's another one....

"BOE's Fisher says BOE likely to make loss on selling assets on QE exit"

Bam_Man's picture

Pretty obvious why he is retiring.

Clearly, he didn't "get with the program".

In Kansas City, they see things a little differently than in NY and DC.

pendragon's picture

shame he wasn't this hawkish when it mattered. stable doors flapping while the horse is bolting around the field

Buckaroo Banzai's picture

There is a reason why the creatures who inhabit the halls of government only speak the truth upon their departure (when they speak it at all):

"There is a power so organized, so subtle, so watchful, so interlocked, so complete, so pervasive that prudent men better not speak above their breath when they speak in condemnation of it"
- Woodrow Wilson

That Peak Oil Guy's picture

New World Order, bitchez!


"As we re-activate our time machine, we find ourselves in the presence of one of the most colorful and mysterious figures of history. His name is Colonel Edward Mandell House. House was never in the military. The title of Colonel was honorary, granted by the Governor of Texas in appreciation for political services. He was one of the most powerful men in American politics and, yet, virtually unknown to most Americans today. He was the personal advisor to Presidents Wilson and Roosevelt. He was close to the Morgan banking dynasty and also to the powerful banking families of Europe. He attended school in England and surrounded himself with Fabians. His father, Thomas, was an exporter in the Southern states and also a lending agent for London banks, which preferred to remain anonymous. It was widely believed that he represented the Rothschild consortium. Thomas House was one of the few in the South who emerged from the War Between the States with a great fortune.

Colonel House was what they called a “king maker” in Texas politics. He personally chose Woodrow Wilson, the most unlikely of all political candidates, and secured his nomination for President on the Democratic ticket in 1912. It was House who convinced the Morgan group, and others with power in politics and media, to throw their support to Wilson, which is what enabled him to win the election and become the 28th President of the United States. House was certainly a member of the Round Table and possibly a member of its inner circle. He was a founder of the CFR (Council on Foreign Relations)."


WryObserver's picture

Hoenig HAS been hawkish for quite a long time, and has also spoken publicly before now on numerous occasions. More than that, he has advocated privately at the Fed, and on key votes. Typically, Hoenig has been the lone dissenting vote on these key matters.

SMG's picture

Everything in our economy today hinges on the whim of a handful of people.  If that's not proof the Fed is laying the path to dictatorship I don't know what is.

Do they mean it this time?  I'm sure they are telling their inside friends but not us useless eaters.

So if you're long you stand the chance of losing everything in a horrible market crash.  If you're short, you stand the chance of losing everything in a hyperinflationary meltup.

The cabal knows what's going to happen, but not us.  So they can starve us out and gain even more power.   END THE FED! BEGIN 100% PUBLIC FUNDING OF ALL POLITICAL CAMPAIGNS!  otherwise the vampire squid will be on our face forever.

Biff Malibu's picture

the Federal Reserve is KILLING American families. 

cubical's picture

Hoening must not know about the CPI. The fed has it under control, don't worry.

rayban's picture

He's the best guy in the Fed. At least he speaks his mind and voted against the continued easing until he had that chance. Too bad he's going to retire due to age limits. 

Cdad's picture

Too late.  CEO's just registered their all time highest bullishness...and why not?  The freakin' government, thanks to clowns like Hoenig who did not do their job when it was time to do it, is now paying for everything.  CEOs are blasting out their shares and becoming billionaires.

I do not care how hawkish he is...he is irrelevant.  He failed the American public.  The damage to our markets is now done.  Fed banker and market credibility have converged...at zero.

TruthInSunshine's picture

The select CEOs surveyed know who is bailing out their asses, and since money is their god, they dare not offend their 'Masser.

They have to keep the CONfidence Ponzi going for a little bit more.

Cdad's picture

Just too rich...I'm literally fighting a gag reflex just now:

E. Burnett over at the Blowhorn [CNBC], ever trying to charm the market higher with her adorableness, thicker each day, tee's up J. Dimon, who says that US debt default would be catastrophic...while also telling folk not to worry about municipal debt default currently very near to hand, because that is part of the credit cycle.

Follow that?  Is there any question remaining that J. Dimon needs to be removed from his current station...you know, regardless of how hot K. Finerman is for him?

Rome, bitchez!

WryObserver's picture

My belief is that he has done everything in his power, publicly and privately.


Specifically, what would you have him do that he has not done?


Ad hominem attacks are easy. Details are hard.

Cdad's picture


WTF are you talking about?  Loosen up ye old chinstrap, buddy.

In one breath, J. Dimon suggest that allowing Federal Debt to default [by not raising the debt ceiling] is "insane" and "unpredictable."  In the next breath, he tells people to prepare for municipalities to default because that is part of the debt cycle.  Got it? In through the nose, out through the mouth.

Guess which debt JP Morgue is loaded up with...and which has some sweet collateral behind it?

Are you serious that you just think this is an unprovoked and baseless attack?  Eat much fluoride?  At least you have the sense to wear the helmet, anyway.

What would I have him do?  Return all Bernanke bucks, fire half of the folks from his corrupt bank, and resign immediately.  Oh...and maybe pay up on all his silver shorts, too.

Fuck off, you ill-informed twat!

Cognitive Dissonance's picture

Bernanke to the middle/lower class - "Let them eat (inflated) cake."

Cdad's picture

You know brother Cog,

I do not see Ben Bernanke continuing on in his current position for much longer.  I do not see additional QE...and I do not see people tolerating this circus much longer.


Cognitive Dissonance's picture

Well then, time for another crisis to properly compel the people to love their monetary God once more.

"Oh Bernanke, just get me out of this mess one more time and I promise I'll never doubt you again."