QE3 Here We Come?

Of all people at the Federal Reserve, the supposed monetary hawk Thomas Hoenig (Kansas Fed chief) indicates he and his colleagues are amenable to QE3.

From Reuters:

The Federal Reserve could debate extending its bond-buying program beyond June if U.S. economic data prove weaker than policymakers expect, Kansas City Fed President Thomas Hoenig said.

Another round of bond buying "may get discussed" if the numbers look "disappointing," Hoenig told Market News International in an interview published on Tuesday.

The eternal put is on the stock market. Have no fear. Everything and anything is already priced in. BTFD (Buy the Failed/F--king Dip).

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As Expected, Fed's Hoenig Says He Opposes QE2

The Kansas City Fed president Thomas Hoenig spoke today, reiterating his steadfast hawkish position that he opposed further easing by the Fed and favored the fed funds rate hike to 1%.

I don't think much of him. He is just as clueless as the rest of the Fed.

As a FOMC member who has consistently voted against the majority within the Fed, Hoenig said:

1. The recovery is proceeding modestly;

2. The Fed should raise benchmark rates to 1 percent and hold them there to see how the recovery proceeds;

3. The Fed must also keep an eye on its mandate to maintain long term price stability. As the economy continues to improve/strengthen, there will be this enormous liquidity and there will be tendencies for inflationary impulses to rise.

I have issues with all three.

1. What "recovery"? Hoenig must be seeing a different set of data than his colleagues, court economists and Wall Street analysts. I do not believe he is seeing the real world; I don't expect him to be, but what data is he seeing?

2. Just as the majority of the Fed pushing for QE2 and ZIRP as far as eyes can see have no clue, neither does Hoenig. He is saying "Let's raise the rate and see what happens. If the economy tanks, oopsy."

3. The Fed's mandate has morphed into something else, in case Hoenig doesn't know. These days, the mandate is not price stability but to boost up inflation to the "desirable" level.

The Dallas Fed's Fisher also spoke today, who sounded like he was sitting on the fence for now regarding QE2.

The Fed's "good banker, bad banker" routine is getting tired. I have to admit I don't know any more which ones are good and which ones are bad. They seem all bad for the real economy, and we can't do anything about it.

Why? The Fed is "independent", remember?

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Hoenig, the Fed's Hawk, Says We're Still in Recovery

It seems he wants to hang on to this wonderful idea of a "recovery" so that he can continue to press for monetary tightening.

Not that I disagree with what he's been advocating; I do think Bernanke is either delusional or too high on some prescription painkiller to understand the unintended consequences of his monetary policies and their impact on the real economy on Main Street. But a recovery?

Fed's Hoenig: We're Still in 'Modest' Recovery (8/26/2010 CNBC via Yahoo Finance)

"The US economy is in a "modest" recovery despite a recent spate of disappointing economic reports, said Kansas City Federal Reserve President Thomas Hoenig.

""I think good news and bad news comes, and you balance it out, and you look at the trends. And I think we have a modest recovery underway," the Fed board member said in an interview with CNBC.

""I don't think any reasonable economist should expect more than that, given the events that we've gone through."

"Hoenig made his comments as Federal Reserve and central banking officials from around the world gathered in Jackson Hole, Wyoming, to discuss continuing problems and concerns with the world economy. He suggested some new ideas for action may come out of the conference.

""I think you will get a broad discussion," he said. "I think out of that, from different points of view, from different parts of the world, you'll get- some disagreement. Hopefully some agreement, and some ideas about how to go forward. So, yes, I think we'll get something useful out of this conference for global economic development going forward."

"The meeting comes amid reports of some disagreement in the Federal Reserve over recent moves about handling its portfolio of securities.

""Uncertainty-is driving things," he add. "We all know that. And the idea here is to get some ideas on the table. Get some options defined ...so that we can perhaps chart a path as a little longer term. But I think we'll address some of those uncertainties. (We) won't eliminate them, but perhaps address some of those uncertainties. That's the goal."" [Emphasis on this idiotic remark is mine.]

Oh boy... And these people are supposed to be the cream of the crop, the best and the brightest?

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