Bankruptcy

Lone Voice Worries About the Debt Level

By mcbride

Because the Federal Reserve, the Treasury Department and the government generally has had one vision for combating the deflation which set in about a year ago and that has been to flood the system with new dollars, there has been little dissent within those organizations.  With the revival of retired Federal Reserve President Paul Volker as an administration advisor, that may open the door to more vocal dissent from this practice.  ?The US must fix its growing debt problems or risk a new financial crisis, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, warned on Tuesday, adding a mounting deficit could spur inflation.  Mr Hoenig said that rising debt was infringing on the central bank?s ability to fulfil its goals of maintaining price stability and long-term economic growth. ?Stunning? deficit projections were putting political pressure on the Fed to keep interest rates low, infringing on its independence at the risk of inflation, he said?.He was the only Fed member who dissented at last month?s meeting against language indicating that interest rates should remain near zero for an ?extended period?.?

Here is a link to this article: http://www.ft.com/cms/s/0/c918b8dc-1b37-11df-953f-00144feab49a.html

 Michael

Full post as published by Texas Lawyer Blog on February 17, 2010 (boomark / email).