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Source link: http://archive.mises.org/16223/most-reasonable-member-of-fomc-out/

Most reasonable member of FOMC out

March 25, 2011 by

Tom Hoenig, who is regarded by many Austrians as the most reasonable and insightful member of the FOMC formally announced his retirement today.

This will remove one of the few voices on the FOMC ever raised against the central bank’s reckless monetary policy.

Now, at their newly announced quarterly press conferences (its latest act of desperation), the Fed can speak with one voice about the virtues of future QE 3 through QE Whatever without any pesky member questioning the officially infallible Bernanke.

In an ironic twist, if the Fed had actually followed Hoenig’s advice, the Fed might have (at least in the short term) avoided the death spiral of public opinion in which it now finds itself. Hoenig never dissented on the Fed’s easy money because he’s opposed to central banking of course. He wanted tighter money because he was afraid that the Fed’s profligacy would undermine and cripple the Fed. Hoenig likes the Fed and thinks it could do good in the world. Thus he didn’t want it to be seen as reckless and incompetent.

Too late. The defeats for the Fed are mounting. Its press conferences, its recent loss at the Supreme Court, and the regularly scheduled undermining of the institution served up by Ron Paul at his Monetary Policy subcommittee are beginning to take their toll.

It’s been fun to watch Hoenig in recent months. As his retirement has drawn closer, he’s become more and more willing to criticize official Fed policy in a variety of forums. He’s no doubt disappointed that the Fed has handled things so badly, and perhaps he may be one of the lucky ones now that he’s on his way out.

{ 6 comments }

jon March 25, 2011 at 3:37 pm

good for him.

“abdicate.”

Adam Smith March 25, 2011 at 6:50 pm

“he’s opposed to central banking of course.”
followed shortly thereafter by
“Hoenig likes the Fed and thinks it could do good in the world.”

Nice contradictory statements.

Oh, and “insightful” is laughable (hows the whole hyperinflation thing going?)

Jkillz March 25, 2011 at 8:28 pm

Read the sentence again. It says, “Hoenig never dissented on the Fed’s easy money because he’s opposed to central banking of course.” In other words, it wasn’t a principled disagreement with central banking that motivated Hoenig’s dissenting voice. No contradiction.

Also, it said “most reasonable and insightful” — which means relative to the other members of the FOMC.

Adam Smith March 25, 2011 at 9:59 pm

Of course he does not disagree with the principle of central banking–if he did he would not have worked for the Fed–but the author of the article does not clearly state this.
The statement “he’s opposed to central banking” indicates, well, that he is opposed to central banking.

On the insight/reason side, he might be better than Plosser or Kocherlakota, but that’s not saying much. I understand the use of “most” as a comparative device; my initial comment indicated surprise that anyone would call Hoenig “insightful”.

BioTube March 26, 2011 at 10:36 pm

You’re misparsing the sentence – it is stating that the reason for the dissent wasn’t opposition to central banking(admittedly, it’s a bit more convoluted than it needs to be).

Bruce Koerber March 26, 2011 at 7:24 pm

The signs of totalitarianism are everywhere!

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