“In a sharply worded dissent to the Federal Reserve’s decision to help ease the supply of credit to the economy, a member of the Fed committee that sets interest rates said Friday that the central bank’s monetary strategy could backfire and touch off a new boom-and-bust cycle. The member, Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City, dissented on Tuesday when the Federal Open Market Committee, which sets monetary policy, voted 9 to 1 to invest proceeds from the Fed’s mortgage-bond portfolio in longer-term Treasury debt. The decision was the bank’s clearest signal yet that its confidence in the pace of the economic recovery was waning.” Read more.

“Fed Official Warns of Starting a Cycle of Boom and Bust”
Sewell Chan
The New York Times, August 13, 2010.

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