Video - April 1, 2011
(Bloomberg) -- Federal Reserve Bank of Kansas City President Thomas Hoenig talks about the central bank's quantitative easing strategy. Hoenig, speaking in London with Maryam Nemazee on Bloomberg Television's "The Pulse," also discusses the Fed's lending during the financial crisis, the U.S. job market and banking regulations.
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This is a copy of a letter that a reader emailed us a few weeks ago.
Dr. Thomas Hoenig
President, Federal Reserve
Bank of Kansas City, MO.
Dear Dr. Hoenig,
Your views and principles expressed in the February 14 Time Magazine article sound very similar to my own which I call the “Okie Economy.” Simply stated this is a “cash and carry” economy where one only borrows for a car or home, provided he or she is qualified to do so. By following my mother’s example, I have paid cash for everything for over 30 years while saving a great deal of money. I did this on a modest income earned during my military career and subsequent retirement in 1979.
My parents were penniless when they married in 1932 during the Great Depression. I still have their first grocery receipt for $5.42. They borrowed $25 to pay the doctor when I was born in Ravia, Oklahoma the following year. Until 1941 they moved from shack to shack, none of which had electricity or indoor plumbing.
In August 1941, after hearing from a friend that jobs were available in California, they headed west. My mom and her sister had married brothers and the four of them, my younger “double cousin,” and I squeezed into a 1929 Chevy coupe with a rumble seat to begin a journey that would change our lives. We slept by the side of the road and cooked meals over a fire. We arrived in Hanford, California and the adults went to work picking grapes.
WW II was a life changing event for many Americans and it helped my parents move into the lower middle class. My dad was drafted and was wounded on Christmas Eve 1944 during the Battle of the Bulge. My mother went to work for a bank for $90 per month. She retired in 1979 the same week that I retired from the Air Force. She was 65 and I was 45. My mom lived well within her means her entire life and when she died at age 83, she left me over $100, 000. I have followed in her footsteps and, if the economy survives, I will leave each of my three children more than twice that amount.
Unless our nation follows the principles that you have outlined in the Time article -- and the Okie Economy -- the next Great Depression will be an unimaginable disaster. In the rural, agrarian society of the 1930s, people managed to survive. Our urban society today isn’t prepared for another Great Depression. There will be chaotic fight for survival that even our military may not be able to quell.
Of course, the rich will never suffer.
Sincerely,
M. M.
Lt. Col., USAF (Retired)
Charlottesville, VA 22901