Apparently Bernanke is not able to rule the Federal Reserve System with as tight of an iron fist as Greenspan did. Some soundness of thought is creeping in between his fingers.
From the New York Times:
A lone dissenter on the Federal Reserve’s policy-making committee warned Friday that the central bank’s monetary strategy could backfire and touch off a new boom-and-bust cycle.
Thomas M. Hoenig, the president of the Federal Reserve Bank of Kansas City, dissented on Tuesday when the Federal Open Market Committee voted 9 to 1 to invest proceeds from the Fed’s mortgage-bond portfolio in longer-term Treasury debt. The decision was the Fed’s clearest signal yet that its confidence in the pace of the recovery was waning.
“Monetary policy is a useful tool, but it cannot solve every problem faced by the United States,” Mr. Hoenig told local Chamber of Commerce members in a speech at the University of Nebraska, Lincoln. “In trying to use policy as a cure-all, we will repeat the cycle of severe recession and unemployment in a few short years by keeping rates too low for too long.”
Mr. Hoenig added: “I wish free money was really free and that there was a painless way to move from severe recession and high leverage to robust and sustainable economic growth, but there is no shortcut.”
