The Intersection: Thomas Hoenig's Most Controversial Opinion
PEDRO DACOSTA: Now, I'm going to jump into the more lighthearted portion of our conversation called The Intersection where I'll ask a series of slightly more personal questions that we asked all of our guests. Thank you for indulging us here. The first one is whether there's any person dead or alive that you'd like to interview, have a sit down with, beyond the other end of the camera here, I guess at the moment? THOMAS HOENIG: Well, I'm an admirer of Paul Volcker and Alan Meltzer. Both of them. I would love to talk with them because who else could help us think about this current pandemic and crisis better than they would? I would love to get their wisdom at this point. Unfortunately, they've recently passed and can't do that, but they were real heroes of mine. I will tell you also, being from Kansas City area, I would love to talk with Harry Truman who had his own crisis to deal with and a great man of integrity also. PEDRO DACOSTA: That's great. Okay, so next, what is the book or books that have changed your view of the world, and what are you reading right now? THOMAS HOENIG: Well, books have changed my thinking of the world have been when I was younger, I did begin to read High [?] work, became much more impressed with how he thought about decentralized systems and how they work. I have found that very worthwhile. More recently, I read a book entitled The Wright Brothers, which I found inspiring, even for today, because here are these bicycle manufacturers and they invent this airplane and how they went about it gives me great hope for the future in this world of technology. I just finished it not too long ago. It's just a tremendous book. I recommend it to everyone. PEDRO DACOSTA: That's great. I'll check it out. As an individual or a leader in your field, how do you remain engaged and relevant in a fast moving world, and especially now that you've left public life officially, how is that going? THOMAS HOENIG: Well, I'm enjoying it. I'm associated with Mercatus, which is an opportunity to interact, engage with academics and other policy individuals frequently and that's of tremendous value to me. Under this isolation environment, I do make it a point to read everything I can in the morning early to catch up on how quickly things are changing. Then I talk to my colleagues a great deal, sometimes like video, other times one on one on the phone to get the detail, the sense of things. Then I try and write because the discipline that has you get your thinking out of the chaos mode into more discipline projection, I'll say. That's it and I'm enjoying it. I don't enjoy the isolation, but I do enjoy the interaction with people and staying engaged as I [?]. PEDRO DACOSTA: I actually like as much as semantics might be meaningless at times, that goes important distinction they've made recently to talk about physical rather than social distancing. Because in a way, I've become more social and caught up with different people in different ways now that we're stuck. THOMAS HOENIG: Yeah, I'm spending a lot of time on the phone talking to friends and colleagues and so forth. It's very-- I enjoy it a great deal. In fact, it makes your days pass a little faster than I anticipated. PEDRO DACOSTA: It does, it does. It focuses whatever research questions are focused on or in my reporting, really helps you figure out what's next. That's great. Some of our guests can tie their professional success to a single key breakthrough or a meeting they had or a person that gave them a lift. Is there such a moment in your career that you can think back to? THOMAS HOENIG: Well, first of all, I would say that I've been very fortunate in my career, because I've had wonderful mentors who would have helped guide me all the way from grad school through my role as president of the bank. I would suspect that out of crisis comes opportunity. One of the crisis that took place in the early '80s was the oil crisis, that period which affected our region. I was a young officer at that time in the bank of the Federal Reserve Bank of Kansas City and got very much involved in dealing with that crisis and was given more responsibility than I might have otherwise been given. I think that did help put me forward as someone to think about for the future at the bank, and it served me very well. Unfortunate as those circumstances were, and as much as I would have liked to have had the crisis evolved, it was probably a boost to my career. PEDRO DACOSTA: That's great. Can you identify a failure, I like to talk about it more as a set potential setback that you had to overcome that was significant to you? THOMAS HOENIG: Well, I can't-- I've had, believe me, I've had my share of setbacks over time that I've learned from, that's the idea of it. I have had in my career, analytical, shall we say, incorrect, felt thoughts that were completely wrong and that I had put forward that people kindly forgave me for, but those were cloudy days, as a friend of mine used to say, but I did get through them and learn from them. That's the benefit of it, so I'll put it that way. PEDRO DACOSTA: Last one, what view do you hold professionally that you'd say is most controversial? THOMAS HOENIG: Well, let me begin by saying in the last crisis, I was supportive of the immediate relief programs in 2008. I became very strongly in disagreement with the majority of the FOMC when they initiated QE1 and 2 and so forth in a recovering economy. They were putting massive amounts of reserves into the system in a recovery, keeping interest rates low and I was concerned then that it was going to create the next excess with increased leverage, misallocation of resources that would follow from that and that was very controversial at the time inside the Fed. I still feel very comfortable with my position. Nothing's changed if anything, in my mind, has been confirmed. We are more leveraged today than we would have otherwise been. That has not served as well in this pandemic crisis itself. It's not the cause of the crisis. That is the leverage isn't the cause, but it makes dealing with it more difficult than I think it otherwise would have been. Very controversial view in its time, but I feel very comfortable with it. PEDRO DACOSTA: I do remember the controversy. Thank you so much for joining me, Tom. I really appreciate it. That was Thomas Hoenig. He's a Distinguished Fellow at the Mercatus Center at George Mason University, and he's the former president of the Kansas City Federal Reserve. Thank you so much again. THOMAS HOENIG: Thank you also.