[Congressional Record Volume 155, Number 135 (Wednesday, September 23, 2009)]
[House]
[Page H9812]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                          INFLATION IS COMING

  (Mr. KIRK asked and was given permission to address the House for 1 
minute and to revise and extend his remarks.)
  Mr. KIRK. Mr. Speaker, when interest rates go up, the value of bonds 
go down. But this presents a dilemma for the newest and largest 
bondholder on Earth, the Federal Reserve.
  With interest rates low, quantitative easing policies and record 
spending, inflation is coming. Normally, we would expect the Fed to 
raise interest rates to protect the value of our dollars from runaway 
inflation, but now that the Feds owe over $1 trillion in bonds, an 
interest rate boost of only 70 basis points would trigger a loss of the 
entire $51 billion of the Fed's remaining net capital.
  Robert Eisenbeis, the former vice president for the Atlanta Fed, has 
highlighted this danger. With inflation coming, we do not want the 
losses that the Feds would have to their own holdings to stop them from 
doing what will be needed to protect us, and especially seniors, from 
next year's expected inflation.

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