[Congressional Record (Bound Edition), Volume 155 (2009), Part 17]
[House]
[Pages 22399-22400]
[From the U.S. 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

[[Page 22400]]

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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