Former Federal Reserve president speaks at St. Joseph Economic Development Summit

By Chris Fortune

Members of the St. Joseph Chamber of Commerce focused on the city’s recent successes and the overall economy at the annual Economic Development Summit.

Local government leaders and business owners gathered over breakfast for the presentation led by Thomas Hoenig, the former president of the Federal Reserve Bank of Kansas City, who had served as speaker for the summit several years ago.

“As we were discussing potential topics for today’s breakfast, we decided the economy was one, and his name came up as a speaker that was very well-received in the past,” said Amy Ryan, vice chair of the Economic Development Committee at the Chamber of Commerce.

Hoenig spoke about how total debt in the U.S. is growing and interest on the debt continues to rise. He said there are too many policies centered around crises.

“If you have a crisis, the Federal Reserve or the government steps in and provides funding, sometimes massive funding, and they say, ‘Well, we’re only going to do this temporarily, and then we back off of that and we’ll be back to normal,’” he said.

But Hoenig doesn’t believe that public policy is temporary because printing money creates a habit, and it becomes more difficult to withdraw from the policy if the government sees a slowdown while attempting to solve a crisis.

“You have to step in and provide liquidity during the middle of the crisis, but what you have to do also as a central bank or as a policymaker is when it’s over, you have to pull back from that,” he said. “You have to be disciplined in pulling your policy back after you’ve solved at least the immediate crisis problem.”

Hoenig said that a Republican congress and Democratic administration ran a government surplus in the late 1990s. In his opinion, the most favorable path to continue that trend is to reduce spending and increase taxes.

The national debt currently sits at over $35 trillion, and Hoenig said the national debt does not appear to be a major issue in this election cycle because it’s not a subject anyone wants to talk about.

The Congressional Budget Office projects the national debt could reach $50.7 trillion by the end of 2034.

“They don’t want to talk about it, and people don’t want to hear about it right now, so it’s not the topic,” he said. “No one’s asking the question of them.”

Ryan said the presentation was important for local elected officials to gain a deeper understanding of why the city gained federal dollars during the COVID-19 pandemic and how it helped expand Hillyard Technical Center and pave the way for the Children’s Discovery Center to be built.

“I know some of what Tom (Hoenig) shared today is a little bit scary when you really think about it and what could happen to our economy over the next 10 years,” she said. “I think we have to plan accordingly for that, but at the same time, we have to focus on what needs to be done next to continue to stairstep and continue to improve our community.”