Nice to hear from Thomas Hoenig on interest rates

He wants short term rates higher.
I can be very specific. We want the banking network to encode GDP as a yield curve to a specified precision. If you are a smart economist you might go look at a 1970s paper by JP Burg of Stanford, which I have referenced many times.

Why do we want to get a fixed precision measure of the banker's yield curve? It is minimal, to the precision limit, which is what economic agents seek. Maximum entropy encoding we call it, there is no obvious low hanging fruit; as in an obviously steep portion of the curve.

How can the Central Banker help (other than dissolving itself)? Let us once again go over this with the Universal Economic Calculator. Since the last time visited maximum entropy encoding of the yield curve, things have changed.  The result of the stimulus has put us deeper in the hole.  But at the short end, we want that kink gone, we want two year rates to be about 1%.  The way for the Fed to get that is to trade in one year bills such as to move the two year rate up to 1%.  Yet again, sample at twice the frequency as the target.

What happens if we do this?  We shut out the low multiplier Keynesian impulse, and replace it with an impulse that invests in overcoming the shortages we suffer.

Should we be hysterical about doing this?  Naw, the economy will boom.   Let me remind everyone, we have an abundance of technology to solve  shortages.