From The Wall Street Journal:

"I've been in the Federal Reserve for many years, since 1973, and I started out in bank supervision here at the Federal Reserve Bank of Kansas City," Mr. Hoenig tells me in an interview in his office. "During the '70s, we went through a time where interest rates were low" and "through that period I saw banks and others invest [based on inflated] asset values—including farm land, including commercial real estate, including the movement in energy prices and on projections that in 1980 oil would go to $100 a barrel."

That oil and real-estate boom ended badly, with a rash of bank failures and financial ruin that set this region back considerably. Though Mr. Hoenig acknowledges that he can't predict bubbles, "when you have an extended period of time with very low interest rates . . . those are some of the necessary conditions that will enable very rapid credit expansion leading to bubbles, perhaps. At least the likelihood of bubbles is greater under those circumstances." More of the interview here.