BREAKDOWN: What's Behind the Fed's New Push to Promote Inflation?
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 21 July 2020
⏱️ 17 minutes
🧾️ Download transcript
Summary
Why the Fed’s strategy on inflation is changing and why the definition used by America’s central bank may be hurting regular people.
This episode is sponsored by Bitstamp and Crypto.com.
Today on the Brief:
- EU leaders agree on $2 billion stimulus package
- LinkedIn job cuts show weakness in the professional sector
- Has DeFi jumped the shark?
Our main discussion: The Fed’s changing inflation strategy
University of Oregon professor and Bloomberg columnist Tim Duy recently penned a piece called “The Fed Is Setting the Stage for a Major Policy Change” arguing that we’re likely to see more inflation, promoted by the Fed.
In this episode, NLW breaks down:
- Why the Fed is turning away from its traditional inflation forecasting method
- Why the Fed is likely to let real inflation hit 2% before doing anything
- Why some are calling the move “simply asinine”
- Why some think the Fed is full of hot air and has no power to actually create inflation
- Why the Fed is trapped by its definition of inflation
Audio clip featuring Alhambra Investments head of research Jeffrey Snider in an interview with Emil Kalinowski.
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Transcript
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| 0:00.0 | The Fed's twin mandate is stability and low unemployment. But isn't low unemployment just a proxy |
| 0:07.0 | for people's ability to live? In my mind, there is no doubt that these policies have had the net |
| 0:13.3 | impact of making living harder. And the only conclusion that I can come to is that in many ways |
| 0:19.6 | the Fed is a prisoner of their own definitions. |
| 0:23.2 | If all we do is worship at the Almighty Temple of a 2% inflation rate, but that inflation rate |
| 0:29.5 | doesn't actually represent important things in the world, or at least it leaves out these |
| 0:34.3 | incredibly important things in the world, then how do we actually have any |
| 0:38.3 | sense of our ability to move and make the economy better for how people really live in it |
| 0:43.8 | and experience it? |
| 0:45.8 | Welcome back to the breakdown, an everyday analysis breaking down the most important |
| 0:50.5 | stories in Bitcoin, Crypto, and Beyond. |
| 0:55.0 | This episode is sponsored by BitStamp and Crypto.com. |
| 0:59.0 | The breakdown is produced and distributed by CoinDesk. |
| 1:04.0 | And now, here's your host, NLW. |
| 1:09.0 | What's going on, guys? It is Tuesday, July 21st, and today we are talking inflation, and specifically whether the Fed is about to start promoting inflation in a major policy shift. |
| 1:22.4 | Before that, however, let's do the brief. |
| 1:25.3 | First up on the brief today, one of the big pieces of macro news was the EU has adopted |
| 1:30.1 | a recovery spending plan. |
| 1:32.4 | After the longest summit in 20 years, EU leaders agreed to a 1.8 trillion euro spending |
| 1:38.6 | package, which is worth about $2.06 trillion US dollars. |
| 1:43.1 | Importantly, it's built around the Block's first ever issuance of |
| 1:46.7 | hundreds of billions of common debt. And this common debt is a lot of what both people are |
... |
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