This is the Cato Daily Podcast for Friday, March 27th, 2020. I'm Caleb Brown.

The Federal Reserve's rescue efforts following the coronavirus outbreak runs the risk of blurring the all-important line between monetary and fiscal policy.

Cato's George Selgin says the Fed's

recent moves don't give us much indication

about the degree to which the Fed is engaging in risk-taking, and we probably won't know for

some time. He says Fed policy since the financial crisis also did not leave them in a better position

for this crisis.

To the extent that the Federal Reserve has taken action and they've taken a lot of action, it seems,

so far, do they at least understand the nature of what is going on in your view?

I think the Fed does know what's

basic responsibilities are, which is to,

which mainly consists of making sure we don't get another

financial crisis as a result of the coronavirus crisis that we can't

avoid experiencing.

I think the Fed understands that.

The problem is that the Fed is under a lot of pressure to provide support for

various markets and for the Treasury's efforts who as it were spread the pain from this crisis

and that of course risks smudging the boundary lines between monetary policy proper, which includes protecting

financial markets from collapse, and what is properly fiscal policy that is the use of taxpayer funds to make

transfer payments and to engineer bailouts and all that.

And there has been some smudging of those lines,

to say the least, in the recent rescue efforts. The Fed has done a lot of things. There was talk briefly as they cut their

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