Here Are the Biggest Problems Facing the Fed Right Now
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 7 October 2021
⏱️ 45 minutes
🧾️ Download transcript
Summary
The Federal Reserve has a lot on its plate at the moment. Not only are "transitory" inflation pressures proving to be more stubborn than expected, but unemployment remains relatively high even as the U.S. economy recovers from the Covid-19 pandemic. Meanwhile, there are also technical challenges that the central bank now faces as it gets closer to tapering its asset purchases. Finally, there's the possibility of an imminent U.S. debt crisis as Washington continues to wrangle over raising the limits on federal borrowing. On this episode, we speak with Joseph Wang, a.k.a "Fed Guy," to talk about all the difficulties facing the Fed right now. Wang is a former trader on the Fed's open market desk and has first-hand experience in how debt ceiling brinkmanship can affect money markets. He gives his thoughts on what would happen if there were a technical default, how we should be thinking about U.S. Treasuries right now, why crypto may have changed everything, plus insights into how the central bank actually makes its decisions.
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| 0:44.0 | Hello and welcome to another episode of the Odlots podcast. I'm Tracy Alloway. My co-host, |
| 1:00.6 | Joe Weisenthal, is away. And if I could just begin the show with a small disclaimer, which is |
| 1:06.5 | that apparently I have broken my foot in three different places. So if I sound a little bit |
| 1:11.8 | distracted today, that is why. Now, speaking of difficult situations, you all know, or all |
| 1:18.4 | lots listeners, are aware that the debt ceiling drama continues in the states. Joe and I just |
| 1:24.8 | recorded an episode on the coin debate, which is one idea of how to bypass the debt limit on a |
| 1:32.1 | temporary basis, at least. But I think it's fair to say that there are a lot of challenges |
| 1:38.7 | out there at the moment, especially for the Federal Reserve, the Central Bank. So not only are |
| 1:45.2 | they still trying to navigate an unprecedented economic cycle in the wake of the global pandemic, |
| 1:52.8 | but they're also now having to deal with higher inflation to decide whether or not it is indeed |
| 1:58.4 | transitory. And meanwhile, they're also facing the fallout from what's going on in DC. So every time |
| 2:06.8 | there is this sort of debt ceiling brinkmanship, we generally see some feed through into the treasury |
| 2:13.4 | market, you know, money market funds stop buying up short term bills around the date, the so-called |
| 2:20.0 | drop dead date, that the US is actually supposed to run out of money and the Fed has to figure out |
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