How Nearly Two Decades Of Fed Policy Contributed To Bubbles, Busts, And A Boom In Debt
Odd Lots
Bloomberg
4.5 • 2K Ratings
🗓️ 9 December 2019
⏱️ 33 minutes
🧾️ Download transcript
Summary
Many people like to claim that the Federal Reserve is responsible for the high degree of leverage and speculation in the economy. But the mechanism via which this happens is often misunderstood. On this week's episode of Odd Lots, we speak with Srinivas Thiruvadanthai of the Jerome Levy Forecasting Center about how the Fed's goal of inflation targeting contributed to a massive buildup in private debt. As he explains, the approach to minimizing the volatility of inflation at a low level created a perfect environment for lenders, creating all kinds of other risks elsewhere in the economy.
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| 0:00.0 | There's so much news happening around the world that we're somehow supposed to stay on top of. |
| 0:05.5 | That's why we launched The Big Take. It's a daily podcast from Bloomberg and I Heart |
| 0:11.4 | Radio that turns down the volume a bit to give you some space to think. |
| 0:16.5 | I'm Wes Kossova. |
| 0:18.0 | Each weekday I dig into one important story and talk about why it matters. |
| 0:23.7 | Listen to the big take on the I Heart Radio app, Apple Podcasts, |
| 0:27.6 | or wherever you listen. Hello and welcome to another episode of the Odd Lots podcast. |
| 0:46.0 | I'm Joe Wiesenthal and unfortunately Tracy Allaway is out this week |
| 0:51.0 | but the good news is we have one of our favorite recurring |
| 0:56.1 | guests on the podcast today. We're going to be speaking with Srena Vaz |
| 1:00.8 | to Vodonti. He's the director of research at the Jerome Levy forecasting center, |
| 1:06.6 | great voice and great insights on markets and economics, and today we're going to be talking a little bit about the Fed, monetary policy, bubbles, economic volatility, and things like that. |
| 1:19.0 | There's a lot of belief out there that the Fed contributes to instability bubbles, but a lot of the thinking is kind of muddled, sort of overly simplistic ideas about a low rate, just lead to surgeon speculation. |
| 1:34.0 | Serena Voss has some more insightful complex ideas about the nature of |
| 1:38.8 | central banking over the last several decades and how it's contributed to less than ideal outcomes in the economy and |
| 1:46.0 | we're gonna talk to him now so Sri thank you very much for joining us |
| 1:50.0 | thank you thank you Joe and good to be back |
| 1:52.0 | you know what's interesting before we get into you wrote this paper recently on inflation targeting but before we get into that it's funny I was looking at a chart recently of just inflation you can measure |
| 2:05.3 | it obviously several different ways and strip out of things over the last 15 |
| 2:09.7 | years and probably further if you strip out oil prices it's almost impossible to find any |
| 2:15.5 | meaningful up or down trend at all even the economic collapse the boom the |
| 2:21.6 | whatever it's like there's it it kind of just stays the same a like, oh, the three month annualized rate of change in core |
... |
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