Welcome. This is Anastasia Yuglova bringing you the Cato Daily Podcast.

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On Thursday, November 16th, the Cato Institute will host its 24th annual monetary conference

addressing federal reserve policy in the face of crises.

In the midst of twin deficits, unfunded liabilities, and a falling dollar value,

should the Federal Reserve do anything to avert a prospective crisis?

Chairman of the Cato Institute, William Niskanen, who will be speaking at the conference,

has a few words to say in today's podcast.

Is the Dollar and Direst Straightes? Why is it falling?

I think it's falling for two reasons.

One is a rate of growth of total demand in the United States is too high.

Our inflation rate is above target. The second is that we're running a very large trade deficit.

And the combination of those reasons has led to a

slight but progressive decline in the dollar rather less in fact that I have

anticipated. What about unfunded liability such as Social Security and Medicare?

What does their impact on the value of the dollar?

Well, that's a great puzzle.

We have unfunded liabilities for Social Security and Medicare that are many times the explicit debt of the federal government.

One of our colleagues estimates that it's on the order of $65 trillion, which is about five times

the annual output of the United States, and it is a puzzle to us and to others as to why the implicit

debt has not had the effect on the market that won't have expected. We can't

...