What the Federal Reserve's New Policies Mean For Your Finances
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 2 September 2020
⏱️ 31 minutes
🧾️ Download transcript
Summary
The Federal Reserve just updated its policy tools. What impact could that have on inflation, interest rates and your investments.
Topics covered include:
- Why is the Federal Reserve more transparent in its communication than it used to be.
- What are the Federal Reserve's Congressionally mandated goals.
- What are four economic developments that has caused lower inflation and motivated the Fed to adjust its strategy for achieving its goals.
- Why inflation could be higher than the Fed's 2% target
- What might the Federal Reserve do now that it has adjusted its strategy
- What will it take for inflation to increase?
- What can individuals do financially in a low return, low yield environment
Thanks to LinkedIn and Candid for sponsoring the episode
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Transcript
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| 0:00.0 | Welcome to Money for the rest of us. This is a personal finance show on money, how it works, how to invest it and how to live without worrying about it. |
| 0:10.0 | I'm your host David Stein, today's episode 3.12. It's titled, |
| 0:14.4 | What the Fed's New Policy Means for Your Finances? |
| 0:18.8 | In January 2012, the US Federal Reserve, |
| 0:20.9 | the US Central Bank did something that it had never done before. |
| 0:25.6 | The Federal Reserve Open Market Committee issued its first statement on longer run goals |
| 0:31.0 | and monetary policy strategy. |
| 0:34.0 | That's often referred to as a consensus statement. |
| 0:38.5 | Now, how is that remarkable? |
| 0:40.9 | Telling people what your goals are, what is the purpose of your organization? |
| 0:47.0 | Well, prior to that, the Federal Reserve Open Market Committee, particularly under Chair Alan Greenspan, was deliberately |
| 0:56.4 | opaque so that financial markets wouldn't overreact to whatever the Federal Reserve |
| 1:02.0 | stated. This cryptic form of communication |
| 1:06.0 | never coming out really saying what you're thinking came to be known as |
| 1:10.5 | Fed-Speak or Greenspeak. In 2007 on 60 Minutes Leslie Stahl interviewed |
| 1:18.1 | Alan Greenspan. |
| 1:20.5 | Stahl mentioned how Greenspan in public was inscrutable whenever Congress asked about interest rates. |
| 1:27.5 | He resorted to indecipitable Delphic dialect known as FedSpeak. |
| 1:34.0 | Greenspan responded, |
| 1:35.0 | I would engage in some form of syntax destruction, |
| 1:38.0 | which sounded as though I were answering the question, |
| 1:41.0 | but in fact had not. |
... |
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