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This is the Cato Daily Podcast for Saturday, December 21st, 2019.

I'm Caleb Brown.

When the Federal Reserve has no levers left to pull, then what?

Eric Sims chairs the Department of Economics at Notre Dame at the Cato Institute's

monetary conference last month.

We discussed the economic outlook and the price of complacency in relatively good economic

times.

There is a great concern right now that in a world with very low unemployment and no obvious indication of inflation or arising inflation and very low interest rates

that the Federal Reserve if and when it needs to act will be

unable to do so.

So explain what that actually means for our audience.

So, you know, sort of in the historical conventional playbook that the Fed takes to try to engage

in stabilization policy is when things get bad, they cut interest rates and when the concern is that things

are getting better and might be too better and putting upward pressure on prices and

wages they would raise interest rates. We live in a world where at present the

target range for the federal funds rates, 1.5 to 1.3

...