Will Infinite Money Save the Economy
Money For the Rest of Us
J. David Stein
4.5 • 1.4K Ratings
🗓️ 25 March 2020
⏱️ 28 minutes
🧾️ Download transcript
Summary
What central banks such as the Federal Reserve and federal governments are doing to counteract the negative impact of the pandemic related economic shutdown. What are the risks of this massive monetary and fiscal stimulus and how to mitigate those risks.
Topics covered include:
- How central banks have the capacity to create an infinite amount of money.
- How the Federal Reserve is using its money-printing ability to stabilize the financial system and reduce the negative impact of the pandemic related economic shutdown.
- What are the mechanics of quantitative easing.
- What are examples of stimulus programs during the Great Depression that didn't work because they were too focused on social engineering.
- How massive central bank and government stimulus could lead to inflation or deflation.
- How inflation-indexed bonds such as Treasury Inflation Protection Securities can help reduce inflation risk, and why owning individual TIPs is particularly attractive right now.
- Why it's okay for investors with a long time horizon to ride out the current market turmoil without reducing risk.
- What are current and leading economic indicators suggesting about the severity of the economic shutdown and the potential for recovery.
Thanks to LinkedIn Learning and Rad Power Bikes 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, |
| 0:08.0 | how to invest it and how to live without worrying about it. I'm your host David Stein today's episode 292. It's titled, |
| 0:16.0 | Will infinite money save the economy? Governments and Central Banks around the world are working on measures to combat the economic recession, |
| 0:29.0 | the contraction really the shutdown of the economy related to the pandemic. |
| 0:35.0 | Social distancing is causing people, rightfully so, to stay home. |
| 0:41.0 | Jobs will be lost. Businesses will be hurt and are being hurt. And it is the responsibility |
| 0:48.6 | of the Federal Reserve and the U.S. and other Central Banks around the world to be the lender of last resort and for |
| 0:56.2 | federal governments to step up and provide stimulus and emergency relief to households and businesses. |
| 1:04.2 | Now there's a great deal of discussion with regard to how that relief should be delivered. |
| 1:11.6 | In this episode we're going to look at some of the things that the |
| 1:15.6 | Federal Reserve has announced and it appears the U.S. government will |
| 1:19.8 | announce. I'm recording this on Tuesday, March 24th. |
| 1:24.0 | They've not passed the final emergency relief bill yet, |
| 1:27.5 | but we have some indication of what it will contain. |
| 1:32.0 | And we want to look at perhaps some unintended consequences, namely |
| 1:37.4 | the potential for inflation given the level of stimulus. |
| 1:43.5 | It is a challenging thing for politicians and |
| 1:46.6 | Central Banks right now. |
| 1:47.9 | I do not envy their situation. |
| 1:51.6 | But we'll see and discuss it. is there anything we can do to protect ourselves in |
| 1:56.8 | case things don't necessarily go as planned. |
| 2:01.6 | Last Sunday on the 60 Minutes news program, Scott Pelley interviewed Neil Kashkari. |
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