37 Burst results for "Federal Reserve"
Fresh update on "federal reserve" discussed on The Breakdown with NLW
"Key macro discussion of the last couple of days, which is the November payrolls. Each month for those of you who aren't familiar, the bureau of labor statistics releases non farm payroll changes for the month before. It's a great chance to look at the labor side of the economy and the markets follow it pretty closely. Last month, November was kind of a mixed bag. On the one hand, the unemployment rate fell to 4.2%, which is obviously good. And what the Federal Reserve is looking to see. But at the same time, we added the smallest number of jobs this year, just 210,000. Many economists had expected that number to be closer to 550,000, which is a fairly significant miss. Labor force participation edged up slightly to 61.8%. And all in all, these mixed signals mean that although job growth might be disappointing, this report doesn't really have anything in it that would change the Federal Reserve's current taper trajectory. Remember, the fed has dual mandates and right now those mandates are dueling. On the one hand, they have price in market stability. They have to be concerned about inflation. That mandate is pointing to more hawkish policy, a taper of bond purchases and potentially a willingness to let interest rates go up a little bit. On the other hand is the maximum employment mandate, and that has been driving the reason that they've kept policy so dovish throughout the year. Given that the jobs reports keep missing, those two mandates are pointing in potentially different directions, but still, it's pretty clear as we've seen over the last couple of weeks that inflation concerns are finally in the political driver's seat. Now, one more interesting note on the fed, it's possible that senator Cynthia lummis will oppose the nominations of both Jerome Powell and Lil brainer on crypto grounds. In an op-ed on Tuesday in The Wall Street Journal, she wrote, over the past year, my faith in the fed has been deeply shaken by its political approach to digital assets in my home state. Now, lumis is specifically pointing to delays around kraken and avanti bank, which are regulated in Wyoming as special purpose depository institutions and are trying to get access to traditional financial rails. She points to a 1994 congressional degree that the fed must act on banking applications within one year and says, while mister Powell and missed brainerd have said that they want to promote responsible financial innovation. When Wyoming provided a perfect opportunity, the fed instead inexplicably chose to ignore its legal obligations. I want to know why, but haven't received an answer. Now, in a possible sign that the fed is trying to be better equipped for exactly the sort of thing in the future, they are launching a new FinTech research wing. It's in partnership with the bank for international settlements innovation hub and is going to be focused on supervisory and regulatory technology, financial markets infrastructure, future of money, open finance, and climate risks. So things that encompass this set of issues. Let's move now over into the regulatory sphere as you see chair gensler was at a crypto regulatory conference this week called dacom and was actually interviewed by former SEC chair Jay Clayton. Now there are two big highlights from the reporting. One was gensler saying that Bitcoin was competition for the U.S. system, although it was reported a lot on Twitter as though he was talking about Bitcoin competing with the U.S. dollar that wasn't really what he was referring to. He wasn't talking about monetary policy competition. He was talking about Bitcoin being a potential way around the AML KYC regime. Bigger at least in terms of its indexing on social media was the refrain that we frequently heard. And here's a direct quote. Work with us, these platforms need to come in and get registered, come within the investor protection remit. The question remains for some register as what? Gabriel Shapiro, lex node tweets, every lawyer I know who has had settlement discussions with the SEC over dows, DeFi, et cetera, has heard from enforcement that their client must register and then heard from trading in markets their client is not eligible to register. Maybe figure this out before cracking skulls? I think if you want to give chair gensler, the benefit of the doubt, that question is at least a little bit for Congress not just for him. Still overall mostly it was repeat of previous themes, which is probably why the response on social was a little more muted. I potentially bigger deal is that there is a House financial services committee hearing next week called digital assets in the future of finance. Understanding the challenges and benefits of financial innovation in the United States. It has a heck of a witness list FTX sandbank and freed circles Jeremy a lair, bit fury's Brian Brooks, who is also formerly of coinbase and finance U.S. and was the former acting comptroller of the currency, paxos Charles cascaria, stellar development foundations denel Dixon and coinbase's alessia Haas. Now, I think we're a little triggered to think hearings are all bad, right? I've talked a lot about the old Libra hearings, for example this week, but I don't think that that's the right way to look at this. I did sponsors this podcast and they're helping CFOs, traders, and risk managers, safely and securely integrate Bitcoin into their operations. Learn more about what nigga does and how they do it at night dot com slash NL. That's NYDIG dot com slash nlw. This regulatory discussion has to happen. I keep referencing that these individual departments really need Congress itself to act to determine what the regulatory regime for crypto in the U.S. should be. I've also previously noted a different hearings that sometimes what feels missing on the witness stand are the actual builders and investors. So now they actually have a chance to testify. It seems highly unlikely to me that this group gets together and it doesn't actually allow the people in Congress who genuinely want to engage in good faith to learn more and move things forward. So I'm going to head into this with some amount of optimism. Of course, it's not just the U.S. for regulatory things are happening. India continues to be confusing AF for a while earlier this year. It sounded like a band was coming, then some officials said, no, it was regulation not a ban. I've pointed out on this show before how much the Indian community has said that regulation is a good thing. It means that there will be a safe path for crypto, but then last week it was back to ban big headlines all about how India's forthcoming legislation was going to ban crypto. But then this week, Indian media is now reporting that it will be regulation and not abandon again. So I feel like at this point, we need to just not report anything until we actually get the substance of this legislation. In Germany a new ruling coalition has called for the EU to regulate crypto. And it seems like their key policy concern is KYC, but there's also attention as they want to make Germany a hub for tech companies focused on FinTech. In South Korea, there is a forthcoming 20% crypto gains tax, which would treat crypto differently than stocks. It was supposed to start next year in 2022, but it has now been moved to 2023, and there's speculation that it's because both the government and the opposition party are trying to appeal to young voters in next year's election, and this tax is unlikely to be a popular issue with that demographic. Just a few more things to wrap up on this weekly recap in the institutional space. There have been a lot more ETF rumblings over the course of the whole last month. Remember on November 4th, congressman Tom emmer and congressman Darren Soto wrote to the SEC urging a Bitcoin spot ETF approval. On November 12th Thenx body TF was rejected, but then on November 30th at the beginning of this week, fidelity launched a spot ETF in Canada. So this is the largest ETF provider having a Bitcoin spot ETF but not in the U.S.. Eric bakunas the ETF watcher from Bloomberg says this should be embarrassing for the SEC that one of America's biggest most storied names and investing is forced to go up north to serve its clients. But it probably won't matter. On the same day, greyscale and the blockchain association wrote to the SEC regarding their spot ETF approval. Craig Sam, the VP of legal tweeted last night, our attorneys at Davis Polk sent a letter to the SEC arguing that approval of Bitcoin futures based ETFs, but not Bitcoin spot based ETFs like grayscale Bitcoin trust is quote arbitrary and capricious, and therefore in violation of the administrative procedure act. He goes on to basically say that their legal argument is that the APA requires the SEC to treat like situations alike, and that they believe that differentiating spot ETFs and Bitcoin ETFs based on the 1940s act in the 1930 threes act are quote an example of two like situations that should be treated alike but are no longer. Another big one, Goldman Sachs is looking at Bitcoin backed loans and really this story, which is currently just reported from sources is two things. One is retail facing loans against Bitcoin, but the second is a sort of business to business repo lending facility as part of a prime brokerage service, which could be a fundamentally different way of looking at a key part of the business infrastructure. I know this is something that many in the space are watching closely as soon as we get more confirmation. Finally, we've talked a lot about it this week so I don't need to go in depth, but I do think that probably when the stories are written, this will be a week that we see as a pretty fundamental shift from the web two era to the web three era. Whatever that means and whatever false starts are to come around it. Jack Dorsey leaving Twitter to focus on square, which renamed itself to block to focus more on blockchain and Bitcoin specifically, and Facebook's David Marcus leaving the Libra project, which was renamed DM, and which was Facebook's first but not last attempt to get involved in this crypto and virtual currency space. Of course, Facebook is now putting all of its focus on the metaverse, even going so far as to change its corporate name to meta. Marcus leaving feels like the end of one attempt and the beginning of a new entry of Facebook into this digital asset space. All in all, it was a week that as significant as it was, feels like a prelude to what comes next from a regulatory standpoint from an institutional standpoint, and of course, from the way the big tech will interface with the next generation of the Internet. Hopefully this gives you a slightly better sense of what happened and as always, I appreciate you listening and hanging out. I hope you are having a great weekend and until tomorrow guys be safe and take care of each other. Peace.
Powell: COVID-19 variant clouds inflation, economic outlook
"Federal federal reserve reserve chair chair Jerome Jerome Powell Powell says says the the fed fed will will consider consider shutting shutting off off its its support support for for financial financial markets markets sooner sooner than than expected expected in in a a bid bid to to fight fight high high inflation inflation Powell Powell says says price price increases increases have have been been a a worse worse than than expected expected and and will will last last longer longer than than anticipated anticipated certainly certainly through through the the middle middle of of next next year year and and tells tells a a Senate Senate panel panel the the fed fed may may move move more more quickly quickly to to dial dial back back old old for for low low interest interest rate rate policies policies he's he's also also a a warning warning about about the the Omicron Omicron variance variance impact impact on on the the economic economic recovery recovery greater greater concerns concerns about about the the virus virus could could reduce reduce people's people's willingness willingness to to work work in in person person which which would would slow slow progress progress in in the the labor labor market market and and intensify intensify supply supply chain chain disruptions disruptions Powell Powell says says the the variance variance leading leading to to warrant warrant certainty certainty about about inflation inflation which which is is already already at at the the three three decade decade highs highs Sager Sager mag mag ani ani Washington Washington
Fresh update on "federal reserve" discussed on What Bitcoin Did
"They're living in absolute poverty and the currency is basically worthless. And it's a total catastrophe. But these things happen, they definitely happen, especially post 1971. And so are we going to have fewer sovereign defaults going forward or more? I would wager more, especially given that there just has been a global creation of debt and credit in that has to resolve some way. And so it's not the dollar I'd be worried about. It's everything else. Yeah, I think he said to me, he predicts a 120 currencies will fail who he thinks that the only survivors would be probably dollar Euro pound, yam. Yeah, a 120 is basically all of them. Yeah, basically it was outside the top 6 or 7 top currencies. But I'm like questioning how did it happen? Because if the Turk is fails, they could just knock a few zeros off and start again, exactly what they've done in Venezuela. But do you have scenarios where other countries like dollar rise on a stable coin? Is that a scenario that we see happening? I think it'll happen. No question. Yeah, I've been expecting it. Crypto dollarization. Crypto dollarization. Yeah. I mean, because look at the failure of dollarization, historically. So look at Zimbabwe. They had a bit of a dollar. It was fits and starts. And ultimately, the government was able to successfully use the banking sector against its citizens. To D, dollars. Now, what's the difference with the crypto dollarization? Is that you hold your stablecoins in your own mobile wallet on your phone? You don't have to hold your assets with a bank. And so you're insulated from the state weaponizing the banking sector against you. So because there's this bare asset nature of a digital dollar, you can successfully dollar. So I think you can more fully and completely exit the financial system. In question. And if you look at stablecoins, they are proliferated globally. I don't know what Turks are buying right now, for instance, to get away from the lira. I would wager that it's a mixture of gold dollars in Bitcoin. And maybe property other assets like that. But I think a crypto dollarization is more enduring and more successful than a physical Federal Reserve note based authorization because of course you have to somehow get those. Do you think it's into the country? Do you think it's also something that comes from bottom up? Because just thinking about when I went to Venezuela, it's kind of pseudo dollarized without officially being dollar rides, but it's pseudo dollarized because people want when you're there. They want your dollar. And Cambodia was the same when I was in Cambodia. People wanted your dollar. Will you pay in the dollar? So do you see it something that rather than come and top down? It comes bottom up and people just request the dollar and just enforce that. There's catalysts. I think they Cambodian dollarization was kicked off by the UN mission in Cambodia, but you're right. It's remained 70 dollarized. Venezuela is interesting. It's kind of a melting pot of currencies now, right? It's 5 Randy. This format, you can dismiss the Petro because it just complete failure. But it is the Bolivar, which obviously is an absolute show. It's Bitcoin. It is the Colombian peso. Right. And it is, what's the fourth one?.
Biden to keep Powell as Fed chair, Brainard gets vice chair
"President Biden says he's nominating Jerome Powell for a second term as federal reserve chair in a statement the president endorses Powell's stewardship of the economy throw brutal pandemic recession in which the feds ultralow rate policies help bolster confidence and revitalize the job market Biden also says he'll nominate Lael Brainard the only Democrat on the fed's board of governors as vice chair the number two position two other slots on the fed's board remain vacant as does the position of vice chair for supervision of bank regulatory post Biden says those positions will be filled early next month my camp in Washington
The Biden Inflation Tax With Steve Moore
"We on this show were early, we were right. We predicted it, we saw it coming, which is the inflation crisis. If you go all the way back into the spring of 2020, a year and a half ago, we did an entire hour long program on inflation. What it is and why it's coming to America and why the leaders in charge could only be, let's say, intentionally bringing us towards an inflation curve. This is by no way whatsoever in accident. This is inflation by design. This is in my personal opinion and attempt to try to justify mass immigration to try and give a basis to try and say we need millions and more people. And someone who I know knows this very well is a friend of mine, a fellow chicagoan. Steve Moore, Steve how you doing? Hey, Charlie, great to be with you. Thanks for having me on it. You are spot on. You were right about inflation. I was right on inflation and Joe Biden was wrong. And so was Jerome Powell, the chairman of the Federal Reserve board. And the new numbers that came out this morning show that we're now the producer prices are up 8% in a year. And Charlie, this isn't complicated when producer prices go up. Guess what happens to consumer prices? They just get passed off. 8.6% increase. So can you translate the economic language to really what that means and how significant an 8.6% increases? Well, it means every time you go to the grocery store, every time you go to the gas pump, every time you go you travel every time you buy anything out of Walmart, things are going to be more expensive. And inflation is a is a regressive tax. I love when Joe Biden you've noticed he's not going to raise tax for anyone who makes less than 400,000. Charlie, he already has. Yes. Every time you go to the basket gas pump, you're paying what I call the Biden inflation
Fed to begin slowing economic aid as inflation worries rise
"The federal reserve will begin dialing back the extraordinary economic aid it's provided since the pandemic erupted last year in a statement following its latest policy meeting the fed says it will start reducing its monthly bond purchases in the coming weeks the central bank plans to trim the amount by fifteen billion dollars a month from the current one hundred and twenty billion however that pace could change the move is a response to high inflation that now looks likely to persist longer than it did just a few months ago the bond purchases have been intended to hold down long term interest rates to encourage borrowing and spending but with the economy now recovering that's no longer needed Ben Thomas Washington
S&P 500 fell 4.8% in September, worst month since March 2020
"Stocks have closed out September with their worst monthly loss since the beginning of the pandemic five hundred ended the month down four point eight percent the first monthly drop since January in the biggest since March twenty twenty when covered nineteen first hit the U. S. hard by the stock market has climbed steadily for much of the year it became unsettled in recent weeks with the spread of the more contagious delta variant of covert nineteen a sudden spike in long term bond yields and word that the federal reserve may start to unwind its support for the economy in today's session the S. and P. fell nearly fifty two points or one point two percent to four thousand three oh seven however it's still up fourteen point seven percent for the year the Dow dropped five hundred and forty six points or one point six percent while the nasdaq composite lost nearly sixty four I'm Ben Thomas
Powell says spike in inflation lasting longer than expected
"The chairman of the federal reserve says the current spike in U. S. inflation is larger and more persistent than expected in remarks prepared for a congressional hearing fed chairman Jerome Powell says the economy and consumer spending are on the rebound but there's a bird pressure on pricing in some cases it's due to bottlenecks in the supply chain and hiring shortages consumer prices have been posting twelve month gains as high as five point four percent Powell says although inflationary conditions are larger and longer lasting than anticipated he expects the conditions will ease if not the fed has tools to lower pricing pressure Powell and treasury secretary Janet Yellen will likely face tough questioning especially from Republican lawmakers about inflation Jackie Quinn Washington
Federal Reserve Holds Interest Rates Steady, Says Tapering of Bond Buying Coming ‘Soon’
"So the fed yesterday avoided a shock to equities in. What's already been a week. September but will investors remained. Comfortable with the hawkish tilt as widely expected members pulled forward rate hikes expectations on the dot plot and fed chief. Jay powell telegraphed a tapering announcement at the next meeting in november. But it's worth pointing out. He said the same thing about this meeting the tapering Once it does happen is expected to end around mid twenty. Twenty twenty two. That's according to powell's comments and a off could occur after that but it's basically not going to be until twenty twenty three. At least that looks like the most likely timing for the start of rates judging by his comments and the dot plot.
Fed foresees a potential rate hike as soon as next year
"The federal reserve is signaling it may start raising its benchmark interest rate sometime next year such a move would be earlier than envisioned three months ago and assign the fed is concerned that strong inflation pressures may persist for now though the central bank is keeping its benchmark interest rate at zero two a quarter percent and says it expects that target range will be appropriate until labor market conditions reach maximum employment and inflation is on track to moderately exceed two percent for some time at the same time the fed says it will likely begin slowing the pace of its monthly bond purchases later this year if the economy keeps improving the fed cites progress on could nineteen vaccinations and strong policy support as key factors in the economic recovery and strengthening job market it also notes improvement in the sectors of the economy hit hardest by the pandemic Ben Thomas Washington
Stocks Drop the Most Since May on Worries Over China, Fed
"Hi Mike Rossi a reporting stocks dropped the most since may on worries over China and the fed worries about a potential collapse by Evergrande one of China's largest real estate developers and the potential ripple effects across markets sent stocks tumbling on Wall Street Monday the markets are also worried the federal reserve may pull back its support for the economy the S. and P. five hundred suffered its biggest drop in four months falling over seventy five points or one point seven percent to four thousand three fifty seven seventy three after two weeks of losses the S. and P. five hundred is on track for its first monthly decline since January the Dow Jones industrial average briefly dial nine hundred seventy one point fell six fourteen to thirty three thousand nine seventy the nasdaq fell three hundred thirty points or two point two percent losses mirrored drops in overseas markets hi Mike Rossio
Fed to Review Financial Trading Rules for Officials
"The united states federal reserve is reviewed ethics policy that governor financial holdings and activities of senior officials in the wake of resent disclosure that to regional fed presidents engage in extensive trading last ti- financial disclosure form shows arabic's coupling president of the dallas federal reserve bank into into twenty treated millions of dollars of stock in companies. Such as apple. Amazon and google while eric rosengren president of the boston fat traded stocks in real estate investment. Trust coupla hours in green said last week that it trades repeated on the feds ethics rules. They however sat there will sell their holdings at the end of this month and place. In money index funds we truck a wide range of securities or in cash.
"federal reserve" Discussed on Vox's The Weeds
"So when i was a when. I was a young blogger. People talk about the taylor rule which came from a macro economist. John taylor this is i. Don't know it's like a formula. There's some variables in it. It says what the interest rate should be and for a long time. I don't think the fed ever should've of explicitly followed that. The taylor rule but the understanding was that this guy's work was fluential and that it was You know kind of a way to think about Monetary policy that that people took very seriously and during the great recession in it's sort of most acute phases. Even one thing people would say. Look mathematically like the taylor. Rule says we should be in deeply negative interest rates which were not going to do for various reasons. And that's part of the case for obama's fiscal stimulus. So you know it's like you can do things in the economy in this taylor framework. It's not like a hawk all the time view but it says currently that like the fed should raise interest rates to five percent. Basically right way. And that is a view that was kind of predominant way of thinking until really really really recently would say that look. You can't let inflation get above two percent or stay there for any meaningful period of time because people will come to believe that. There's inflation that there's going to be like right now at the price of cars has gone up a lot so you can have a car buying frenzy right in which everyone who is even vaguely thinking about buying a car is like holy shit car. Prices are going up faster than incomes. I better by car like as soon as i possibly can. And then the prices go up and up and up and like we're in a disaster so the fed needs select slammed the brakes right now even if it throws people out of work we need to make it that like you just cannot afford a car and that's the only way we're going to get this back done and it sounds crazy but like i think it's important to understand that like that was how we were doing things like really really recently that like not just it would be undesirable to have three to four percent price growth but that it would be like apocalyptic and at any cost we had to stop. That mapping. yeah. And i think the a critique of the kind of inflation targeting regime which involved the taylor rule that became influential started kind of early in the two thousand tons of his wasn't starting with the economic blogosphere about people like yourselves reinvent many others. Our were very influential in pushing. The argument was that the inflation target becomes like ceiling. Which is another way of saying about you. Know your target metaphor which is to say that if you get that nervous about inflation being over target. You're not actually aiming at a target. You have a ceiling now. Inflation will always be a little bit below and this powerpoint between nineteen. You know if you're always a little bit below target you can actually start to drift down inflation expectations and thus inflation will drop and thus rates have drop lower and you end up in this kind of negative dynamic where you're always on the under heated side. You're always like in the wrong gear on the slow and you're always never quite getting the economy back to speed as quickly and as fast robustly issue cut and so having much warren explicit acknowledgement that. The fed wants to air on both sides understanding that on average it will hit its target gives it opportunity to take periods like right now and instead of just saying like the numbers of the number like the equations you know now through now we gotta we gotta stop everything and slam on the brakes and put the economy into a quasi recession. Slow down you can actually look at it much more holistically and say okay is. This sectoral is transitory. Is this going to decline. You know we still retain the tools to slow down economic activity. But it gives us a framework understand. Like if we actually think this is transitory if this reflecting economy that is coming back to life so rapidly it's causing some bottlenecks in supply chain issues but it will resolve itself. Well you know we have the bandwidth to sit this out and wait a little bit to take action which is important to give the economy time especially for a recession like this so i wanna pivot a little bit and ask you about kind of big picture theory because you know in addition to being a a great monetary policy noar. You're the author of a book freedom from the market which we talked about on this show and you know it's Well it's not about this. But it's about you know the limits of a market society and neoliberalism and i always get the sense that part of the disjuncture between what you and i have been talking about here and the way some progressive activists things is that this doesn't sound freedom from the market marquis enough to them like we're talking about solving problems and making the world a better place but like nothing has been de commodified. Nothing has been redistributed necessarily from anybody. Where like saying some guys on a board need to make somewhat better technocratic decisions and then people can just like get jobs more easily or higher pay and so i wonder i mean because you you really in this space you know. That's like critical of the market society. And how do you how do you think about that. I mean who do you hear from. How do you talk to people. So there's definitely a. I don't think it is reflected in mainstream journalism or progressive activism. But there is a sort of marxist critique of of left cantinas. I would insert myself a left kensington in my political orientation my economic orientation. There's a kind of like marxists left. Critique which says like this ultimately won't work because the battles between employers employees and and you can't massage system that's prone to collapse and i think that's outside this conversation and certainly i think we can do better on keynesian economics and then maybe we'll figure that other stuff out later. Yeah i mean. That's not really what i mean. I mean more. Just the sort of psychic emotional. You know interpretation that. I think people want to. They want to fight the bad guys on one level. And also they want to bolster so we. There was a version not that they were super left wing but like there was a version in in late obama of like a progressive structuralist critique of the economy that was like look participation has fallen in this shows. We need new investments.
"federal reserve" Discussed on Vox's The Weeds
"I think the the lack of cost is important to dig into here because obviously there is a cost to participants in the industry who enjoy having very high return on capital. We talk about this and yesterday's show but you know if you can find your investment with a lot of debt then your upside is enormous. The investment pays off. Well so you know people like to do that if they can get away with it normally in life. It's hard to get people to lend you. Money to make speculative investments. That's a heads. I win tails you lose. Sort of situation. But if there's a sense that you might get bailed out you know you can do it. And this is why. We need to regulate banks. The people involved with like you to believe that this is very costly to the economy that by making it less profitable to sort of be in banking. You're going to reduce the availability of credit of capital two people who who rely on banks to get the money but you say that that's not the case. So why is it that you know if i wanna mortgage. I want a small business loan like why doesn't it. Putting tighter capital requirements and banks make that harder for me as a customer sure so from the bank's point of view it is substituting one form of funding for another so instead of funding with dat is funding with equity or retained earnings And so it is. Substituting on the liabilities is basically saying we're going to change our balance sheet so that we're not using this thing that's we like doing more. And certainly at the margins we think that the cost of switching from one to the other has very little cost for that bank itself like if you increase requirements ten percent maybe the cost of capital goes up less than half a percent like. That's the kind of small basis points kind of change and even those might be exaggerated. It's really tough to do these studies. But that's that's the kind of scale talking about also particularly for real economy firms that need money for investments. They themselves have other options to i. You know your tidings regulations on the very biggest banks who we think have real stressors but like there are other things that can lend community banks can lend other your internalizing the cost of the failure of these largest banks over fifty billion dollars in size but there are other financing instruments in the economy as well so between those two things. There's a tendency to think that this has very little low cost and we see this because since two thousand eight to the cova crisis we essentially more than double capital requirements in banking system. And it's across all measures and there's a lot of different ways to to measure this. But in general the banks become significantly more capitalized in the aftermath of the crisis in the years after the crisis and then they keep that rate there because dodd frank forces them to even though they're angry about it and there's no system wide decline in lending or increase in lending causse because those are also largely determined by the federal reserve in aggregate demand Another way to approach is that if an activities profitable someone will lend to it. And they'll find a way to lend to at and that's kind of the flip side of that equation so we did this big experiment where we rapidly increased capital requirements the economy and basically no one says that it had a huge cost. The fight is whether or not the causes even really that measurable and you can just go out. I mean go apply for mortgage tomorrow. Like it's. There's a lot of credit available in the united states of america. But then so okay so. We were going to talk about pout so capital requirements. I went up under obama because of dodd frank and then they went down again somewhat Under under the trump administration. So the reason talk about fifty billion i think is a is a good way to approach a set of things that were deregulated so people ask. Where was the big bipartisan infrastructure. Bill of the trump years and they're actually was one in two eighteen. There was a big and push to deregulate. Parts of dodd frank. It was called something or willion. What is it. The economic growth regulatory relief and consumer protection act Which was basically very few of any of those things and what it did was congress that we're going to take that fifty billion and move it to two hundred and fifty billion and say we're no longer gonna worry about fifty to fifty if there's any worries in between there. The federal reserve is authorized explicitly in this act to step in and do things to make sure baseline projections are in. But we no longer want this enhanced regulation until you get to fifty because we as congress bipartisan group. Wanna really just focus on the biggest place. Now there's a lot of regional mid size banks in that which are very influential and purple states and very influential in terms of their power in congress and they asked for this and they got it. We were very opposed to it. Financial reform community in general is very post to it. I think there's argument. You could have moved. Fifty to one hundred janet yellen when she was at the fed barney frank himself later on so that might have been good but going. The fifty was really far beyond people thought that deregulated several trillion. Dollars on an important way. And these are like you know. Mnt bank santander ameriprise. I mean these. Are you know like have stadium. Sponsorship deals they're large large enterprises. They're not the biggest banks in america. But they you know. I mean i think you have. I think should have at least the question of can you really wind these these firms down in a clear well organized way you know. And that's the kind of basic regulatory concern. And they're being now let off the hook to an extent. Yeah absolutely and so jay-paul becomes ferries of chair and quarrels Randy cross Charge of regulations within the fomc. And they do two things that really upset. The financial reform community one is that they basically zero out regulations. That weren't even in that bill for firms between one hundred and two hundred and fifty billion in size so where we fought against this bill back back when it was passed in a lot of moderate. Dem staffers were like you. Know if there's a real problem between a hundred and two hundred billion size like the federal step in was like no. They're not like this like it felt like almost like oh my god you really do think like view. Believe that i think you you might even just be naive here. And the fed not only didn't stop and they removed living will requirements. They just eliminated them for banks up until two hundred and fifty billion and they eliminated some liquidity capital requirement but basically a certain kind of cap requirement that says you need to be able to make payments for thirty days in case the markets frees up on. They just eliminated that for up to fifty so they took what congress told them to do. Which is to say taylor and right size for up to two fifty and just sweat a lot of stuff away for banks that don't get the headlines. The bad actors in the financial economy away like goldman sachs might get a headline. That's very bad or do things that really stand out in the public but banks that do pose a real financial risks. That could collapse and could have real problems. They do that the next thing they do and they do this over the next several years going into cove. Ed is that they say you know what we're so interested. In only focusing on the largest banks we're going to extend a significant amount of regulatory relief in these areas to banks up to seven hundred billion dollars in size so they are now taking kind of with the directive was that bill but then going way outside the legislation of it and basically saying we are going to make living wills required less offense like every six years for banks up to seven hundred billion in size. And we're going to significantly weakened capital requirements particularly the kind of capital requirements. That are lake the most strict but also the ones the banks hate the most things like liquidity ratios. And things like that. And so now you've taken congress saying like we want to weaken on some of these mid size banks and then the fed goes further in the weakening of those banks and then takes way up the the scale..
"federal reserve" Discussed on Vox's The Weeds
"At my guest today. Returning weeds guest is my council from the roosevelt institute. We are doubling down on the federal reserve here in the waning days of my tenure on the weeds. There's a topic that is near and dear to my heart. I wrote a piece a decade ago. Like urging progresses to pay more attention to this subject. It is getting a little bit more attention now. But it's gonna get more attention on this show dammit. I'm sure there's gonna be some cheap ratings ploys coming after my time. But mike is is is a great guest to talk about this because he is really knowledgeable about the regulatory issues. That have been sort of in. Play the discussion of j. powell's tenure. But i think not actually talked about that much detail. So i mean i guess to start is just like what happened with banking regulation under the trump administration or powell's joint tenure with trump like what is the critique about sure. Can i start one. Step back and talk a little bit about what dot frinta just as a backer yeah. Let's go back dodd-frank so dodd-frank so dodd-frank in response to the financial crisis of two thousand eight. Remember that you buy ministration past the big one. The ministration past the dodd frank financial Reformat did a lot of things but things very relevant for pow and trump is that it took banks that were fifty billion dollars in assets is over and put them under enhanced prudential regulations on these are largely largest fifty six. These are not community banks which tend to be under a billion in size dodd-frank said in the statue wrote down fifty billion dollars. If you are above this size you are subject. To a lot more scrutiny. In two pieces. That are very relevant here. When is enhanced capital requirements. Which is to say that banks like that need to fund themselves more with equity. They need to fund themselves in a such that they can take losses without collapsing or panicking or failing in a catastrophic and quick way and another thing that they did was something called living. Wills which is. The banks had right down a plan for if they failed. How could they fail. Leman brothers went into bankruptcy and caused a huge panic. And the idea was that for financial firms bankruptcies not a really good option and for smaller banks committee bank. You have the fdic which can kind of go in and take over a failing firm. But you couldn't do that with these bigger banks. These megabanks banks are involved in a lot of complicated financial instruments or have multiple international exposures and so forth so the idea was like have the banks fund themselves with more equity in a lot of different ways. There's a lot of different types of capital requirements and also right down and be prepared to fail in such a way that would make it easier for officials at the fdic to take them over and wind them down with small bank to just go even more further field right. I was in in in maine last summer. There's a lot of small banks. There was in texas where there's a lot of very small banks and if like a really small bang goes bankrupt the will usually just like sell it to some other bank that you know wants the branches and the facilities or if nobody wants that they take their little pool of fdic money and just pay out the people who had the deposits there and they go someplace else with business. And it's like it's no biggie. You get up to these. Fifty biggest banks keycorp allies and way up to city groups bank of america and it just it wouldn't work logistically the antitrust implications of trying to sell wells fargo to another giant bank would be enormous. You couldn't just do it over the weekend. Obviously and also the banks are involved in like a million different lines business and that sort of the point about the living wills right is that you need to provide some kind of documentation of like what are you doing with your business so that these different lines of business could be frozen or separated or dealt with in a reasonably swift time period rather than just kind of chaotic bailout or chaotic bank failure. Right i mean the the concern was that in the financial crisis you had this sharp disjuncture you could do the bankruptcy option which has a lot of negative consequences for other people or you could do the bail out option which seems to have like not enough negative consequences for some of the people responsible for the failure of the bank. Yeah absolutely and though dodd-frank did a ton of stuff you know it harmonized consumer regulators into a dedicated consumer the consumer financial protection bureau. It moved derivatives into clearing clearing-houses. Did a ton of things when it came to the big banks banks over fifty billion dollars in size the banks and not just saying bank but like things that act like banks things that maybe our bank but also an investment bank things that our investment bank but act like a commercial bank. The kind of hodgepodge of bank holding company law and i am summarizing quickly in greatly here. So feel free to yell at me. On twitter handles dylan matthews. If you really those mentions with esoteric bank law if you're upset with the summary but when it comes to the biggest banks these are the big things like bank capital. Living wills are these are just core. These are not superfluous. These are not like nice to have. These are foundational for what you want to do. And they're the things where you really wanna go far because we think bancapital rules have very little cost for the economy as a whole you're largely just changing how banks themselves and users affirmed a lot of options. So the cost of those to the whole might even be zero. but they're very negligible in terms of like everyday people who need resources and financing and the benefits are quite big no matter what. The crisis is the crisis in the corporate sector capital requirements. And living wills help if it's in the household sector it helps if it's from climate change if it's from rapid decarbonisation no matter what the problem is these things help and living wills also just good internal risk management at just like says you know you have to make sure you're going to do this because the failure point is where we really hit the road so this is exactly where we want to have strong regulations i. Let's no..
Fed Survey Finds Growth 'Downshifted' in Summer Due to COVID
"The federal reserve's latest survey of business conditions finds US economic activity down shifted in July and August the fed's beige book cites rising concerns about codes delta variant as well as supply chain problems in labor shortages for the slowdown Americans held back on dining out travel and tourism and the report also notes particular weakness in auto sales that's attributed to low inventories due to a shortage of computer chips there had been expectations the fed could soon announce plans to start reducing its monthly bond purchases which are being made to help lower long term interest rates however analysts say that's less likely given the disappointing August jobs report Ben Thomas Washington
"federal reserve" Discussed on Vox's The Weeds
"It doesn't make sense in the real world as opposed to just as like a take about how well if you did everything to the max. You could do a lot because you know like you couldn't you couldn't write like the system has limits. I think yeah. There's also some slippage about what climate thing. You're trying to do that. You can sort of divided the proposals between ones that try to protect banks from the climate and one's try to protect the climate from the banks and those are quite different and have very different ramifications for the climate so some of the stuff about stress testing for for investing in fossil fuel assets trying to serve recognize climate. A systemic risk. You could make an argument. that vary indirectly. Like maybe if you do that then citibank will decide that it needs to serve put a price on carbon internally to offset its risk but basically what you're talking about is is trying to make banks adapt more to observe a world of rapidly changing climate to diversify their assets and ways to protect them. And it's not at all obvious to me that are trying to protect the banks. Themselves from collapse is going to have large effects on the actual climate. It seems more plausible to me that the bank's just serve restructure in ways that make them more resilient without actually changing what kind of activities or invested in the economy and on the opposite end of that of trying to protect the climate from the banks and trying to raise the cost of investing in specifically fossil fuel stuff. It's sort of funny to me that this conversation is happening at the same time that the three point five trillion dollar reconciliation bills being hammered out in congress which is said to include sort of a carrot as opposed to stick version of carbon tax where they pay utilities for meeting certain targets on renewable energy big subsidies for research and development on unclean energy. Some fees on imports. That are heavy. Users of fossil fuels are fines for utilities. That don't meet certain standards. All of that seems very straightforwardly like it will significantly reduce emissions and i think part of why people are pivoting their vision from that to the fed is they don't really believe joe manchin is going to go for a lot of that stuff and it's in fact really really hard to pass ambitious legislation through congress and it feels easier to like have an independent executive agency doing these things with wave of one but the fed does not do things with a wave of lawn aboard. Only some of the board is appointed by the president. A lot is appointed by local bankers and kansas city. Who do not share the sunrise. Movements views on these things and more importantly like i think there are like both practical and like more idealistic questions of democratic legitimacy like congress has passed a law saying that the fed has to maximize employment and stabilize prices. They have not passed any laws to the fed to do anything whatsoever on climate and it feels like the appropriate way to tackle. Climate change is for like congress to pass laws tackling climate change. What's actually speaking of that. Let's take a break. And then i wanna talk about who is actually in the mix.
"federal reserve" Discussed on Vox's The Weeds
"Matthews. We're gonna do a good episode. We're going to talk about mass when you've done about bangladesh. We're gonna talk about the federal reserve. But i i have a sort of sad news to announce at the beginning. Which is that. I am going to be leaving the weeds After two more weeks of shows It's gonna be great. We're gonna be in great hands which were still and mind who've been doing an amazing job as hosts it's Sorry i feel sad. The weeds is very close to me. but you know i think it is. It is probably the the right time for everybody to Move on with things. Vox has some great ideas for the show and for a sort of final weeds episode one week from friday as recline and sarah cliff to excellent new york times reporters who people may remember as the original co host of the weeds with me are going to be coming back. We're going to be having a roundtable. We are going to really. We're gonna weeds it out. We're going to talk about. I think healthcare pricing reform proposals from the by the administration. Personally i spend a lot of time ranting and raving about monetary policy as. We're gonna talk to day. About drum powell. He is the chair of the federal reserve. Donald trump appointed him to that job Previously he had been put on the federal reserve board of governors by brock obama. But he's a republican. He was sort of. Obama was making a kind of a package of fed. Nominee is and this was someone who the obama administration economic team considered to be reasonable republican. Who they could sort of. Put there as a A sop to senate republicans than trump wanted to put sort of. I guess he put his like his own man in at the fed. It's not like he. And powell or like buddy is powell is a republican and steve mnuchin. It seems like feared trump. Toward powell over some other people who were fed. Outsiders who trump knew better. And i remember when this happened. You know when. I talk to x. Obama people and they all said you know we don't i don't know we. We don't think you should fire. Janet yellen but like powell is fine He'll do a fine job. I feel like he has done a pretty good job on the topics that i mostly care about. But there's a big push from the left to dump him and that has involved. I don't know like a bunch of different complaints but dill. What's what's your understanding of of what's going on short so As you say. There are a bunch of different sort of lines of criticism of jay powell and arguments for a replacement fed chair. I think the the two most significant ones Actually let's do. Three most significant ones the first and most basic is that he's a republican and democrats have a right to appoint their own person to run the fed. So brad delong. Who's in economist at berkeley. Who knows a lot about the fed knows. A lot of these players has been arguing for replacing powell basically on social circle grounds of yes. He's been very pro full employment right now but he's a republican has republican friends. There's no guarantee that he'll maintain those positions if he's under pressure from fellow republicans. Route the rest of biden's term. I'm sort of of that. For various reasons that will will go into the other. Two are financial regulation and climate change so the feds and it has a number of jobs but the two big ones are monetary policy. Making sure we have employment and that inflation is under control and banking regulation that major banks have accounts at the federal reserve. The fed Has a lot of regulatory power along with other agencies and how wall wow very very progressive on employment. I think is is less of a die. Hard true believer on increasing capital ratios for banks. Doing the kinds of reforms that liz warren and ends where the financial regulatory community and the democrat party wants and on climate change. This is not traditionally been something. That's considered part of the fed's purview. But i think there's a there's a movement to consider every part of the federal government as involved in greek effort to fight climate change which totally makes sense given the scale of the challenge and there are some boatswain specific things that i think activists in the space want like rating for bonds from fossil fuel projects as riskier and requiring banks that invest in things like that to hold more safe capital as a insurance against them as a way of sort of indirectly deterring them from investing more in fossil fuel projects. And a lot of other are more symbolic things like jay-paul took a while to join the group of central banks that were committing to do certain things on climate change And i think people. I've i've talked to in rat on. That would say that on. Its own doesn't do a whole lot. But it's just sort of a sign of commitment and him being later than the european central bank or the bank of england or the bank of canada looked bad to them. So that's my attempt to to serve. Charitably relate these critics jay powell i think you have a less charitable take on any of these i mean i have in some ways i give frankly more credence to to long's point that you might just want a democrat in the office. I thought that like donald. Trump's stated reasoning for firing janet. Yellen which was that. She was a democrat. Just like makes perfect sense to me. And i thought he handled it really well. Honestly like trump always often handled things poorly but he he didn't trash yellen. He didn't come up with some whole elaborate. Set of like fake reasons. He didn't blame her for anything. I think he. He praised her in fact as having done a good job but he said he wanted own person in there and he did it and in a weird way if that had been the whole thing right like if this was the whole push from day one was just like you put in a democrat not because republicans are necessarily bad but because people are impacted by subtle psychological biopsies. You want somebody who is friends. With lots of democratic party hill staffers democrat ex democrat lobbyists by administration appointees just somebody who liked at the margins. Biopsies will be to say this is good. I would really sort of buy into like. I just feel like he was a huge problem with ben brunelleschi's tenure at the fed. Not that not that. He was like sabotaging the economy because he's a republican but like he was a republican so he thought that the obama administration's policies were misguide and was inclined to give a lot of you know this decisions under uncertainty right so you're inclined to give a lot of credence to the idea that this president who you don't support whose policies you disagree with is like actually the source of problems and that you were being asked to like bail out this bad regime versus you. Were trying to help you know. Be be helping partner in in something that's good. That'll jimmy can argue whether that applies to the current situation. And and i have some doubts. It it's what i thought. Last winter i would say i find the climate argument very puzzling right like literally believe that we should be pulling every climate lever available. Then you should appoint a fed chair. Who will deliberately plunge the economy into a depression because that would greatly reduce short-term co two emissions now..
Powell Sees Taper Starting This Year
"About what pal is going to say on Friday. And basically nothing. Well, I think he is going to be appropriately vague and perfectly noncommittal. Well, guess what? That's what happened. But I also told you That he would not Paper. You would not raise rates because he had too many things going Augusta, one of the things Was I told you That you've got to have full employment. And right now. We're receiving every week. New sign up for unemployment unemployment checks The unemployment applicants each week I running between three and 450,000. Anything about 350,000 is a recession. Well, guess what he said. When he came out, Jack, what I said. Doesn't have full employment. The Federal Reserve Chairman Powell He just came out and said that well. You may likely begin to taper before the end of the year. However, you went on to say That rate hikes aren't imminent. As you're still much ground to cover. Before the economy hits, full employment, exactly what I said. I also said They're lying. They're not gonna They're not. They're not going to raise rates because they don't control it. Paul does not control the Federal Reserve. The same banks, TERT warlords, bank stir Gangsters. Who control the Federal Reserve, the same ones who control The military industrial machine.
Powell sees taper by the end of the year, but says there's 'much ground to cover' before rate hikes
"If the economy continues to get stronger, says ABC Jim Ryan, watch for the Federal Reserve to begin tapering off some of its easy money policies before the end of the year. In a much anticipated speech as part of the Fed's annual Jackson Hole symposium, Jerome Powell says interest rate hikes are still often
Jerome Powell Signals the Fed May Soon Start Reducing Aid
"Federal Reserve chairman Jerome Powell indicating this morning that the central bank is likely to begin withdrawing some of its easy The policies before the end of the year, though he still sees interest rate hikes off in the distance. In a much anticipated speech is part of the Fed's annual Jackson Hole symposium, Powell said the economy has reached a point where it no longer needs as much policy
Federal Reserve meets in Jackson Hole - Closing Bell - Marketplace Minute - August 26, 2021
"Twelve american service members and injured many more investors were watching the gathering of the federal reserve. That began thursday in jackson hole. Wyoming chair jerome. Powell will speak friday offering clues about when the fed might pull back on measures to stimulate the economy. The governor of
Dallas Fed President: Watching COVID Delta Spread for Economic Impact
"Aclu today from dallas. Federal reserve president. Robert kaplan has been among those advocating for easing up this fall on some of the pandemic era economic support coming from the central bank. But kaplan now says he's watching the effects of the delta variant for signs. He might need to adjust his
Senators Want FTC Enforcement on Autopilot
"Aren't so pretty. Nice day for tesla stock today shaking off some of the red from earlier this week. Finishing up three and a half percent to six hundred eighty dollars ninety nine cents comparatively. The nasdaq was down nine. Tenths of a percent most of that drop happening in the last hour. Two hours of trading after the fed minutes came out so the minutes from the federal reserve's meeting today indicating that they are considering tapering off their monthly asset purchases sometime in the near term but obviously those things can and often do change so the market reacting to that towards the end of trading and tesla got pulled down a bit as well so pretty strong day for automakers just across the board today so we ejected on this yesterday but will check in again today probably for the last time this week but weekday performance so far tussles down about four percent a little bit less than four percent so far and actually now doing about a half a percent to full percentage point better than gm. Ford's atlanta's volkswagen and neo so despite all the coverage of the knits investigation. If you'd just slept through the first few days of the week which is actually not a bad strategy for an investor and you just looked at automaker performances we to date. You'd have no idea that there was investigation on tesla. And you'd probably say oh tesla's having a pretty good week relative to others so markets down today tesla up and that was despite reports that two. Us senators are currently urging the federal trade commission to open a probe into whether or not tesla used deceptive marketing practices involving drivers systems features which tesla of course calls autopilots and full. Self-driving that is per the wall street journal. They write quote in a letter to the head of the fdic. We con dated wednesday senators. Richard blumenthal of connecticut and ed markey of massachusetts said they have serious concerns about how tesla advertises. Its advanced driver assistance features. Which don't enable vehicles to operate autonomously. They took aim chief executive elon. Musk for some of his comments and quote.
Fed Discussed Pulling Back on Bond Purchases Later This Year
"The federal reserve may soon be dialing back their support for the economy minutes from the late July fed meeting indicate the economic recovery from the pandemic is moving closer to goals on inflation and jobs as a result the fed is expected to start cutting the pace of its treasury and mortgage bond buying when that will happen is not clear it could happen as soon as next month the strategy was to lower longer term interest rates and encourage borrowing and spending the rate is near zero the minutes also noted fed officials were worried about the threat posed by the rising number of virus cases from the delta variant and that it may temporarily delay the full re opening up the economy at Donahue Washington
"federal reserve" Discussed on The Breakdown with NLW
"Wasting asset gold will always glitter but novelty by definition fades bitcoin. And its ilk will. Accordingly almost certainly remain a risky and speculative investment rather than a revolutionary means of payment and are therefore highly unlikely to affect the role of the us dollar or require a response with the cbc. Still even with all of this. What has really gotten people's attention is quarrels discussion of stable coins. Something like we said. That's an increasing concern for many in positions of power. So let's read what he has to say about this. Some commentators argue that the united states must develop a cbc to compete with us dollar stable coins. Stable coins are an important development that raised difficult questions for example how would widespread adoption of stable coins affect monetary policy or financial stability. How might stable coins affect the commercial. banking system. do stable coins represented fundamental threat to the government's role in money creation. In my judgment. We do not need to fear stable coins. The federal reserve has traditionally supported responsible private sector innovation consistent with this tradition. I believe that we must take strong. Accounting of the potential benefits of stable coins including the possibility that a us dollar stable coin might support the role of the dollar in the global economy for example a global. Us dollars stable coin network could encourage use of the dollar by making cross border payments faster and cheaper and it potentially could be deployed much faster and with fewer downsides than a cdc and the concern that stable coins represent unprecedented creation of private money in this challenge. Our monetary sovereignty is puzzling given that our existing system involves indie depends on private firms. Creating money every day now. This doesn't mean in quarrels estimation that there shouldn't be regulation in fact the legitimate recognition of private stable coins would come with more not less legislation quote. We do have a legitimate and strong regulatory interest in how stable coins are constructed and managed particularly with respect to financial stability concerns the pool of assets that access the anchor for a stable coins value. Could if use of the same coin became widespread enough create stability risk if it is invested in multiple currency denominations if it is a fractional rather than full reserve if the stable coin-holder does not have a clear claim on the underlying asset or if the pool is invested in instruments other than the most liquid possible principally central bank reserves in short short-term sovereign bonds all of these factors create run risk possibility that some triggering event cause a large number.
"federal reserve" Discussed on CoinDesk Podcast Network
"And are therefore highly unlikely to affect the role of the us dollar or require a response with the cbc. Still even with all of this. What has really gotten people's attention is quarrels discussion of stable coins. Something like we said. That's an increasing concern for many in positions of power. So let's read what he has to say about this. Some commentators argue that the united states must develop a cbc to compete with us dollar stable coins. Stable coins are an important development that raised difficult questions for example how would widespread adoption of stable coins affect monetary policy or financial stability. How might stable coins affect the commercial. banking system. do stable coins represented fundamental threat to the government's role in money creation. In my judgment. We do not need to fear stable coins. The federal reserve has traditionally supported responsible private sector innovation consistent with this tradition. I believe that we must take strong. Accounting of the potential benefits of stable coins including the possibility that a us dollar stable coin might support the role of the dollar in the global economy for example a global us dollars stable coin network could encourage use of the dollar by making cross border payments faster and cheaper and it potentially could be deployed much faster and with fewer downsides than a cbc and the concern that stable coins represent unprecedented creation of private money in this challenge. Our monetary sovereignty is puzzling given that our existing system involves indie depends on private firms. Creating money every day now. This doesn't mean in quarrels estimation that there shouldn't be regulation in fact the legitimate recognition of private stable coins would come with more not less legislation quote. We do have a legitimate and strong regulatory interest in how stable coins are constructed and managed particularly with respect to financial stability concerns the pool of assets that access the anchor for a stable coins value. Could if use of the soon became widespread enough create stability risk if it is invested in multiple currency denominations if it is a fractional rather than full reserve if the stable coin-holder does not have a clear claim on the underlying asset or if the pool is invested in instruments other than the most liquid possible principally central bank reserves in short short-term sovereign bonds all of these factors create run risk possibility that some triggering event cause a large number of stable coin holders to exchange their coins all at once for other assets and that the stable coin system would not be able to meet such demands while maintaining a reasonably stable value. But these concerns are imminently addressable indeed. Some stable coins have already been structured to address them when our concerns have been addressed. We should be saying yes to these products rather than straining to find ways to say no indeed the combination of imminent improvements in the existing payment systems. Such as various instant payment initiatives combined with the cross-border efficiency of properly structured stable coins could well make superfluous any effort to develop a cbc. I'd like to just note here if you go back and listen to some of my podcast about cdc's and stable coins. Before that. i have said on at least a couple of occasions that if you look just at a government producing a cbc the us is far behind. If on the other hand you include the use of private us denominated stable coins as an example of this new type of money. The us has an enormous lead. That effectively is what quarles is saying. Here also goes in depth on what he sees is still to unexplored. Risks of cdc. His main points are one that quote a. federal reserve cbc could create considerable challenges for the structure of our banking system. Which currently relies on deposits to support the credit needs of households and businesses to could undermine the value of banks competing for customers three. It could present a huge target for attacks and cyber threats for it would demonstrate the challenge of preventing illicit activities while also respecting writes quote. Maybe challenging to design a cdc that respects individuals privacy while appropriately minimizing the risk of money laundering at one extreme. We could design a cbc. That would require cdc holders to provide the federal reserve detailed information about themselves and their transactions. This approach would minimize money laundering risks but would raise significant privacy concerns at the other extreme. We could design a cbc that would allow parties to transact fully anonymous basis to approach. What address privacy concerns but would raise significant money laundering risks. The fifth and final risk or question that he has is that it could be expensive for the federal reserve to design and maintain this thing so all in all a lot of folks really like this speech to give you just a couple sample reactions. Nick carter tweeted. So why do. I like this talk so much. A number of reasons. First of all he contest the framing of the cbc enthusiasts correctly pointing out the most dollars are digital. He also points out. That most dollars are effectively fed dollars. Go through fdic guarantees on commercial. Bank deposits quarles acknowledges the innovation present in the stable sector while rejecting the notion that they are somehow competitive with central bank dollars. Stabile issuers do not create money stables fiat convertible ones at least are just a wrapper on commercial bank dollars. Quarles is one of the first central bankers. I've seen seriously acknowledge the enormous honeypot risks inherent in cdc and the fact that most likely cbc implementations would massively trade off against user privacy. He doesn't try to force stables into some ill-fitting regulatory mold instead acknowledging their utility while stressing that they can be rendered more credible. Although he doesn't elaborate much in how this would work quarles rejects the framing around the urgency of cdc. I am with him. Foreign countries with a reduced respect for property rights or liberty creating sino. Cdc's cannot and should not motivate us to create something similar at domestic. Cdc must stand on its own merits. One thing i find interesting is that these comments differ significantly from the tone of quarrels colleague. Brainard took a decidedly harsh tones on staples recently encouraging to.
"federal reserve" Discussed on CoinDesk Podcast Network
"Vice chair of the federal reserve for supervision as well as the chair of the financial stability board at the one hundred and thirteenth annual utah bankers association convention in sun valley. Idaho gave a speech at the end of june called parachute pants and central bank money. His speeches at core a question about the logic and urgency of a central bank digital currency for the us. His starting point is that the dollar system is already highly digitized. So what he's really interested in is how is he. Bbc would add new benefits or would solve existing problems. He looks first. At the argument that quote the federal reserve should develop a cd to defend the us dollar against threats that would be posed by foreign cdc's on the one hand and the continued spread of private digital currencies on the other with regard to that first part foreign currencies. He says quote. I think it's inevitable that as the global economy and financial system continues to evolve some foreign currencies including some foreign. cdc's will used more and international transactions than they currently are it seems unlikely however that the dollar's status as a global reserve currency or the dollars role is the dominant currency and international. Financial transactions will be threatened by a foreign. Cdc the dollars role in the global economy rests on a number of foundations including the size and strength of the us economy. Extensive trade links between the united states and the rest of the world deep financial markets including for us treasury securities the stable value of the dollar over time the ease of converting us dollars into foreign currencies. The rule of law strong property rights in the united states and last but not least credible. Us monetary policy. None of these are likely to be threatened by a foreign currency and certainly not because that foreign currency is a cbc now with regard to private digital currencies quarrels divides them into stable coins and not stable coins. He is in his analysis. Pretty dismissive of bitcoin's potential to compete with the dollar. Basically saying that it's a novelty quote. Some commentators assert that the united states must develop a cdc to counter the appeal of crypto currencies. This seems mistaken. The mechanisms used to create such crypto acids value also ensure that this value will be highly volatile similar to the fluctuating value of gold which like bitcoin draws a significant part of.
"federal reserve" Discussed on Newsradio 970 WFLA
"Washington, DC Good morning to you. Morning, guys. Well, you know, it's been a Out of a crazy crazy week to say the least, Uh, Federal Reserve. They made a pretty big announcement yesterday. What was that? With other reserve has announced they are changing the major barometers or at least the major. Goals of the Federal Reserve. For the better part of the last decade, the Federal Reserve has had a employment mandate, but then also a managing of inflation mandate. Uh, for the better part of last decade, it was Having a target that has inflation trending around, 2% not really go over. Not really go under well issue's been the credibility of the Federal Reserve this past decade. We've never really had inflation even remotely come close to 2%, and it puts the Federal Reserve in a difficult position when they are having to create policy to charge stimulate. Growth from a monetary perspective stimulate growth in the economy. So the announcement that came from Jackson Hole. It's an annual gathering that sort of reserve. Uh Or or finding two leaders around the world together. Typically, the Federal Reserve chairman speaks at this Ah, respective event. In his comments yesterday, again introduced a new inflation target, or at least a new Goal for the Federal Reserve to try to get unemployment as low as possible. Ah, and basically take every measure possible to do that. Usually it was always defined about what the Federal Reserve would do to be ableto. Helped out unemployment or help manage inflation. But now and this is a concern some people now it's very broad based in with lack of description. There's a lot of pigments to this respectively. Uh, options for the reserve has tio what they was able to what motives or or what motions they would do to be able to make these respective policies, which have each decision has their own impact. On financial asset prices. Well, based on that. So what asset glasses do you think will benefit from these policy changes over the bed? Right. So Roger wanted the major takeaways from the respective event was that the Federal Reserve basically said We will do anything in our power to keep interest rates low. Uh and not worry about having inflation go over 2%. They go to 2.5% say goes to 3%. The Federal Reserve will not care as much because they see a longer run average of trying to get it closer to 2%. And again as we established before, for the better part of a decade, we've been well below 2%. So in their eyes for the reserves, eyes Hey, you know, let's have the inflation rate reached 2.5 or 3%. And from that perspective, then we average out in blood, too. Some of the narrative that we got from this respective speech first and foremost as the classes that would benefit from a very, very dovish monetary policy gold. Uh, now again, there's a lot of skepticism toe What? The Federal Reserve Khun dude to influence inflation. I think in the last 24 hours, it's been very interesting to see Ah wide range of whether economists, investment professionals, former Federal Reserve analysts. Come out and issue their opinion about. Well, look, the Federal Reserve can say they want to try to get inflation higher than 2%. But there are certain fundamental developments that need to happen. Roger. We talked about the output gather few times. Right now there is a significant supply demand in balance. And right now demand and it only got worse in the last six months. Demand simply has not grown.
"federal reserve" Discussed on Conspiracy Theories
"That he received criticism for controlling prices and keeping inflation. Rather than jacking up prices to boost employment. Basically, he took money from companies and put it in consumers hands rather than enriching business owners to create jobs. Greenspan continued to push for low interest rates through the DOT com bubble, and the nine eleven attacks many Credit Greenspan for the longest economic expansion. The United States has ever seen, but after eighteen years, Greenspan left the job in two thousand five. And while the Fed was extremely successful up to that point, the two thousand eight recession brought new criticism author and Congressman Ron Paul published his book end the Fed to shed light on what he considered a dangerous and corrupt institution Paul claim that not only was the Federal Reserve and call. It was unconstitutional. Congress didn't actually have the right to establish A. A centralized bank or create paper money and the Federal Reserve was an institution designed to sidestep these measures through semantics Paul argued in the post meltdown world it is irresponsible, ineffective and ultimately useless to have a serious economic debate without considering and challenging the role of the Federal Reserve ultimately Paul's in the Fed Movement helped increase national skepticism toward the Federal Reserve. Because of its unique position, straddling the line between public and private, the Fed can keep its inner workings close to the chest, and this elusive nature has inspired many conspiracy theories like conspiracy theory number one the Federal Reserve didn't just sit idly by during the Great Depression, they actually caused it. So it's founders could enrich themselves at the public's expense. Conspiracy theory number to the Federal Reserve, ordered the assassination of President John F Kennedy in nineteen, sixty three after JFK signed an executive order handing over more power to the treasury. The Fed may have collaborated with the CIA to kill the thirty fifth president. And conspiracy theory number three the Federal Reserve is a cog in the new world order who may be using the Organization for global domination. The Federal Reserve is one the least understood organizations in our country. We don't know exactly what its goals are because it operates in the shadows. Songs Federal Regulation, they control the most dangerous weapon known to mankind. Our money. Thanks for tuning in to conspiracy theories. We'll be back. Wednesday.
"federal reserve" Discussed on Conspiracy Theories
"Made the panic of nineteen o seven look like a cake walk in the nineteen thirties. The Nation hit its breaking point when the commercial banking system collapsed entirely. That's because only eight thousand commercial banks belong to the Federal Reserve System. There were still around sixteen thousand that did not and had no lender of last resort. While the banks inside the Federal Reserve System weren't hit nearly as hard much of America had their money in those sixteen thousand other banks on the outside. The Fed boards members differed on how to handle the crisis. Some believed aid should only be given to banks that were part of the system. Others argued that they should offer assistance to banks on the outside, or at least help their customers. The twelve branches were all involved in the final decision, but ultimately couldn't reach a consensus. Meanwhile, the Federal Reserve Board or the governing body of the Fed didn't have the power to dictate nationwide policy. Lawmakers. NHS became frustrated. It appeared that the Federal Reserve was sitting idly by while country descended into economic ruin. Ultimately Congress decided to resolve the issue themselves. They passed the banking act of nineteen, thirty, three, which expanded the president's authority during major banking crises and gave the Federal Reserve the flexibility to issue emergency funds later in nineteen, thirty, three Roosevelt decided to take the US off of the gold standard. He ordered all gold coins certificates worth over one hundred dollars to be turned into the Fed in exchange for paper money. Citizens would get twenty dollars in sixty seven cents per ounce of gold, which equates to a little over four hundred dollars today. The only exception was other foreign nations were allowed to exchange their US dollars with America for gold. The following year the government inflated that rate to thirty five dollars, an ounce, a little under seven hundred dollars today. This meant that the Federal Reserve who held the gold suddenly had sixty nine percent more money in their pocket. And more money meant more inflation. In the nineteen seventies, the Nixon administration completely severed any remaining connection between the US dollar and the gold standard, meaning the final clause of allowing other nations to exchange would now cease. Six decades after the Jekyll island meeting Fiat money finally became a reality. Things ebbed and flowed for the Fed until August eleventh nineteen, eighty seven, when economist and Greenspan became the chairman of the Federal Reserve two months later, he weathered another catastrophic economic crisis. The stock market crash of.
"federal reserve" Discussed on Conspiracy Theories
"Ten, a group of wealthy bankers mad on Jekyll island to discuss their plans for a centralized bank. Three years later, that plan became a reality when the Federal Reserve Act was passed and signed by President, Woodrow Wilson, but Com August of nineteen fourteen. The United States economic climate completely changed World War. One began, and although America hadn't joined the fight yet. Economic Panic was still setting in. As for the Fed, they had only been founded nine months before, and it wasn't quite operational yet. They're twelve branches wouldn't open until November nineteen, fourteen and rushing wasn't an option. They were in new unchartered territory, especially, because the start of the war triggered another run on the banks, but the panic only lasted for a few months. By the end of the year, a large influx of European gold came into the United States to pay for exports. The, federal. Reserve gathered that gold and stored it in their own private vaults. As a result, the nation's reserves inflated drastically. The Federal Reserve didn't quite know how to address that in addition European. Financial markets had slowed installed, and since the United States was in good financial standing, many foreign entities came to America to ask for loans and other financial needs. This strengthened the US dollar and made it one of the world's leading currencies when the United States finally entered the war in nineteen seventeen. The government needed extra money for the troops. The Federal Reserve did their part by keeping interest rates low so the government. Government could borrow at a lower cost. They also sold liberty bonds to citizens to raise money for the war effort. The United States came out on the other side of World War One with one of the world's most prosperous economies when the other nations started to pay back their wartime. Dad's the federal. Reserve amassed more gold than ever before the Fed had the luxury of offering citizens low interest loans while inflation soared the Federal Reserve had passed the ultimate test. It had proven itself as a necessary resource that could properly function as a centralized bank after the war. It did its best to bring down inflation. But? It was too late in the late nineteen twenty s, the nation went into an economic recession. In Nineteen, twenty nine, the United States had one of the most catastrophic economic disasters in global history. The Great.
"federal reserve" Discussed on Conspiracy Theories
"Today the federal! Reserve, controls the United States interest rates and the amount of money in circulation. But. It's not an age old institution. The US government's first three attempts at a centralized banking system failed. So. In the early eighteen hundreds thing lifted up to the states and privately owned institutions to manage America's money, but the system proved too weak in the face of a crisis. In April nineteen o six, a seven point, nine magnitude earthquake hit San Francisco causing massive devastation, not just to the city, but to the entire US economy, bridges, roads and buildings were destroyed insurance companies went bankrupt in an effort to fulfill their claims, but many property owners didn't have insurance and couldn't afford to rebuild or move. The stock market plummeted as investors. Investors were forced to sell shares in an effort to repay their debts. People started to worry about the banking system stability and decided they'd rather hold onto their cash than let the banks do it for them. The country entered a recession as more people refuse to spend their money in October. Nineteen O seven, a Wall Street panic made the recession even worse. Auto and Augusta's hinds copper moguls tried to corner the market by taking full control of their company's stock. The brothers bought as many united copper shares as they could, and drove the prices up except auto completely misread the market projections two days after he purchased the stock, his very expensive shares plummeted even lower than the original rates. The Wall Street Journal reported on the drop, which triggered a nationwide panic. Clients made a run on the banks meaning they withdrew their money from every institution rumored to be involved with the Heinz family, many state and local banks declared bankruptcy leaving thousands of their customers unable to access their funds. It quickly became apparent that the independent bank didn't have the infrastructure to whether an economic crisis. Luckily. One American banker was ready to rally the troops and clean up the mess in October, nineteen o seven John Pierpoint, Morgan better known today as J. P. Morgan invited a group of bankers over to his New York Mansion. He asked that they fled their capital into the banking system to keep the economy afloat until the panic subsided. Essentially J. P. Morgan's private banks save the US government a lot of money by bailing out the banks, so they didn't have to. But Morgan and his friends would soon call in the favor. G. P. Morgan didn't board. Aldridge's train car that November and nineteen ten, but he was well represented the roster of Cigar Smoking. Men included Benjamin strong head of JP Morgan Bankers Trust Company and Henry. P Davison senior partner at j.p Morgan Sipping Scotch alongside him where a Piat Andrew Economist, and Assistant Secretary of the Treasury. Paul Warburg partner at a New York investment firm called Kuhn, Loeb, and company Frank, a vendor lip president of the National City Bank representing William Rebecca Feller. Of. Course Nelson Aldrich Senate chairman of the National Monetary Commission A study group responsible for reporting any changes to the American currency or banking system to Congress, but Aldrich knew that the commission was mostly just for show. The country needed a stronger monetary agency to avoid future panics, which was why he'd brought these men together. They traveled eight hundred miles south to Jekyll island there they'd spend nine days at a private resort exclusive to the nation's wealthiest as soon as Aldridge's extravagant train car pulled into the Brunswick station in Georgia news of their arrival spread, the men were waiting for their boat at the local dock when reporters arrived spitting questions. Henry Davison told the journalist that he was simply. Simply entertaining a few guests, they'd come for a week long. Duck Hunt and the press Bhatt it soon. The reporters dispersed in Aldrich and his friends had privacy again from that point on their meeting was shrouded in secrecy for the duration of their stay at the island lodge. The men only referred to each other by their first names. They dismissed there fulltime staff in favor of new employees. Who didn't know their identities, so no, this wasn't an ordinary duck hunting trip. It was an effort to establish the most powerful banking structure. The world had ever seen. The men spent their days drinking expensive Scotch, eating caviar and devising a plan to tackle some of the issues they collectively faced. They'd been business rivals before, but now they needed to combine their powers and take back control I. They had to stop the growing influence of smaller rival banks. Even these wealthy elites felt the competition getting stiff in the banking world. After the market crash there were almost twenty thousand privately owned lending institutions across the nation. They cut into the big banks market share, and made it harder to make money off of interest or loans. Another problem was that American banks didn't have a lender of last resort. meaning. There was no to fall back on. Although it had failed before the United States really needed a central bank one that could create as much money as needed to help banks that were risk of going under and to accomplish that they needed to make money more elastic, which meant that its value could be inflated or deflated quickly. According to commercial demand, they also needed to pull the nation's funds into a large centralized reserve. Then they could be the ones to dictate who got? Got How much most of the men involved in the Jekyll island meeting were experienced bankers, and they all knew the rules of the game investor Paul Warburg had already advocated for a centralized bank for years he published several pamphlets that were popular in financial and academic circles, so he became the JEKYLL. Island plans mastermind Warburg had long argued that American currency had been handicapped by its dependence on government bonds and gold. He believed that one day the world would come off this system. Now is the time to institute elastic Fiat money to keep up with the nation's capital economy in other words, the men at Jekyll island.
"federal reserve" Discussed on Conspiracy Theories
"Safely store public funds and take over the government's financial duties like back war debts. And since it would all be done outside of the federal government, it wasn't technically unconstitutional. His model wasn't too far off from the Bank of North America's in fact Hamilton was a former colleague of Robert Morris and some believe that he was working to keep Morris's agenda alive. Theoretically, the further the banks stayed from political control in the less, the public understood about their inner workings. The easier they'd be to profit from. Except Thomas Jefferson saw right through Hamilton's plan. He argued that because Congress couldn't print money. They also shouldn't create their own bank. The heated debate lasted months. The issue played a part in creating the country's first political parties. Hamilton led the federalists who advocated for a strong centralized government and commercial growth. Jefferson became the face of the Anti. federalists who supported states, rights and believe the constitution should limit the federal government's power. Ultimately Hamilton's party went out in Congress issued a twenty year charter to the First Bank of the United States Hamilton handpicked. The bank's new President Thomas Willing a merchant who had benefited from Morrison's corrupt dealings during the revolutionary. War The first bank acted as the nation's fiscal agent, securing incoming loans in paying its bills. The US government became the largest shareholder in the biggest corporation in America and while it didn't manage the bank. Bank directly it collected a portion of its profits inspected the books from time to time of course, the government flourished when the first bank did well, so they didn't have much incentive to blow the whistle. If they ever found something amiss, unlike the Federal Reserve, the first bank offered loans to private citizens and businesses. It printed its own banknotes backed by gold reserves with those notes in circulation. The US dollar became more powerful. In eighteen eleven, the charter went up for renewal but Alexander Hamilton wasn't alive to defend the banks honor anymore. The pro-bank federalists no longer had congressional power at the end of January. The House voted on whether or not renew the charter. It came down to a tie-breaking vote and the First Bank of the United. States lost. It was subsequently dissolved. Another attempt was made with the Second Bank of the United. States in eighteen sixteen, but it didn't have the support of the newly elected President Andrew, Jackson so the second bank met the same fate as its predecessor, and was also dissolved for the next seventy five years. The United States thrived with only private or state owned banks. That is until nineteen o seven when the new. York Stock Exchange fell almost fifty percent and panic spread throughout the nation. Millions of dollars had disappeared overnight. Coming up the panic of nineteen o seven triggers a top secret meeting of the world's wealthiest men. Knives out the critically acclaimed blockbuster film that audiences love is now free to prime members on prime video. When renowned crime novelist Harlan thrown be dies on the.
"federal reserve" Discussed on Business Basics
"We're left with a lot of new deal proposals like the glass steagle act and some other new reforms that end up giving the Federal Reserve's responsibilities over to the treasury and what this process does is it allows the Fed to become more focused on certain duties. It'll it'll also Laos the Fed to become more centralized so in effect. It's making the Federal Reserve a more efficient system that we can effectively implement. Us economic policy. So what is the Federal Reserve today? So basically the Federal Reserve is what is known as a bank while simultaneously being the government. Spink IT sells notes and bonds which are basically where consumer gives money to the government and the government uses that money and after a certain period of time depending on the bond length or the note went then the federal government gives that money back to the person who purchased it with interest and each bond rate has an interest rate attached to it which allows the consumer to make money from it in addition to that the Federal Reserve is also responsible for distributing cash apply from the Treasury to the Banks. So that means that it's a whole nother organization within the federal government. That's separate from the Treasury. It's working in tandem with the Treasury to distribute money. But it's not the one producing money dot is the treasury's job. The Fed the Federal Reserve has twelve banks. It has banks in Boston. New York City Philadelphia Cleveland Richmond Chicago. Atlanta Saint Louis. Minneapolis Dallas San Francisco in Kansas City. So these twelve banks all have a president or CEO. Who's responsible for managing that bank and each of these banks are responsible for distributing money to their respective regions and lending major commercial banks money. In addition to those twelve banks the Federal Reserve also has a seven member committee known as the Board of Governors and this board of governors is the one who sets interest rates and they are the ones who help in making public policy them in tandem with the Federal Open Market Committee and another system. We'll talk about so the Board of Governors seven member committee appointed by the President and approved by the Senate and then you have on the seven member committee. A chairman and vice chairman were appointed to buy the precedent and they serve four year terms without any term limits. Sonali mentioned the Federal Open Market Committee. What exactly is that? The Federal Open Market Committee is the Board of Governors plus the president of the New York City Bank and three other of those eleven other Bank Federal Reserve Bank chairs that end up rotating in a yearly fashion. This Federal Open Market Committee meets eight times a year and they're the ones who set federal the Federal Reserve policy they set interest rate guidelines within the interbank market. So what does that mean? Basically banks trade money amongst themselves before they traded to consumers and whenever they traded amongst themselves they have an interest rate that they abide by. And because you have competing banks trading money. You're not going to have one. Banks set an interest rate. What you're going to have is the banks abiding. By the interest rate guidelines set by the Federal Reserve so those banks will trade money amongst themselves by the poll by the range set by the Federal Reserve. And then in turn those banks will for the most part set their own interest rates that they charge consumers or people who they give money to that they loan money to they'll charge them interest rates that are around the same area as the Federal Reserve interest rate guidelines. So that's one aspect of the Federal Reserve in addition to that it can. It's also responsible for introducing money into economy so the Federal Reserve helps to sell bonds. I E drawing money into the Federal Government but in economic downturns the Federal Reserve also buys bonds so therefore advise that bond back it gives money to the consumer whenever the consumer economy have less money than usual and that way the Federal Reserve is giving its money to the consumer and that we'd economy has more money within so if we think back to more recent event than the Great Depression immediately what comes to mind is the two thousand eight recession and we think about that. Did the Federal Reserve have a major impact on alleviating the two thousand eight recession? And so the answer to that. Is that during this time? The Federal Reserve cut interest rates and it did purchase the debts of some struggling corporations. But the problem the would that happen with the Federal Reserve during this time is that the Fed began cutting interest rates in two thousand seven. They thought the economy slowing down. So therefore they decided to cut those interest rates but in two thousand eight was when the problem really hit that was when the economy entered recession territory. And so by the time we were in mid two thousand eight inflation had already started increasing because of those interest rate cuts from two thousand seven that the Federal Reserve's hands were tied behind. Its back to cut interest rates further so the Federal Reserve couldn't do anything with the interest rate aspects beyond two thousand eight. But what they did do was they injected four trillion dollars to the US economy through the purchasing of bonds. Like I mentioned before so. The Federal Reserve played a notable impact in the two thousand and eight recession. All beat not as much as it probably would have liked to given that the interest rate cuts from two thousand seven did significantly hamper. It's ability to affect change in two thousand eight and now we that leads us back to where we are today where we have the krona virus or cove in nineteen and as we've all seen within the last month the massive economic downturn that has occurred and so we've been hearing within the news that the Federal Reserve is thinking of or rather not thinking but it's already taking action and so this action that the Federal Reserve has taken have has already been that they've cut interest rates to zero so the official Federal Reserve Interest Rate Range is zero percent zero point twenty five percent. That's already been done. It happened two weeks ago so Federal Reserve is already on top of that but the problem is and we don't want to run into a similar problem faced with interest rates in two dozen eight so the Federal Reserve is planning to to inject economy money into the economy. Even faster this time than it did in two thousand eight and what you have right now with the current viruses. No one is really willing to lend money what you're seeing. The stock market is that people are dramatically selling their positions in order to get cash back and no one wants to lend money to the corporations. No one's going. Outside of their homes people are told to stay indoors so with no one lending money then that means someone has to and so. The Federal Reserve has announced that it will purchase treasury in corporate bonds in order to lend money and this is pretty significant because a the federal reserve has never delved into corporate bonds before Sadat is pretty. That's a pretty significant action. Additionally I've read that the Federal Reserve is even announcing that it will purchase around seventy five to fifty billion dollars worth of bonds each day if we calculate that over the next two weeks to four weeks. Then we're going to massively out. Then we're going to have a lot more money than four trillion dollars which is how much the Federal Reserve put in in two thousand eight recession. So that's where we are today in terms of the Krona virus and the Federal Reserve's Halsey and it stands on alleviating the economic impact..
"federal reserve" Discussed on Business Basics
"So our Federal Reserve story starts back in the early nineteen hundreds an actually even before. Then see up to this to the early nineteen hundreds we had had a series of major financial panics within the US third major notable ones where the panic of eighteen seventy three following the construction boom. That happened after the civil war. Panic of eighteen ninety three right in the heart of the gilded age and the panic of nineteen o seven and the panic of one. Thousand nine hundred. Seven is the one we're going to focus on but before we do that we look at all three of those major financial events in the intermediate sprinkled in between what was the common denominator between all of them. They all involve banking failures that resulted in prolonged periods of economic depression. And these banking failures were caused by rampant speculation banks made loans to these speculators and ultimately you'd have these speculators creating these economic bubbles and then every these bubbles collapse. These prices became unstable then. The entire market crashed when the bubbles collapsed. So if you go to the nineteen thousand seven panic what happened. In one thousand zero seven so the fallout from the crash of the United Copper Company stock led to the chain reaction of bank runs and you had stock owner trying to make money off of shorting a stock and he miserably failed. He got put into lots of trouble. His reputation got got ruined in his name. Was Mr Auto hines. And so he was a very well connected man him and his brother and they were precedents of several banks around the country especially with New York and so a lot of people they start hearing that Mr Hines and his family are at the head of my bank and if they're going to do this to their company then I might as well take my money out of my bank so all around the country and starting in New York. You start seeing these. Massive Bank runs where people are going to banks and the crowd in line just gets longer day by day hour by hour and you have people standing outside of banks just asking for their money back and banks. How having loaned this money out. Don't have the money to give them so. Banks have little to no liquidity and at the same time they have people asking them for loans so banks are refusing to give out these short term loans and they have dramatically raised interest rates to the people who they do give loans to and these interest rates reached even as high seventy percent which is extremely high to be paying on an inch on bank. So because of this you had people afraid to basically lend money lend money to corporations within stocks or put money into stocks and lend money to those corporations on stock exchanges so within the stock market as well you have low volume so even the stock market the stock exchanges were in danger of shutting down because of the low volume of trade so all these bankers and stock exchange managers within New York City. They all go to the most famous financier in American history at that time and still is to this day probably the most famous financier and his name. One you've probably heard of this J. P. Morgan so. Jp Morgan uses his own money. He's a billionaire and he uses the he gets other billionaires like John D. Rockefeller to pitch in. And what they do. Is they get they say okay? Banks will give you our money. You can use our money to give to people who are asking for their money back and JP Morgan and people like John. D. Rockefeller were extremely well connected. And so what they do. Is They get even the Treasury Department to pitch in a little money as well to these banks and they convince bank managers. You guys are being a little harsh. Come on just give just lower your interest rates. Give reasonable loans to people. So they can trade stocks and the actions of J. P. Morgan here were Sherman had a tremendous impact. Gp Morgan's actions prevented the crisis from becoming even worse than it did. As bad as the crisis was it could have been a lot worse had JP. Morgan not stepped in and rallied his friends in government and as well as wealthy friends to chip in and convinced these bank managers to calm down and alleviate some of the concern caused by the panic so in the aftermath though even though J. P. Morgan had basically saved the problem for becoming a lot worse. There is concerned though about the reliance of private unreal of the government relying on private individuals to have to rescue the entire economy. And the worry was that he S. JP Morgan rescues the economy. But he's also having almost the entire control of the US economy he's controlling almost the entire US economy. The major banks especially in the northeast. Which at the time was a sent. The population hub of the United States and in addition to that. Jp Morgan has a financial immature. And he's growing old he's GonNa pass away within six years and to him. It's like I can't afford to save the economy each time. There's speculation and there's incompetence within the banking industry so he's also desperate for a measure to alleviate this problem in the future so and keep in mind to part of the reason why. Jp Morgan had to step in. And why was the wealthy? Gweat to step been primarily rather than the government was that the US had no central banking system. See back in eighteen. Thirty seven. The President of the United States Andrew Jackson let the Charter for the Second Bank of the United States. The National Bank expire and since eighteen. Thirty seven the. Us has had no central bank no central banking system at all so what GP Morgan and his wealthy friends as well as government officials who are anxious to change this policy. They start working on a proposal Creative Federal Banking System essentially to replace the Central Bank that was abolished in eighteen thirty seven so after howling over various proposals. Jp Morgan ends up passing in nineteen thirteen and it's ultimately in December nineteen thirteen that the Federal Reserve Act is passed and signed is passed by Congress and signed by President Woodrow Wilson and so the initial system that they set up of the Federal Reserve also known as the Fed was pretty insufficient. It was decentralized. So you have the Fed chugging along and then here in the late nineteen twenties fresh off the roaring twenty s when you have the rise of consumerism and a lot more people adopting credit for the Fed decides to raise interest rates in nineteen twenty eight and then in the early nineteen thirties. When after the a? After block Tuesday when the stock market crashed the end these banks are experiencing bank runs. The Fed is making the decision to not give money to these banks which kind of defeats the purpose of why the Fed was set up right if we go back to nineteen o seven. It was ultimately J. P. Morgan and his friends who ended up giving money to banks so they could give to people and they said okay enough of that will have the government do that so they set up the Federal Reserve but then here in the Great Depression the Federal Reserve is refusing to give money to the banks and the reason behind. This was at the time. It was still very polarizing to have the government. Step in and give this much money to private street and overtime. That view has significantly evolved but at the time it was very controversial for the federal government to give money like this and so then the decision was made to not give money to fix and this ultimately does end up prolonging the depression a as long as it did it was only ended by the US entry into World War Two in nineteen forty one and throughout the Great Depression. You have high deflation sue the opposite of inflation where you don't have enough money circulating through the economy and all of this hearkens back to the Federal Reserve's decision to raise interest rates in one thousand nine hundred eighty eight where you had people with less disposable income and so they were less willing to spend on things like entertainment and travel so you had less money going throughout the economy and by the time the Fed realized that they had made a mistake in nineteen twenty eight by raising interest rates. They decide to introduce money. Not but not giving it to banks but by insinuating at through various proposals and they try this in early nineteen thirty one and they do end up releasing some money but the problem is it's too little too late they should have done it much earlier and ultimately.
"federal reserve" Discussed on KTOK
"The federal reserve signaled it won't raise interest rates for the time being a potential boon for first time home buyers one reason the low rate environment increases consumers' purchasing power Jessica Menton personal finance and markets reporter at USA today has an in depth look at today's market just what's it like working like a potential boon for first time home buyers and those that are looking to refinance a and the big reason is because the lower rate environment right now the fed has signaled that it won't be raising rates for next year increases consumers' purchasing power so basically many prospective home buyers could afford a more expensive home than they previously thought nights are they doing that or will they do that actually it's interesting because I pulled some data and it looks like about six point eight million borrowers could potentially benefit from refinancing and that's from a data from black night which is a mortgage data analytics company so there's a group of Americans who if he didn't walk in lower rate in the aftermath of the financial crisis when borrowing costs for even lower they're still a group of people out there that could benefit from refinancing and when you look at the home buying side a lot of that first time home buyers or millennials who typically been straddled with safe student died and a book of then or injuring their leaves next year so it's more of them get married and have children economists are thinking that's really going to help that side of the housing market yeah so that that group then are they going to lift the housing market is that a is that a big enough group like reaching their thirties there is an issue when it comes to supply and demand and so there's a lot of demand on the first time home buying side driven by millennials but the problem with the quiet a lot of existing holders you don't want to move because they have walked in lower rates after the financial crisis and so there's not a new homes available for a lot of first time home buyers to go into so that's the dynamic that have been pushing home prices higher and those builders are not making those types of homes really right I mean they're not it's a starter homes that much now and that's really where it widened the issue right there so when you have the boomers that might not be wanting to to move then that's causing that issue when you see rising housing prices so it really depends also on the market that you're in typically the Sun Belt has the more attractive holding prices and see if you're on the east to the west coast speak with Jessica meant in personal finance and markets reporter at USA today she's written a piece about whether or not now is a good time to buy a house since the federal reserve has held interest rates steady what about the the coming months are looking deeper into twenty twenty any feel for that yeah so the economist that I've spoken with said twenty twenty looks like a great time to buy if you are have been on the sidelines and you've been thinking about it just because the fed had their meeting this week in a signal that they won't be raising rates in twenty twenty and that was something that was a pretty beat people really well on the sidelines wondering okay we'll we'll Dave lower rate the the more will be a free trade in so since it looks like we're going to be in this sort of middle band there a we've seen because of the steps that that is taken that would really help you mortgage rates over the past six months and so if you're looking to do it and you're looking to buy it buy a house or even a refinance you should look into doing that in twenty twenty let's just just comment in personal finance and markets reporter at USA today fourteen minutes from the hour on this morning America's first news on new.