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Binyamin Appelbaum

lines on the record: 66
first: 2019-10-11
most recent: 2019-10-11
sittings or episodes: 1
sources: podcast

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“Yeah. I mean, I guess, you know, one thing you learn is you get inside any system is how much of it is a little random, how much of it is sort of arbitrary and things that you assume must have sort of a clear and logical explanation turn out to not actually operate that way. So just I think to have understood that this is true of just adulthood in general. You think that there's a reason for everything and then you become an adult and it turns out that a lot of things just happen.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you're specifically interested in writing about business and economics, I think one thing that has changed in journalism in recent decades is that it was once the case that the journalism was much more stenographic. Your job was to sort of transfer the things that important people”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think that the Fed has undergone a really important evolution in recent years, that it has embraced a broader set of responsibilities, that it seems to recognize that it can't simply pursue lower inflation without regard to the consequences for American workers, that it can't ignore financial regulation without regard to the consequences for all of us. That's really important. And I'm optimistic that the Fed is going to move forward with those things in mind and that that will give it a better chance of producing good results over time. On the flip side, you got to be a little concerned about the Fed's room for maneuver. Rates are very low while the economy is growing. There's not much room to cut rates when the next downturn comes. They can do some bond buying, but A, not totally clear how much that helps. And B, there are limits on that too. I think there's reason to be worried about the Fed's capacity to help if things go.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I love reading. I guess that's probably already clear. I like running. I have two young kids and I love spending time with them. That's pretty much a full life.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I already mentioned my inability to get millions and billions straight in my first banking story. You know, in general, I think, again, to go back to Charlotte, the importance of making sure that all the facts are right in a story is something that as a young journalist, I didn't have a high enough batting average. And I had an editor who told me, you know, if you get one thing wrong, even if it's a small thing, the credibility of your entire story is lost. And understanding that and internalizing that was a very important step in my development.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, Fernand Bradelle wrote this series of three books The Wheels of Commerce maybe is the first of them. You can find them, but they're basically his history of Europe's rise into the modern era. Just fascinating books that integrate economics and history in a way that at the time was unprecedented and remains deeply influential. So I love those books. Daniel Borstein's trilogy on the American experience, just a wonderful history of the United States that again has this capacity to tell our story much of what is so innovative and important about America is its rise as a commercial power and a commercial innovator. And he really captures that aspect of the American experience in a way that I think most historians fail to do.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I read a lot about the FAD and monetary policy, but that's not necessarily the most enjoyable stuff that I read. I love history. My approach to writing deeply influenced by historians like Daniel Borstein and Fernand Brodell, who saw economics and history as integrated. I'm very frustrated in general that historians pay very little attention to economics and that economists pay very little attention to history. So people who work at the intersection of those two things, who see the connections, who understand how much history has been shaped by economic forces, who understand how much economics exists in a historical context, those to me are the people that I admire and love reading.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Covering the Fed specifically, I mean, I think Greg Ipp is kind of the gold standard in our era. I think his understanding of monetary policy and his clarity as a journalist are just things that I admire enormously.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I was really lucky to work for some great editors and to work with some great colleagues at the Charlotte Observer. That's where I think I really grew up as a journalist. And so my editor there, Patrick Scott and Ted Melnick, who was the data guy there who I collaborated with on a series of projects, I really feel like I learned journalism and grew up as a person in Charlotte. And so I'm indebted to the folks I worked for and worked with at the Observer.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't know what year it was. It was an old Ford Esk or old red Ford escort that my father gave me when I graduated from college. It had been his commute car and I inherited it and drove it until it was total”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I'll say two things about that. The first is that a lot of Americans find themselves looking with envy at the success of Asian countries that have managed rapid economic growth in recent decades. A very important thing to know about that is that those countries took the recipe from the United States. We invented this formula. We invented this formula of investing in domestic manufacturing.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's not clear to me that there is a theory, a clear theory in MMT, or at least I haven't encountered a consensus description of what that would be. But let me say this. It is clear that the United States has fiscal space at present to spend more money. And if that money is spent wisely, it is likely that we would recuperate on that investment, that if we invest in infrastructure, if we invest in education, if we invest in these kinds of improvements that over time our economy will grow fast enough to make those worthwhile uses of public resources, we can borrow at low rates right now. We'd be well advised to do so. I don't think you need to necessarily wander into some of the more extreme claims of MMT to accept that basic set of premises about what is possible and desirable at present.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the Fed got left in this uncomfortable position where it was the only game in town, the only people who were willing to do more, to engage the needs of the economy were Federal Reserve Policymakers. And so they threw everything they could at the problem, not necessarily as quickly as they should have, but they cut rates to zero. Then they started buying bonds in large quantities. They were trying. But the reality is that they were never going to succeed completely. They could not by themselves revive the economy. They did what they could. What they did was important. But I think one takeaway from this past decade should be that fiscal policy turns out to be really important.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah. I mean, it's a longstanding feature of our economy, and it's sort of a thing we can all agree to spend money on. It has some real utility, but it's not as beneficial as building roads or building broadband infrastructure or investing in schools. It's a second best kind of spending. A lot of the money goes overseas. A lot of it gets put into things like bombs that blow up and don't leave anything positive behind. It's not the greatest way to spend money. It's better than nothing. It's not the interstate highway system.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't have the numbers in front of me, but government spending is actually, if you look at the stimulus during the Trump years, the fiscal side boost in spending is pretty close to equivalent to the boost that you get from the tax cuts. Oh, really?”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Tax cuts as an incentive, as a stimulus program are kind of second best, and politically they've been much more palatable. And so we've tended to rely on them in recent decades. They help. They don't help as much. The Trump administration actually has increased spending, particularly on defense, pretty significantly.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. I mean, I think we've seen this denigration of government, this sense that government does nothing productive and that the best government is the smallest government is really problematic. It is clear that there is such a thing as too much government. It is clear that spending can be excessive or wasteful, that it can create problematic incentives. These things are all true. But it is also clear that you can have too little and that you can cut too much, particularly during periods of economic difficulty. And Britain is living evidence of it. I mean, they've really damaged their economy, the viability of their polity, their future prospects. I would not want to be the parent of a young child in Britain right now.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I mean, as you said, I think it's well documented that this was the Republican strategy, politically speaking, it also reflected an economic philosophy, again, that goes back to”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's both things, right? So you see that this era, what the French call the 30 glorious years after World War II, is coming to an end. Growth is faltering. Policymakers are casting about for alternatives, for answers. And the answer that they fight Milton Freeman famously says that, you know, the way that you convince policymakers is by stocking the fridge with options so that when they need something, when they go there, they open the door. There it is. And his ideas were there. And so beginning in the late 60s and the early 70s, really beginning in the Nixon administration, these ideas become influential. And we enter a new period in policy, a new period in economic history, and that's really the focus of this book is the revolution that began in those years.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It forced IBM to share the ability to write software. And one of the first companies to take advantage was a company called Microsoft. Forced Microsoft to let Google onto its machines, nobody's forcing Google to make way for the next competitor. So, you know, once again, you've got a role the government played for a long time in enforcing antitrust rules in making space for new companies that it's no longer playing. It's another example of this phenomenon.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Because the government does part of its antitrust program at the time, was committed to ensuring that large corporations couldn't monopolize important technologies. So it forced the sharing of semiconductors and what you get from that is personal computers. Right, intelligent.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And another thing about semiconductors that people don't know, which is very relevant to this conversation, when AT&T invented the semiconductor, the government forced it to share the technology. AT&T literally held seminars where it invited its competitors, rival firms to come to New York for training in how to make semiconductors under the”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“American adults who are coming into the workforce in those years, the rate at which they have college degrees is much higher than in any other developed nation. We had a huge educational advantage during the 1990s. At present, we've fallen off a cliff. We're now below like 13 other developed nations in the share of our workforce that has college degrees. We've lost that educational advantage. How did we gain it by massive public investment in public education during the mid-century? How have we lost it by massive disinvestment in public education during the 1990s and since then? So I have a little bit of an unusual view of the Clinton era. I think it was a disaster for the American economy. I think they basically harvested all of the trees that had been planted in earlier eras and forgot to plant any new ones.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And maybe that was necessary to clear the way for renewed prosperity, but the renewed prosperity was not as good as what had come before it. So I think there is reason to wonder about our memories of that period. The other thing that's really important, and this particularly becomes true in the 1990s, is that the 1990s really reaped the fruit of earlier periods. The 1990s happened because the federal government had invested massively in technology and had built a new industry, a new sector of the economy, with public funding that it then turned over to the private sector to exploit and to realize, and that was great. And productivity rose, and we had a genuine economic miracle. But the basis of that miracle was the investment in earlier eras, and instead of paying it forward, what the federal government did in the 1990s was to sharply reduce funding for the things that had worked previously, so that we weren't funding new technology, we weren't funding infrastructure, and one of the really important ones that people miss is when you go into the 1990s,”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes Annual average growth in the 1970s was higher than in the 1980s People look at the good years in the 80s and they forget that Volcker caused a bunch of bad years at the outset.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the bull market and bonds, by all means, make Paul Volcker the patron saint. As far as America's prosperity in the 80s and 90s, I think there's a couple of things that often get lost in that discussion. The first is that adjusting for population growth, economic growth in the United States has declined in every decade since the 1960s. The 80s is remembered as this period of rapid growth, but only because we had this sharp recession and then rebounded from it. The 70s were...”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Paul Volcker is a seminal figure in the history of the Federal Reserve because he is the guy who implements this shift in the Fed's approach to its job. Prefau Volker, the Fed, like most central banks around the world, has a very broad conception of its economic responsibilities. It's trying to minimize unemployment. It's trying to play a role in currency markets at C as a financial stability mandate. And Volcker is the beginning of this period in which the Fed says, no, we have one job. Our job is to control inflation, to stop it out. We're going to do that as hard as we can. That's what the Fed does. And he does that single-mindedly and successfully over the course of the 1980s. Reagan's role in it is really interesting.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“But when we're going to look back on it, we're going to say, how did all of these people come to believe this insane thing so wholeheartedly, so completely, how is it possible that they were all blind?”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And, you know, she is, it's such a remarkable story because she tried because she had the wisdom to know that regulation was necessary and the courage to try to implement it. But both of those things were in very short supply in Washington in those years. It was mostly people outside of Washington, outside of sort of the conventional consensus, outside of the economics community who were willing to raise their hands and say, listen, there are problems here. And we're all familiar with people who followed this probably know some of these names, but Raghurajan is an economist who famously at the Fed's conference in Jackson Hole stood up and said that maybe financial innovation was dangerous. There were people at the Fed at Gramlik who raised concerns about the Fed's unwillingness to regulate mortgage lending. There are instances of people who were willing to raise these questions.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost impossible to be a voice in opposition to the prevailing consensus. Everybody knows the famous story about Brooksley Bourne, who as head of the CFTC sought to regulate derivatives and was slapped down by a who's who of Washington dignitaries. Old men”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I want to start with the villain because you're right. Alan Greenspan took an oath to be what was essentially the nation's chief financial regulator, and he says that as he took that oath he had in mind that he did not mean it. And the fact that he was willing to become the nation's top financial cop with the intent of not doing the job. And worse than that, with the intent of preventing everyone else from doing the job, I just think that even to the extent that people have held him culpable for what happened in 2008, there is still not a sufficient understanding of how bad and how devastating his conduct as fed chair was for the American economy. So that's number one. As far as heroes go, I'm not sure there's a lot of heroes at the Fed. The groupthink around financial regulation was so pervasive in those years that it was”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Privileging the views of economists about what the goals of policy should be. There's no special reason to think that economists deserve a greater hearing on that subject than anyone else. We as a society can decide what goals we want to pursue, and then economists have the genuine ability to help us get there. But this faith that they can predict the future is badly misplaced. And the credence given to their priorities, I think, is badly misplaced as well.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“And so, first off, they are so bad at forecasting the future. I mean, one of the things I chart in the book just because it amuses me is every decade, every generation of economists, you get some very prominent economist, often more than one, announcing that the problem of recessions has been solved. It's just permanently high plateau. That's a classic. How is it that an economist can continue to make this claim with any knowledge of the history of the claims that have preceded their own? It just is mind-blowing the arrogance of these claims. But, you know, yeah, so economists have problems. It's important to say that economists are also really good at some things. Economics is a wonderful system for disciplining choicemaking. It really helps you to think carefully about costs and benefits. It forces you to put into a system and a model the factors that you're considering, the pluses and the minuses. It allows you to think systematically about choices. That's great. Where I think we go wrong is in”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, yeah, I knew that Eli Lilly thought that. But, you know. And maybe those economists legitimately thought that too, but the confluence of those two things is what you get a lot of the time. You get economists justifying the things that are best for the wealthy. I think Galbraith goes too far, both in terms of saying that this is always the case and in terms of suggesting that economists are always doing it for the wrong reasons. There clearly are times when it's a good thing for society as a whole. But you want to be looking at the whole pyramid. It's not enough to just be writing policies that help the people at the top. You want to know that the people at the middle and at the bottom also are benefiting. And that's hard because the people at the top undoubtedly have the loudest voices, the most direct connection to the powerful people, the greatest ability to influence the course of policy. And they'll stand there and scream all day that if you just keep cutting their taxes, growth will ensue at some point you want to start asking questions about why economists are still willing to”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a fascinating and a wonderful quote. I think Gabra's point, and it's an important point, is that we often find that economics and other academic disciplines serve the interests of the wealthy and powerful. They end up explaining the things that rich people want. So, you know, the rise, for example, of the idea that corporations should be focused on maximizing profits for shareholders was obviously very dear to shareholders who had a lot of money to fund economists. There's this wonderful paper from the 1970s that is still regarded as one of the most important economic papers of all time. And what it basically says is corporations are the apotheosis of capitalism. It's the best way to allocate resources between workers and capitalists. It's great. What a wonderful system was written by two very prominent economists. And at the bottom it says, you know, this research was funded by the Eli Lilly Corporation.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“To regulate markets effectively, the concentration of corporate power is a product of the fact that we have abandoned antitrust enforcement. The issues that we have with labor markets are a function of the fact that we allow corporations to prohibit workers from seeking jobs at other companies, that we allow licensing boards to make sure that nobody can become a cosmetologist. These are failures of the regulations, but the answer is not to do away with regulation. The answer is to regulate wisely. And so the problem with Milton Friedman is that he made the argument that you could just trust natural law basically to take care of these problems. And we actually need human laws. We actually need effective, we need to make decisions as a society about what we want markets to do. And then we can structure markets to achieve those goals.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So I think it's kind of a false dichotomy. I think what's important to understand about markets is that they are constructed by humans. And this would have been obvious to our ancestors who encountered markets as physically constrained spaces in the middle of town that operated at defined hours. A bell rang to start it, a bell rang to end it. Literally. Literally. And so markets, they understood that a market was something they had made that had rules that were laid out by the town fathers and that it couldn't exist without those rules. Markets are now so pervasive. We live in a marketplace 24-7, 365, and we've lost that understanding that a market is inherently a regulated space. You're absolutely right. We need markets and indeed much of what is wrong with our economy is that markets are being impeded, distorted, constrained, perverted. But that is not the corrective is not to free the markets and return them to some kind of natural state. The corrective is”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Public policy needs to address. I do think we're at the end of what I call the economist's hour. And the question now is what takes its place? And hopefully the answer is not the kind of unfettered populism that we've seen in some countries. But if it's not going to be that, it has to be something better than the old nostrums about trust the markets, everything.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Economists said, listen, if you focus on efficiency, it will increase growth. They said, don't worry about inequality. It's not that bad. They said, you know, the more that we rely on markets, the stronger democracy will become. They were wrong about all of these things. Growth has slowed down in the developed world. Inequality has turned out to be a really big problem. We're just learning how bad it is as the data piles up. And democracy is being strained precisely by our reliance on markets. So I think there's a recognition that this revolution went way too far and that the ideas espoused by Milton Friedman while they were necessary correctives to problems at the time in some instances were carried too far, as is often the case, and that the pendulum needs to swing back away from markets toward a recognition that government has a valuable and viable role to play in economic management, toward the recognition that inequality is a profit.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It's an amazing story, and it's the first chapter in the book because I think it's such an amazing and little known story, and because it sets a pattern, it was really the first instance of these economists influencing policymaking in an area you wouldn't have predicted, but they then come from that into much broader power and they succeed in deconstructing the post-war global financial system, the Bretton Woods system, and replacing it with market set exchange rates. So across this whole waterfront of policy issues, if you look at what changed in the second half of the 20th century and you say, where did that idea come from? A surprising amount of the time, the answer is that idea came from Milton Friedman.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Can be traced directly to Milton Friedman's thinking in ways great and small, so he's the father of the earned income tax credit. He's the guy who convinced Richard Nixon to end military conscription. People don't know this. Which is a fascinating part of the book.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“In the 1970s, that economists begin to play a larger role in public policy. And one of the foremost figures in the rise of the economists is Milton Friedman. And what he's really associated with is the idea that you've got this period of growth after World War II. It's breaking down by the late 60s, and Friedman comes forward and says, the problem is that the government is overly involved in the economy. We're not trusting markets enough. We're not allowing markets a sufficient scope to sort of allocate resources and produce growth. What we need to do is get out of the way. We need to stop reduce government spending. We need to cut taxes. We need to roll back regulation. We need to have the Fed, he wanted the Federal Reserve to be run by a computer program that would just increase the money supply to slow and steady rate. He wanted to minimize policymaking. That's what he thought was necessary. And this was enormously influential. Much of the shift in public policy over the second half of the 20th century.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, again, backing up a little bit, if you go back to the mid century, economists were not, and it's almost hard to convince people that this is true, but they were not in the halls of power. Presidents did not take their advice. President Roosevelt referred to John Maynard Keynes as an impractical mathematician. President Eisenhower warned against allowing technocrats to run the government. The Supreme Court ruled that economic evidence was irrelevant. Congress took testimony from economists, but it didn't take it particularly seriously. There was this sense that economists were not particularly interesting or helpful. And places like the Federal Reserve didn't have economists in positions of power, places that are now essentially economic institutions, decisions that are now made by economists, did not involve economists until surprisingly recently. And it was only really in the 19th century.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, the Fed's argument is basically that the Fed cannot perform its role without focusing on risk assets. That essentially if one of the things you're trying to do is to maintain financial stability, the risks to stability are going to come out of risk assets. And you got to pay attention to them. And if you're not paying attention to them, you're not doing your job. And I mean, there are clearly people who think the Fed should still be more narrowly focused, but you come out of 2008, you look around also the 2001 recession. The last two times we've been down this mountain, it's because of financial stability issues. I think there's a pretty good case that the Fed does need to have a focus on risk assets.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“That's exactly right. And so we decided to create this system to serve as a backstop for our banks. Over time, that mission gets minimized. And so in the Volcker and Greenspan arrows, the Fed's mission is transformed into inflation control. The one thing it has to do is just keep inflation slow and steady, and that will guarantee financial stability, it will guarantee broad prosperity, it was like a magic pill. The idea was if you could just control inflation, and this comes from Milton Friedman. If you could just control inflation, everything else would fall into place. And so Alan Greenspan, and he's been quite open about this, basically ignored financial regulation. It wasn't that he thought markets were perfect. That often, that's a bit of a caricature. What he thought is that markets were better than regulation, that markets would do a better job, notwithstanding their flaws than any human effort to regulate markets. And the result of that was a massive financial crisis.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you sort of step back for a moment, the Fed, you know, in the 1960s was still run by financial market types, the economists played a very limited role in the institution. The Fed was essentially a part of the financial system. And there were not people like Alan Greenspan in charge. And what you get over the succeeding decades is people like Paul Volcker and Dalan Greenspan are elevated into positions of authority and they see the mission of the central bank much more narrowly. The Fed was created to prevent financial crises. That's why we Decided to have a central bank post.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“That has been happening more lately as part of this new era of transparency and clarity and communication we have heard central bankers, particularly here in the United States, critiquing their own performance more publicly than was true in the past. And that's an interesting change. And I think it's helpful. We heard Jay Powell last year explaining what he thought about the Fed's actions over the previous year offering sort of in December a post-mortem on the year that had been. That's something that it was unimaginable that Alan Greenspan would have delivered a performance like that. So it's a new thing to hear central banks talking this way about their own performance. And frankly, I think it's beneficial.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“It clearly is a concern. I think people would have said the same thing about Europe or Japan before they experienced negative rates that our understanding of modern finance is predicated on the assumption that you get a return. And the idea that those returns are negative requires a lot of adjustments in the mechanics of the system, in the way that we think about the system, in the way that it functions. I think no one knows is the answer. It's a possibility that has to be unnerving because we've never been there before. And I think we just cannot anticipate all the consequences.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“I don't think it's by itself a sufficient factor to move policy, but it's clearly a consideration for some members of the Fed more than others. There are some Governor Lale Brainerd has been particularly vocal about her interest in international factors and her belief that they should influence the course of monetary policy. It remains sort of an active debate inside the Fed how much attention you pay to these considerations, but there's no doubt that it matters and that it is influencing the course of monetary policy and that the United States is part of the financial system is even more integrated than the global economy. And the Fed operates in the financial system. And to the extent that there is a divergence, as we've seen, between rates domestically and rates in the rest of the world, it clearly constrains the Fed's ability to act.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source
“Absolutely. And so, you know, this idea that the Fed has a responsibility for keeping money pumping not just domestically but internationally is clearly a part of the sort of the modern era of Fed and its thinking. The other issue is that if you get too big a gap between the United States and Europe, just as you just suggested, or between the United States and the rest of the world, it starts to put pressure on both the Fed and the American economy. It is difficult to be raising rates when everybody else is cutting rates and standing still and buying bonds. You can't pull away that much from the pack. And we've seen that tension play out in recent years where the Fed has said basically, listen, we think the American economy is ready to detach and start growing again. And the mere fact that the rest of the world was standing still ended up limiting the Fed's ability to move rates north.”
2019-10-11 · Masters in Business · Binyamin Appelbaum Discusses Monetary Policy · IDENTIFIED FROM THE TRANSCRIPT · source