YouSaid · the spoken record

Robert Kaplan

lines on the record: 84
first: 2023-06-12
most recent: 2023-06-12
sittings or episodes: 1
sources: podcast

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“Higher for longer and monetary policy, it's great to be focused on it. And obviously I was at the Fed, so I think it's very important. But I think just as important is what we do in early childhood literacy, education, the digital divide, skills training, things that improve productivity, help at-risk populations, and fiscal policy and energy policy, other aspects also play a critical role. And I think we'd be well served economically to broaden the aperture because I think we'll have a stronger economy and a better country if we talk more broadly about economic policy than we currently do.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“We've now incubated over 200 ventures over the last 12 or 13 years. And so I think the need for this has never been greater. And we're continuing to aggressively try to step in and back social entrepreneurs.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“The need for what we do at Draper Richards Kaplan. Now, why did I do it? I'm a big believer in disruptive social enterprises to help serve at-risk populations, whether it's in education, food inadequacy, access to health care, a whole range of other needs. I think the government has a role to play, business has a role to play, but social entrepreneurs have a very big role to play in finding new ways to improve what we do and help at risk communities here and around the world. And I'm a big believer in it. And the more I do it, the more I believe it and even more. And they're amazed by social entrepreneurs and the things that our enterprises do. And we put one of our managing directors on every one of these boards for three years. We back them for three years.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“To the extent they're for profits, if we make a profit, we dump the profits back into the 501c3. So no one ever makes any money from this. And what we find is even though yes, the for-profit venture world has seen valuations come down and as somewhat under a little bit more pressure, in the nonprofit world, which I live in, I actually think our role, if anything, is greater. The interest in backing what we do is even greater. And the need for interventions that help at-risk communities in the United States and around the world is just as great or greater than it's ever been. And so what's going on in the for-profit venture world doesn't really affect us very much. And if anything, it probably increases.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“So Draper Richards Kaplan is a 5013. We have a approximately a $90 million fund. We have about 85 or so donors. And we've been running this for a whole number of years. We back 20 to 25 early stage social enterprises every year.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Higher for longer. That makes sense. Thank you. My final question is so you are the co chair of the Draper Richards Kaplan Foundation, where you venture philanthropy. I want to know firstly what motivated you to do this and what your projects are you excited about. And secondly, just in the venture world broadly, what are you seeing? Are you seeing some activity slow down because of Silicon Valley Bank, a huge bank to all these venture companies that bank was taken down? And if you see in 2020, 2021, you know, you had juice companies being valued at a billion dollars. I mean, is the sort of the high valuation period kind of over?”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Which is dirtier than our production. And so I'm not saying it's right or wrong, but I'm saying it is a factor in causing people who make $50,000 a year not being able to make ends meet. We're doing this in a way that is putting more pressure on low moderate income families in poorer countries. And so to that extent means inflation is going to be stickier. That's one of the pieces of the puzzle that explain why inflation is stickier and why people making 50 grand a year need to make a little bit more because they've got a drive to get to work. And we should just be aware of it. The Fed can't solve that problem. And I think the Fed is well served to point out it cannot solve all these issues. It can do its part on monetary policy. But I think the extent that the Fed is the only game in town on this.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“So, what do I mean by you had earlier in 2021, I think there was more signals from the government that encouraged fossil fuel companies to limit their oil and gas production. And I think that's fine as long as we have alternatives to replace it, but we didn't and we still don't. And so what the shareholders also did under pressure is they basically said to those companies, to the extent you have cash flow, we don't want you put it into drilling. We want you to put it in alternatives or return it in dividends and share repurchase. And that's what those companies have done. And so the impact of it is the price of oil globally is in the 70s, not in the 40s. It also means that around the world people are burning more coal. We are actually encouraging OPEC to produce more.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Yes, yes. U.S. fiscal policy, excuse me, U.S. regulation passed by Congress and then the president rather than sort of the private markets ESG movement saying, oh, we're not going to invest in stuff, which is not really government directed.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And you think to the extent that American oil companies haven't been investing in production and so much so that Chinese coal companies are picking up the slack, so to speak. I think that's what you're referring to, or Australian coal companies. That is a reflection more of Saudi Arabia.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Inflation. I think if you leave the Fed to do it all by itself with no change to these other policies, rates are going to be higher for longer, and there's a greater chance that we might make a mistake in monetary policy, which we prefer not to do.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And we've allowed the price of oil and gas to spike, the price at the pump to be higher. And again, back to that $50,000 a year worker, that worker is particularly affected by food, energy, rents, and God forbid health care. And by having oil prices higher, that means that person has a harder time making ends meet, needs to get paid more money. And so my point is, as a central banker, I think you could do a great service by making clear monetary policy is not the be-all end-all in fighting inflation. We need a whole of government approach, which includes a focus on fiscal policy, the remnants of these government programs, energy policy is very significant. And I think the Fed, I personally think we'd be better served if we had a more holistic view of how”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“But it's not the only part fiscal policy and energy policy matter significantly at this stage. And I think it's important that other parts of the government focus on their role in this inflation issue. I'm a big proponent of sustainability and reducing greenhouse gas emissions, but the transition plan, I'm afraid, is not reflected the fact this could take 15 or 20 years, not three or four years. And what we've done is limit the cleanest production of fossil fuels in the world. In favor of dirtier production in other parts of the world.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I mean, listen, everybody around the table should speak for himself that the level of the SP would not be a driver of my decision on whether we need to do more rate hikes. What would be a driver is what I think the prospects are for the economy, credit spreads, and particularly I'd have my eye, and I do have my eye very much focused on this 50 million plus group of workers that make $50,000 a year or less and are struggling to make ends meet and are driving more wage increases in the service sector and more pricing in the service sector, I'd be very aware of that. And the other thing I'd be doing if I were at the Fed and I'm doing it as a private citizen, I'd be pointing out that monetary policy is part of the fight on inflation.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“So, everybody around the table handles it differently. I'll speak for myself. I focus much more on credit spreads and the credit markets. And the reason on the S&P, the thing that you got to be careful about, and this year is a good example, you know, you've got five or ten stocks that are making up for the bulk of the increase. You have a number of industries where earnings are challenged and the stocks are challenged or the stocks reflect a concern about a downturn in the economy. And so I think as a central banker, I'm much more interested in what's going on with bank lending and with credit spreads and availability of credit.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I think it's going to be hard to get inflation much below 4% or 3.5%. And I think the Fed, and again, this fiscal tail is going to be around for a while. I think it's going to be necessary to keep rates higher for longer than what's reflected in the forward curve. And I'd be saying that even as a private citizen, I'm saying that every time I speak. And at the Fed, I would be saying it every time I speak.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I think people should listen to JPAL when he says that it's unlikely that they're going to rapidly cut. If I were there, I would be advocating and saying in every speech, the market should expect we're going to keep rates at this level for a lot longer than the curve suggests. The curve suggests that by the end of the year, early next year, there's going to be a cut. I don't see that. And here's why I don't see it. I think that inflation, particularly in the service sector, is going to be stickier.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Debate, not tactical that's worth having a big fight over. But those big, big pivotal decisions strategic don't happen all the time. And that's why I think it's okay to go along. If I have a tactical disagreement and I would guess most people around, if you have a tactical disagreement on the margin. I'm going to save my powder for the strategic disagreement.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“That's a strategic disagreement. And that's the reason I dissented. And so the good or bad thing, once it's clear that the Fed had to start raising rates, I think most of the disagreements, in my view, are tactical. I think whether you pause in June or raise in June, that's a tactical disagreement. We're unlikely to have one or more than one or two more rate increases in any event. That's not the end of the world. The problem I have is if you're heading north and you should be heading south, that's a big disagreement and that's one worth having a big fight over, big debate over because those I would argue not stepping in to Silicon Valley Bank or First Republic Bank and having this hold the maturity account accept it as worth book. That's a strategic”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“What I think are bigger issues, and we're approaching one right now, is when it's peacetime or you feel like you've gotten your head above water and you're not sure whether to go north, south, east, or west. And you say north or the chair says north and someone else like me says, no, east, west, or south, that's a big disagreement. That's a strategic disagreement. So I've always been a believer. If I had a minor tactical disagreement, in other words, I agree on the tightening, but I might rather have done 25 more or less. I don't know if I'd dissent over that because we can fix that disagreement over time. Or in the next meeting. If there's a strategic direction disagreement, should we keep mine bonds in the size we are? Should we be making a forward commitment to keeping rates at zero?”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I'm sure he listened to it and he encouraged them to voice it, and then they debated it. So for me, when you know you're pointed in a direction, north, south, east, or west, then most of the disagreements are about matter of degree tactics. So is it 50? Should it be 75? Should it be 25? I don't view those as massive disagreements.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“It can be, even though I think he would always say, I want you to give your view, but I think if the chair... Say to the FOMC or a bank president like me said to my team, I really don't want you to debate this or I'd prefer you went along. That's a pretty powerful statement to make. And so you just have to, there's no right or wrong here. You just culturally have to be aware of it because the nature of the organization is to get along, agree, not disagree. And when you know that's the predisposition, I think you got to work harder as a leader to encourage debate and disagreement because it's easy to shut it down at the Fed.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Or from me as a bank president with my team, we'll shut everybody down. And you got to be very aware of that. In business, you have a lot of power. At the Fed, the chain of command, I think, and the power asymmetry between the boss and the subordinate is, you know, I used to kid around multiply that by 100 versus the private sector.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And to speak up and to cause trouble. And I did that in all my years at the Fed. I encourage people, you know, to speak up. But that is not the natural culture of the Fed. And so I think there maybe is an opportunity at the Fed to re-look at the culture. But culture starts with leadership. So if the leadership says things like, I don't want to talk about this or I don't even want to talk about talking about X, Y, or Z, That will shut down debate and disagreement. And I think at the Fed, that's something as a leader you never want to do. You got very smart people who are trying to do the right thing, but they're very sensitive to the chain of command and to the desires of the leader. I think the leader's got to bend over backwards to encourage debate and disagreement and a little tap from the chair.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“The culture of the Fed is a little bit more to fit in. This is why you saw the post-mortem on the supervisory issue that happened. I think you really have to work harder as a leader at the Fed to encourage people to debate, to disagree.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“There were a number of compromises I threw out to change that guidance that would have allowed me to sort of bite my upper lip and go along. But I couldn't agree to that language. And my feeling was if I'm going to work in the public sector or at the Fed, I've got to speak up and disagree. But did I feel alone? Absolutely. Was I isolated very much? Were people nice about it, including the chair? Yes, he was. He was constructive, but he was not thrilled with what I did. Although he can speak for himself, but that would my impression was he was not terribly happy.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“We're troublemaking is a little bit more encouraged and rewarded. And I encourage my subordinates, even at the Dallas Fed, to disagree with me aggressively debate, not be afraid to speak up. And so when you're the only one in the room dissenting, the other thing that goes to your mind is maybe I'm wrong. And you should, and I think that's a good thing, is if I'm the only one that thinks this, either I'm smarter than everyone, which is unlikely, or maybe I'm just wrong. And so when in doubt, I tended to go along. The September 2020 was one of those rare cases where I disagreed. I was fairly isolated, and I was convinced I was right. But that didn't happen very well. And also, I didn't want to dissent. And I look for every possible way to change the language in the guidance.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“My job as a leader is to convince my peers what we ought to do. And if I lose the debate, then I've had my say and I go along with it. And so I think you see a little bit of that at the Fed where I think people are not looking to dissent. The culture of the Fed and the leadership is collegial, constructive. The other thing you got to remember most of the people around the table have been at the Fed for their careers. I was not. It came from the outside. And so to become a Fed president or a leader at the Fed, I used to kid around troublemaker is not a great career path at the Fed. You learn to be constructive, to give your views, but to limit how much trouble you cause. I come from the business.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. So I'll give you what I saw and where I come from. I come from the business world where you debate and you disagree and you have furious debates. But once we make a decision together as a leadership team, I own it. Even if I didn't agree with it, okay. And so I'm not a big fan of dissenting.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'm seeing it nationwide in banks I talk to. The reason it's not alarming at this point is its old hat. We're close to two and a half, three months into this. And I think banks reoriented their operations in the month or two after March. And I think they've gotten comfortable with being in a much more disciplined mode where the bar is higher for loans that they make.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I mean, I don't know, but if I'd guessed, I would guess you're going to see bank earnings come under some pressure in the next few quarters. And I think you'd see well-managed banks actually increase their loan reserves to prepare for the credit cycle. I don't know that, but that would be my guess. You've already started to see it to some extent. But I think people may be surprised, although we'll have to see, that bank earnings are going to be under more pressure. Because what goes with deposit rates going up over 200 basis points and restricting your loan growth than your loan book is it tends to put pressure on earnings. And so I think I will be, and I'm sure others will be watching that closely.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“It's a risk, but I think a lot of that is going to depend on severity of the credit cycle. If you have a very severe credit cycle, if we have a more severe downturn, which I don't know that we will, I would guess that will cause depositors to rethink again whether they're comfortable with where they have their deposit account. If you don't have a severe credit cycle, it might mitigate that.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And that term funding program helped with liquidity. It didn't help with the idea that these banks have less capital. And I think in the minds of depositors, and I talk to lots of companies, treasurers, CEOs, they think their bank deposit is safe, but they're not sure. Because I think Janet Yellen went on to say in further statements that we will ensure any deposit in a bank that's thought to be systemically important. I think it left it a little ambiguity, and that ambiguity is in the minds of particularly company treasurers and CEOs.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Of work our way through this. And that's probably why Janet Yellen said some number of weeks ago, we may see more bank mergers than we would have otherwise. The only thing you can do, you can either weather through it, or you can force some of these small mid-sized banks to merge. They don't want to do that. And certainly small mid-sized banks don't want that. But I'm sure the Fed is going to be very vigilant watching that.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“You might have some banks that have less capital than you'd otherwise like have even less capital because of the performance of their loan book. And that's what people are bracing for. And that's why you've seen some quote unquote business banks that have high exposure to CNI loans and commercial real estate loans and have a lot of uninsured deposits. You've seen those bank stocks get marked down more because people are bracing for that possibility. So the Fed needs to be aware of it. But unfortunately, I would say I learned growing up, that horse has left the barn. So in other words, you can't go back and easily fix that. You can't say to all those banks, now raise more capital because they can't easily raise capital. You can say it to a big bank, but not to a small mid-sized bank. So we're going to have to sort.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“The banking system is not as well capitalized as the Fed thought it was three or four months ago, or as the public thought it was. And the reason is you had this accounting fiction hiding in plain sight, which is these hold the maturity accounts were marked at par, even though they were worth 80 or 85. And once we woke up to that fiction and we realized that the regulators and bank supervisors tolerated that fiction, I think the perception is the banking system has, and the reality is banking system has less capital than we would have thought. So what's the issue? At the moment, it's not a viability issue. It may be the business is not as attractive as it was. What the issue is, is how severe the credit cycle is going to be. If you had a very severe credit cycle,”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Definitely compresses their net interest margin, the profitability, what you're referring to. What about their potential solvency? I mean, we did have large banks fail, Silicon Valley Bank, SVB, First Republic. Is the risk of more banks failing greater now because of these issues that we're talking about? And is that something that the Federal Reserve must contend with? Oh, you were going to have a handful of small regional bank failures. That risk has increased. But guess what? We're not going to just lower interest rates to zero just to bail out a few small banks.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Banks now, particularly small, mid-sized banks, and it makes the profitability outlook for the businesses, for those banks not as attractive as it was.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Fund. So, why am I accepting a discount at a bank? So the answer is if I'm a saver, I don't think there's a good answer. And if I'm a business, yeah, the reason I accept below market rate is because it's a transaction account. I don't keep that much in it, but I do transactions. But even a lot of treasurers decided it wasn't safe to keep that transaction account at their local bank or at a small bank. So that's why all this has happened. Am I surprised Honestly, three or four years ago, I was wondering why it hadn't happened sooner. Unfortunately, what happened in March was the trigger that kind of created a tipping point. And I'm not sure we're ever going to go back to the way it was. I think people have woken up to the fact that they don't need to accept below market rates. And so unfortunately, this is a fact of life for”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“So let me talk first about why this is happening now. It might not have happened in the past. First of all, people got scared in March that the uninsured deposit they had at their local bank, they got scared that maybe it wasn't as safe as they thought. We didn't have that issue three or four, five, six years ago because the banking system was perceived as much better capitalized. They started to get worried maybe my bank is not as well capitalized. So that created some flight. Second, while they were looking at it, they were starting to ask themselves the question, why am I getting such a low rate at my bank? And yes, today we have much more widespread options in terms of treasury related money market funds. And so you've got a risk-free option, essentially risk-free option in a treasury money market.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“To see a tightening in the economy, the thing I don't like about this tightening is it's disproportionately affecting small mid-sized businesses. It's not hurting big businesses as much. And so it puts small mid-sized businesses at a much bigger disadvantage. And the reason I worry about that is when and if we do have a severe downturn or a slowing in the economy, we need those small mid-sized businesses to help us power out of that downturn. And I think we may be doing some damage right now to that sector.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“It's not a crisis what they're doing is limiting their lending because they're very aware that they could have more deposit instability, they may have a little less capital than they thought they had. And we may be heading into a credit cycle if and when the economy has a more severe slowing. And so what's going on right now, I call it a dull headache. It means small mid-sized banks are being very careful about making loans to small mid-sized business and to real estate projects and small mid-sized businesses are finding it harder to borrow. And to the extent they borrow, they may have to be going to alternative sources where the rate is much more like 10% or above, not based on the Fed funds rate. And so that's what's going on right now. And you're seeing a tightening. And in fairness, the Fed wants...”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“So a lot of people feel because there's not big splashy headlines that the bank situation is well under control and it's in good shape. That really is not quite the case. I would call the phase we're in now for lack of a better term a dull headache. The asset liability mismatch has happened. Bank stocks have been marked down. Market value bank capital is lower than we thought We've had a repricing of deposits, 200 basis points plus higher. And there's a worry as the Fed continues to draw down liquidity, its balance sheet and the federal government tries to refill the Treasury General account, issue more Treasury bonds, you're going to”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“I think it would be wise, and I think local governments, I've talked to mayors, other local officials would welcome it because right now they're scrambling and they're very aware they have to, in their words, obligate the money. And then I think it has to be formally out the door and spent by them in 25. And they're scrambling right now to do exactly that. But again, all that money increases demand for goods, services, and labor.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And there's a deadline by which the local governments have to spend it or it's kind of use it or lose it. And you said you would want to extend that so they don't have to spend it over the next short term.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“And again, I just want to emphasize. If you look at just the government spending data, you might not say that, but you got to remember what people are not looking at is even though it's been spent by the federal government, that doesn't mean it's been spent in the economy. A lot of the American Rescue Act money, for example, has not been, but it's going to be. And it's going to be, particularly in 23 and 24. And that's the part I think people may be missing.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Data don't suggest it, but if you disaggregate it, I think that's also what's going on. So I'm not as confident about when there's going to be a, if there's going to be a recession and when it's going to be, because I think the fiscal side of the house has been stronger than people may have factored in. And eventually that will start to dry up. And when it does, I think you'll see these rate increases bite. More than people think.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“That might also ease some of the offset to monetary policy, but it would not surprise me if the economy is stronger than people are expecting. The good sector is weakening, but the service sector has been surprisingly strong. And I think that trend may continue for a while longer. And the other thing that's going on is there are 50 million workers in this country that make $50,000 a year or less. They've been getting wage increases, but those wage increases still haven't been enough to help them make ends meet. So they're looking for more wage increases to the extent they get them, those who are going back into spending further. So we've got a bit of a wage price spiral, in my opinion, going on at the $50,000 year level in this country. I think the aggregate.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Economic view is that fiscal policy to some extent is offsetting the monetary tightening. Won't go on forever, but I can tell you it's going to go on for 23 and 24 because I can tell you locally what's being done with the American Rescue Act funds. And some of what I see going on with the Inflation Reduction Act funds and the Infrastructure Act funds, I think that will make it so the economy may be stronger than people expect. Now there'll be a point at which this fiscal money is going to start to dry up. I would actually love it if in DC there was an effort to extend the timeframe for spending of the American Rescue Act money and the inflation reduction act and the infrastructure and extend it out.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT
“Well, there were two reasons for the spending. This is again in 2020. It was to restore market function. And I do think it was to smooth the way for the fiscal spending that had to be done. But more than anything, we were in a deep hole. And I think our view at the Fed was more specifically to try to stimulate economic activity because we were coming out of a ditch. It had the effect of helping to facilitate the fiscal spending also.”
2023-06-12 · Forward Guidance · Higher For Longer | Robert Kaplan, Former Dallas Fed President & CEO · IDENTIFIED FROM THE TRANSCRIPT