Kaplan Says There Are Side Effects to Fed's Purchases

The transcript discusses the limitations of monetary policy in addressing supply issues post-Great Recession, emphasizing the need for substantial progress before tapering. It highlights concerns about the housing market, where private investors are impacting single-family buyers. The Fed's new framework aims to be less preemptive on inflation, allowing the job market to run hotter. The discussion also covers financial stability, market expectations, and the importance of balancing growth with debt sustainability.

What is a key limitation of monetary policy according to the speaker?

• It has no effect on inflation.

• It always leads to higher interest rates.

• It is limited in increasing supply.

• It cannot influence demand.

Why does the speaker believe it's important to discuss tapering sooner rather than later?

• To reduce government debt.

• To decrease housing prices.

• Due to excesses and imbalances in the market.

• To increase inflation.

What is a concern related to the housing market mentioned in the transcript?

• Increasing mortgage rates.

• Private investors buying homes sight unseen.

• Decreasing home values.

• Lack of available housing.

What is the main goal of the Fed's new framework on inflation?

• To be more preemptive in addressing inflation.

• To let the job market run cooler.

• To increase interest rates immediately.

• To be less preemptive and allow for more inclusive employment.

How does the speaker view the role of the Federal Reserve in economic developments?

• To focus solely on inflation rates.

• To be vigilant and on top of economic developments.

• To be reactive to political changes.

• To ignore market changes.

What is a potential benefit of infrastructure investment mentioned by the speaker?

• It increases government debt.

• It reduces the need for monetary policy.

• It improves sustainable growth and productivity.

• It decreases inflation.

What does the speaker suggest is necessary to moderate U.S. government debt growth?

• Increasing taxes.

• Improving growth and productivity.

• Reducing workforce size.

• Cutting all government spending.