Fed's Kaplan: Risky Debt Could Be Burden on Economy in a Downturn

The video discusses concerns about the rise in non-financial corporate debt, highlighting the potential economic risks during downturns due to high leverage. It examines the role of low interest rates in encouraging borrowing and its impact on asset prices and corporate behavior. Additionally, it addresses consumer debt, noting that while corporate leverage is high, the household sector is in better shape due to increased incomes and a strong job market.

What is the primary concern regarding non-financial corporate debt discussed in the video?

• Rising interest rates

• Increased government debt

• Borrowers having high leverage

• Lenders being over-leveraged

How does the Federal Reserve's dual mandate influence its approach to interest rates?

• It prioritizes government debt reduction

• It considers excesses and imbalances

• It ignores asset prices

• It focuses solely on price stability

What economic activity becomes more attractive due to low interest rates?

• Investing in government bonds

• Increasing savings

• Reducing corporate debt

• Share repurchases and mergers

What is the current state of the US household sector compared to ten years ago?

• In worse shape

• More leveraged

• Unchanged

• In better shape due to higher incomes

What is the main concern about consumer credit discussed in the video?

• High mortgage defaults

• Increased credit card defaults

• Rising student loan debt

• Decreasing auto loan terms