Fed's Fischer Warns of 'Perverse Effect' of Rate Cuts

The video discusses economic growth rates, the compounding effect, and policies to enhance growth. It highlights the Federal Reserve's role and the political influence on economic decisions. The impact of demographics and capital investment on interest rates is examined, along with the challenges of low interest rates and economic slack. The potential move towards negative interest rates and the limited tools available to the Federal Reserve are also explored.

What is the effect of a 1% growth rate on economic improvement according to the video?

• It will take two generations to improve.

• It will take a decade to improve.

• It will take a generation to improve.

• It will take half a generation to improve.

What is one reason businesses might be investing less capital?

• Increased competition

• Political uncertainty

• Lack of skilled labor

• High interest rates

What is the Federal Reserve's view on current interest rates?

• They are just right.

• They are too high.

• They are too low.

• They need to be increased immediately.

Why is the Federal Reserve hesitant to implement negative interest rates?

• It could lead to inflation.

• It may pressure bank margins and slow lending.

• It would increase government debt.

• It could boost economic growth too quickly.

What is one potential action the Federal Reserve might take if interest rates remain low?

• Increase taxes

• Implement massive quantitative easing

• Cut government spending

• Raise interest rates by 5 percentage points