Transcript

00:00 |

Initial credits
00:06 |

Introduction
01:06 |

Anecdote on the importance of communication at the Federal Reserve (FED)
03:21 |

Importance of economic history
Quotes n , Milton Friedman and Anna Jacobson Schwartz
04:49 |

Amendment of the Federal Reserve Act
Exercise of the Emergency Powers in March 2008
05:43 |

Historical parallel: Panic of 1907
- Creation of the Central Bank in the United States
- Economic shocks in 2007
- Shadow banking sector in 1907: The Trust System
- Moral hazard problem of JP Morgan in 1907
- Justification for the actions the FED took in 2008
11:20 |

Inflation and deflation issues of the FED
- Impulse of liquidity in the economy
- Quotes Milton Friedman on the problem of inflation
- Current inflation levels in the United States
- Implications of the money supply to the demand curve in the market
- Current increase in system reserves
- Economic situation of the U.S. in 2010
- Japan deflation economic problem
- Ben Bernanke's recovery program
- Role of expectations in monetary policy
- Recovery of confidence in the markets
- Position of the dollar value abroad
- Ben Bernanke's concern about deflation
22:38 |

Costs and impacts of deflation
- Delayed consumption in the markets
- Uncertainty about wages and job prospects
- Debt deflation spiral effects on economy
27:19 |

Real deflation threat to the American economy
28:49 |

FED's tools and techniques for preventing deflation
30:55 |

FED's actions through time according to changes in the economy
33:27 |

Exogenous consequences to the American economy
35:26 |

Question and answer period
- Why is it so difficult to recover from a deflation process?
  - Increase in the demand for reserves the FED provides
  - Inflation expectations indicators
- Regarding the ability of the FED to print money without creating inflation, what internal and external factors affect this phenomenon?
  - Creation of international swap lines
  - U.S. dollar as an international reserve currency
  - Impact of Chinese currency in the future
  - Japan, an example in the past
  - Alternative international currencies
- Do you think the United States could enter into a hyperinflation crisis?
- What would be the impact for the U.S. if China stops devaluating the yuan?
- What does the FED do for the economic growth?
- Is GDP the ultimate measure to determine if the FED is succeding or not?
- What does the Gross Domestic Product really determine?
  - Quotes n , Tyler Cowen
  - GDP as a less good measure for economic progress
- What effects do high fiscal deficit have, and what is the government planning to do regarding this problem?
  - Ability of the U.S. to easily finance its fiscal challenges
  - Excellent ideas by the Partisan Commission to evade fiscal problems
- Why did you leave the FED?
- Are income distribution and income inequality a concern for the FED?
- Criticism on the FED's actions
- Can you explain the moral hazard problem that you encountered with the Lehman Brothers' case?
- Diminish of risk spreads
- What about the moral hazard these decisions have on the future of financial institutions?
- Metaphor on the effect of bank bailouts in the middle of an economic crisis
- FED's actions based on the economic ideas of Milton Friedman
- Where do you think a line should be drawn regarding government intervention in the economy?
- Do you think a new economic crisis could be caused by an increase in the interest rates?
01:25:14 |

Final words
01:26:23 |

Final credits

Myths and Facts about Inflation Risks and Dollar Devaluation as Consequence of the FED Decisions towards the Crisis

New Media | 16 de marzo de 2011 | Vistas: 36

In the middle of America's worst economic crisis, the Federal Reserve System (FED) assumed an important and essential role in the economic recovery process. In this conference, Randall Kroszner talks about his experience at the FED as a former member, explaining the techniques and ideas that guided their actions amidst this difficult situation.

He explains the historical parallel of this crisis and compares it with the Panic of 1907, and contrasts the guides and actions taken formerly with the ones the FED took presently. He also speaks about the economic phenomena of deflation and inflation and how particularly deflation could affect the U.S. economy, based on current economic tendencies. Kroszner focuses on the importance of economic history in the decision-making process in many aspects; and finally, he speaks about the controversial aspects of government intervention, based on the ideas of Milton Friedman.