Former Fed Governor Tarullo on Inflation, ECB, Negative Rates

The video discusses the challenges faced by the Federal Reserve and other central banks in addressing economic growth and inflation. It highlights disagreements on monetary policy, the impact of negative interest rates, and the complexities of inflation expectations. The video also explores the role of regulation in the repo market and the changing dynamics of the treasury market.

What are the three major issues the Fed is facing according to the discussion?

• Technological disruption, climate change, and demographic shifts

• Unemployment, wage stagnation, and housing market collapse

• Trade wars, geopolitical tensions, and fiscal deficits

• Secular inflation, cyclical factors, and market expectations

What challenge might Christine Lagarde face as the new leader of the ECB?

• Reducing unemployment rates

• Increasing the ECB's interest rates

• Continuing Mario Draghi's policies

• Implementing new trade policies

What is a potential psychological impact of negative interest rates?

• Boosted economic growth

• Perception of diminishing savings

• Higher savings rates

• Increased consumer spending

What is a concern regarding the use of negative interest rates in the Eurozone?

• They boost consumer confidence

• They are difficult to exit from

• They lead to higher inflation

• They increase government debt

What role do banks play in short-term funding according to the discussion?

• They primarily deal with retail banking

• They are the primary source of long-term loans

• They intermediate as much short-term funding as markets want

• They focus on international investments

How has the treasury market changed over the past decade?

• The Federal Reserve has stopped buying treasuries

• Treasuries are no longer a popular investment

• Second-tier primary dealers are now the incremental buyers

• The People's Bank of China is the main buyer

What is a key question regarding fiscal deficits and monetary policy?

• How to finance increasing fiscal deficits

• How to reduce government debt

• How to increase consumer spending

• How to boost international trade