Dehn: Global Conditions a Problem for Fed's Rate Path

The video discusses the implications of rate hikes by the Federal Reserve, focusing on the economic conditions that make these hikes significant. It explores the outdated notion of 'original sin' in emerging markets, highlighting the current ownership of local currency bonds by local pension funds. The discussion also covers Japan's recent fiscal policy moves, emphasizing the potential currency adjustments resulting from central bank actions.

What is the main concern about the Federal Reserve's interest rate hikes?

• The hikes are too large.

• The hikes are too frequent.

• The hikes are occurring in weak economic conditions.

• The hikes are not well-publicized.

What does the term 'original sin' refer to in the context of emerging markets?

• The high inflation rates.

• The lack of foreign investment.

• The inability to issue bonds in local currency.

• The dependency on commodity exports.

Why is the 'original sin' argument considered outdated?

• Emerging markets have stable exchange rates.

• Emerging markets have high inflation.

• Emerging markets have no institutional investors.

• Local pension funds now own most local currency bonds.

What is Japan's recent monetary policy strategy?

• Reducing fiscal spending.

• Targeting low yields on bonds.

• Strengthening the yen.

• Increasing interest rates.

What is a potential consequence of Japan's monetary policy?

• Increased inflation.

• Reduced fiscal spending.

• Currency depreciation.

• Higher interest rates.