Guggenheim's Minerd Says Fed Is Choking Off Credit Faster Than It Thinks

The video discusses the Federal Reserve's interest rate movements, highlighting the effective Fed funds rate's position near the top of its range. Concerns are raised about the Fed's credibility and control over monetary policy. A technical tweak is mentioned, which adjusts the interest rate paid to banks. The discussion shifts to market impacts, including rising Libor rates and increased funding costs for investment banks. The video concludes with a debate on the number of excess reserves and the Fed's balance sheet reduction, suggesting a faster credit choke-off than anticipated.

What is the concern if the Fed rate trades above the top of the range?

• The stock market would crash.

• It would boost economic growth.

• The Fed might lose credibility.

• It could lead to inflation.

What was the technical tweak discussed in the Fed Minutes?

• Increasing the interest rate paid to banks.

• Decreasing the interest rate paid to banks.

• Changing the currency exchange rate.

• Introducing a new monetary policy.

Why are investment banks hesitant to take on the same positions as before?

• Due to a lack of investment opportunities.

• Due to a decrease in Libor rates.

• Because of increased funding costs.

• Because of a new government regulation.

What is one potential signal of the number of excess reserves getting lower?

• A drop in inflation rates.

• A decrease in interest rates.

• An increase in the price of reserves.

• A rise in stock market indices.

What is the debate regarding the Fed's current policies?

• Whether the Fed should stop raising rates.

• If the Fed should increase its balance sheet.

• How tight the Fed's policies are.

• Whether the Fed should lower interest rates.