Yellen: No Need to Stress Test Fed Balance Sheet

The transcript discusses the financial fragility caused by carry trade practices before the 2008 crisis and the importance of stress testing banks. It explores the Fed's approach to risk management, particularly in relation to its $4.5 trillion balance sheet. The discussion includes the potential risks of interest rate changes and the impact on the Fed's income. The transcript concludes with a consideration of economic growth scenarios and their implications for interest rates and the Fed's solvency.

What scenario could lead to the Fed having negative income?

What is the relationship between economic growth and the Fed's interest rate decisions?