How Nearly Two Decades Of Fed Policy Contributed To Bubbles, Busts, And A Boom In Debt
U.S. Federal Reserve’s mechanism is often misunderstood.
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Many people like to claim that the Federal Reserve is responsible for the high degree of leverage and speculation in the economy. But the mechanism via which this happens is often misunderstood. On this week's episode of Odd Lots, we speak with Srinivas Thiruvadanthai of the Jerome Levy Forecasting Center about how the Fed's goal of inflation targeting contributed to a massive buildup in private debt. As he explains, the approach to minimizing the volatility of inflation at a low level created a perfect environment for lenders, creating all kinds of other risks elsewhere in the economy.
To contact the editor responsible for this story: Laura Carlson at lcarlson21@bloomberg.net
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