Peter Stella on the Fiscal Theory of the Price Level
Macro Musings with David Beckworth
00:00
Is the Fed Losing Independence?
The political economy how it looks the optics are just completely different and it's arbitrary as you said the fed sets an administrative rate the treasury takes it to auction so there's big differences there. What I see this leading to is the fed losing independence if the fed gets cut up in a political firestorm because it's paying bankers and wall street higher interest then the fed can't respond to say inflationary pressures right and it loses its ability to fulfill its mandated price stability. We went for decades without paying interest on reserves so it's not so ingrained and obvious why are we doing that? The old days of central banks raising rates were when finance ministers jumped up and down, they would always complain
Transcript
Play full episode
