Cato Podcast Don’t Ask the Fed to Fix Bad Trade Policy
6 snips
Apr 7, 2025 Jai Kedia, a research fellow at the Cato Institute specializing in economic policy and trade, dives deep into the ramifications of the recent tariff regime imposed by the President. He explains how these tariffs strain the Federal Reserve's attempts to control inflation, highlighting the risks of stagflation. Kedia argues that the effects of tariffs are far from temporary, leading to fewer consumer choices and higher prices. He also critiques the notion that inflation is solely a monetary issue, revealing the complex interplay between tariffs and market health.
AI Snips
Chapters
Transcript
Episode notes
The Fed's Limited Power
- The Federal Reserve's ability to counteract economic issues is limited when it comes to new punitive tariffs.
- These tariffs will lead to fewer goods, higher prices, and impacts the Fed can't control.
Post-COVID Inflation
- During COVID, excessive spending led to a positive demand shock and not enough goods.
- The Fed increased interest rates to lower spending and manage inflation.
Tariffs' Negative Impact on Consumers
- Tariffs negatively impact consumers by reducing the variety of goods and services available.
- This also increases prices due to competition for limited goods, causing inflationary pressure.