Mission Creep Impossible: The Impact of the Federal Reserve’s Exploding Balance Sheet

Published on
January 11th, 2021
Duration
64 minutes

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Mission Creep Impossible: The Impact of the Federal Reserve’s Exploding Balance Sheet

The Interview ·
Featuring Jeff Cox and Ash Bennington

Published on: January 11th, 2021 • Duration: 64 minutes

Jeff Cox, finance editor at CNBC.com, joins Real Vision senior editor Ash Bennington to demystify the often opaque activities of the Federal Reserve. Cox shares his in-depth knowledge on the Fed's plumbing to shine light on how factors such quantitative easing and interest rate cuts impact the real economy as well as financial markets. Cox describes how the Fed's reliance on the Phillips curve, a theory which may be outdated, led the central bank to chronically undershoot inflation over the past decade—as a result, the Fed is now willing to let inflation "run hot," purchasing assets and suppressing rates in an unprecedented manner. Lastly, Cox shares his views on Modern Monetary Theory (MMT) and the growing debt levels of the U.S. government. Filmed on January 7, 2020. Key learnings: The commitment of the Federal Reserve to supply liquidity to the economy is stronger than ever. The fact that the Fed’s facilities are more effective at inflating financial assets than they are at supporting the real economy is not something that its leadership is sufficiently concerned about to bring about any meaningful change in policy.

Comments

Transcript

  • DB
    Donna B.
    12 January 2021 @ 22:46
    No depth, nothing new. Doesn't RV compete with CNBC? So why are you interviewing the competition? Because he's marketing his book?
  • JT
    John T.
    11 January 2021 @ 21:12
    I suggest that Jeff look at something explaining MMT from the proponents side. MMT is not a blanket statement that printing money has no consequences and that we should do it forever. It is an attempt to think outside of the monetarist box to try to explain the current actions and results of central banks around the world. Example: if QE always creates massive inflation, why not in Japan? Also, it seems very US-centric to say that all of this fed policy is totally unprecedented worldwide when major central banks like the ECB have been buying corporate bonds like crazy and the SNB and BOJ even buy stocks. The BOE even gave out huge individual loans to many companies, foreign and domestic, just from an application.
  • OA
    Olivier A.
    11 January 2021 @ 21:05
    I am thoroughly confused by Jeff's positions: - The US govt is spending too much, creating too many dollars and debasing the currency. Ok. It's also not doing enough and sucking its thumb. You lost me there. - The Fed shouldn't have raised rates around '18 because the Philipps curve is meaningless and the economy was sill weak. Ok. But it should have raised rates in '13, when the economy was most definitely weaker than in '18. Lost me there too. Interesting interview, but there's a feel of "well, things aren't going well 'cause of the govt. 'cause you know, the govt did too much, and at the same time not enough. That's just how bad they are"
  • dm
    dennis m.
    11 January 2021 @ 17:47
    waste of my time.... I can cnbc for this lack of depth and opinion.
    • dm
      dennis m.
      11 January 2021 @ 17:48
      correction -watch cnbc
    • AP
      Antonio P.
      11 January 2021 @ 20:00
      totally agree, he is just as smart as I am ... I need much more from RV. Sometimes I feel they open room for advancing their pals profiles and careers
    • SD
      Steve D.
      11 January 2021 @ 20:43
      That seems more than a little harsh. Maybe you saw CNBC and simply tuned out. I watch the vast majority of RV videos and found this one quite good; certainly not lacking in depth and opinion. When someone addresses the concept of MMT, which is unbelievably gaining traction these days, by saying that MMT is "the most economically illiterate thing I've ever heard of in my entire life" I would definitely say that person gave their opinion.
  • SG
    Skyler G.
    11 January 2021 @ 19:20
    "Creative and unprecedented"...not really in the context of history.
  • DD
    Dan D.
    11 January 2021 @ 18:31
    "The Fed made a loan to a casino." The Fed *only* makes loans to casinos.
  • GF
    George F.
    11 January 2021 @ 17:28
    Great Interview!
  • SR
    Sarah R.
    11 January 2021 @ 15:35
    Jeff Cox seems to be delusional about the state of the real economy
  • PH
    Paul H.
    11 January 2021 @ 14:53
    Interesting that Jeff Cox is still working for CNBC, with his skeptical view on QE. All the bubble vision business networks never discuss currency debasement, or how the fed is destroying the dollar. I agree completely that we are heading towards a currency crisis, and people might look back at the 2020 summer riots and US capital storming on 1/6/2021 as a day in the park.
  • df
    diamantino f.
    11 January 2021 @ 13:41
    Nothing new! sutitles great thanks RV
  • BA
    Badri A.
    11 January 2021 @ 10:59
    Thank you for adding subtitles to your videos :)