You're watching...
Former Federal Reserve Economist Gerald Hanweck on the Fed’s decision to launch a new bond-buying program.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
It was.
Open ended that was what jumped out -- me Peter open ended but -- work here comes the question so let's bring in a former fed economist.
His name is Gerald have -- we're thrilled to have you here Jarrett.
I'll tell -- -- what you think about the decision the announcement and more importantly will it work.
Well it's pleasure to be here one of the things that really struck me was it -- conditionality that was put on.
Future policy.
-- to say that it's gonna be conditional upon substantial increases in employment.
I think is a major change in the strategy that the Federal Reserve is undertaking.
Other words they're putting on the table right now.
What they're going to be doing and until the end of this year -- since if employment doesn't improve slipped substantially.
-- unemployment hasn't decreased substantially then they're going to continue this and may even accelerated.
So I think this is first of us pretty big it's not as big as what they did not to over 2010 but.
You know it's pretty vague and big you know this this whole strategy is really puts the Fed.
On the on.
On.
On a mark that they have to me.
How worried Sheryl do you think the Fed really is that we are perilously close to -- back into recessionary territory.
Well this indicates to me and just -- if you.
Look at the just the introduction to the FOMC.
Statement this time it was really different than the other two.
And it was more it was way more.
Alarmist if you will.
Then those other two -- and certainly this last the last part of this this forty billion a month.
Buying of mortgage backed securities this really is.
A major change in the way they put it.
In terms of substantial increase decreases in -- unemployment.
Is I think indicates that they are worried very word.
Well there was this one quote -- from Ben Bernanke if we don't see improvement.
We will continue so again that that sort of pay that the doors -- folks is certainly indicative that there isn't it great concern but.
Let's look at the other side of this potentially was an economist might be able to see what would be the domino effect.
It could be positive it could be negative but when you have open ended bond purchases like that.
That is their sort of unintended consequence that's what people are concerned about.
Well I think the unintended consequence to me is that the banking system is still weak in terms of lending.
They are very risk averse at this present time the regulatory agencies in the bank examiners are.
Very concerned with banks taking on risk so banks don't take on risks.
And get these big money flowing.
Two businesses and investment and and other types of investments.
Then he really isn't going to have an impact that the Fed could -- overdo it.
And the Fed is as overdone things before.
But unless the banking system is really.
Active here.
In getting out funds to increase investments and to have businesses make decisions and -- increase employment.
Effective -- itself in this for a long time.
Not just through the end of this year having -- through the end of next year right.
Jerrold thank you very much former fed economist -- have.
