Kathleen and I packed a lot into our 28-minute discussion on Central Bank Central. I have just returned from a symposium of the College of Central Bankers hosted in NYC by the Global Interdependence Center, and we are poised on the brink of an expected rate cut by the Fed.
We delved into a variety of issues. Here are a few highlights, but you’ll have to listen for some of the best and all the rest.
- We have a divided Fed, 3% inflation, and no labor market growth. Markets are pricing a cut.
- A rate cut risks higher inflation — would I do it? Think about it. What is the Fed’s critical job?
- We can anticipate policy shocks. We are seeing one now in the labor force.
- When I served as chair of the Casino Authority in Atlantic City, I negotiated with real estate developer Donald Trump for two hours regarding a payment structure concerning a casino — a little building called the Taj Mahal. How did that turn out? Having watched him over his career, I’ve observed how he makes his money. Is it realistic to expect him to operate any differently in the White House than he has during all his years in business? Trump can be unpredictable, but there’s a pattern. What does it portend?
- In a world of conflicting forces and potential and yet-to-be-realized policy shocks, how do we invest? What investments makes sense if I don’t want to get up every morning worried about where the VIX roller coaster will take my investments today? Certain high-grade tax-free municipal bonds are very cheap and provide relatively risk-free, competitive returns.
- Trust in the United States and its central bank is key. If trust is shaken, recovering it takes a long time. Global asset allocations are impacted. Is the dollar imperiled? I offer my take on that question.
Kathleen posted our full interview, “Kotok Sees Fed Cutting Rates Amidst Labor Market Shocks at Cost of Even Higher Inflation” on her Substack here, with interview transcript excerpts:
The video can also be found on YouTube:
