Project on Financial Institutions
• You are a well known expert on financial institutions. You are being interviewed by me, fellow classmates, friends, news, etc. It is to help them gain insights into policies and implications.
• You are to answer the questions based on our class discussions and your own research. There is plenty of information available on all the questions. This is not cut and paste, except potentially charts or other visuals that support your words, but you own words and interpretations of your research.
• Remember to use critical concepts…….unemployment, inflation, interest rates, stagflation, asset bubbles, etc. These are important to bring into your thoughts.
Questions ( 10):
1. The Federal Reserve’s main mandates are what and how do you monitor these mandates to ensure policies are consistent with the goals.
2. The administration continued to “pump” money into the economy to continue economic growth. Was this a prudent policy or was it driven by politics? Did this policy create more demand when we already were seeing a shortage of goods given the supply chain issues? Should it have stopped sooner?
3.Fighting inflation can cause the economy to go into a recession. While bringing down inflation, it can cause much higher unemployment. Which is of more long term concern to the Fed
4. Interest rates had been extremely low for many years. Has that caused asset inflation, particularly for stocks and real estate? With rates increasing, do you think that will bring assets prices down and is that a goal of the raising of rates.
5. Historically many financial problems have involved real estate and mortgage markets. Is the current market leading us to the same problems or not and why?
6. The United States has the most developed and liquid capital markets which enables those needing to raise capital great opportunities. Raising rates has halted the IPO market and is making the debt markets more expensive. In your opinion are the markets correctly reacting to the changing financial landscape or do we need to adjust our policies
7. Main street versus Wall Street. We often hear that saying but in reality do we not all care about building wealth as even “main street” has 401(k)’s and pension plans. If we keep on regulating and think that “asset bubbles’ only impact the rich are we not hurting all of the country with those statement?
8. Are banks strong enough to withstand a severe recession. While capital levels look strong today if we have another mortgage crisis or consumer crisis can banks withstand the potential losses and can we avoid a 2008 scenario. What is different this time?
9. Pension plans must meet future obligations by making investments that have high enough returns to meet them. If pension plans are underfunded what must they do and how can they achieve a balance?
10. In summary, can you please tell the country your view on the strength of our financial institutions and what you see the biggest risk is that could stress our system and what policies remain can be used in case we get to that scenario?