Bank Directors Seminar, Coeur d'Alene, ID

Monetary Policy: What should we conclude since we didn’t get the bang for the buck expected? – Chairman Powell’s conclusion: the ‘natural rate of interest’ is really low now, and we are lucky the Federal Reserve was wise enough to cut interest rates as they did or things would have even been worse. – This is an example of a “counterfactual argument” that presumes one knows the “truth” and low interest rates or base expansion do indeed stimulate economic activity. – Hein concludes: monetary policy and Federal Reserve Actions are not very helpful in stimulating economic activity. – Low interest rates have harmful effects. They hurt those trying to save.

The Fed is economist #2. You?