Fed Will Keep Interest Rates High For A While, Says Former Dallas Fed President Robert Kaplan

Robert Steven Kaplan, former President & CEO of the Federal Reserve Bank of Dallas, joins Forward Guidance to share his views on the U.S. economy, banking system, and the Fed itself. Filmed on June 12, 2023, two days before the end of the meeting of the Federal Open Market Committee (FOMC).

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Timestamps:

00:00 Introduction
00:22 Pause Likely at June Fed Meeting, According To Market Pricing
01:16 Why Kaplan Voted Against Ultra-Loose Monetary Policy (September 2020 Dissent re: Forward Guidance & Flexible Average Inflation Targeting)
05:02 Fed Has Slammed On The Brakes
06:40 Did Fed Action Exacerbate Banking Stress?
15:13 How Fed Thinks About Inverted Yield Curves
16:53 Global Economic Recovery, April 2020 to Present
24:02 Did The Fed "Monetize" The U.S. Debt?
25:10 Future Economic Outlook
29:25 In-Depth Thoughts On Banking Turmoil
39:36 Deposit Outflows Will Depend on The Credit Cycle
41:32 Interal Politics At The Federal Reserve
50:56 Fed Cuts Are Off The Table For Now
53:08 How Closely Does Fed React To Stock Market (vs. Credit Market)?
55:08 Inflation, Oil, and Energy Policy
59:34 Venture Philanthropy & Venture Capital
01:02:41 Closing Thoughts

[Nernst]

Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125k ETF/Growth Stock portfolio.

[khemkhaengniran]

I started investing when I was 27, mostly through sweat equity. I just turned 32 and this last month was the first time that my passive income broke $100k for the month. This is solid advice! DO IT!

You don’t have to get rich quick, you just have to get RICH no matter what. 👍🏼
V

[wtzfekk]

It was a very bad decision to remove the Glass-Steagall Act in the late 1990s, which led to the spectacular failure of huge banks during the financial crisis of 2007–2008. To prevent another disaster, Dodd-Frank and this statute both need to be reestablished right away. What happened with these banks is only the beginning of what will happen if nothing is done to address the current situation.

[veronica.baker]

The relationship between external factors such as inflation data and the Federal Reserve's decisions and their impact on the stock market. Inflation, bank collapse, severe drought in the agricultural belt, recession, food shortages, fuel available automobile shortages and prices, the price of living place. <It's all coming together and it could lead to a real disaster towards the end of this year (or sooner). With inflation currently at about 6%, my primary concern is how to maximize my savings/retirement fund of about $300k which has been sitting duck since forever with zero to no gains.

[raymanmorrison]

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[fernmoss-]

Kaplan is so clear and everything made a lot of sense. Great interview

[JuneroseCarcina]

I need a solid and reliable plan to survive these trying times, I was really hopeful of my investments this year, but all my plans have been disoriented, I've been studying the price crashes and I realized some investors made a fortune from the recent recession and I was wondering if such success rate could be achieved in this present market. Any recommendations?

[MattCRHughes]

Literal “Forward Guidance” from someone not in the blackout period . . . what a get!

[tildazarqa]

Buying a stock is easy, but buying the right stock without a time-tested strategy is incredibly hard. Hence what are the best stocks to buy now or put on a watchlist? I’ve been trying to grow my portfolio of $560K for sometime now, my major challenge is not knowing the best entry and exit strategies ... I would greatly appreciate any suggestions.

[rmihai]

Kaplan is spot on - Sep 2020 they should have started actually raising the rates a bit - 0.25% at a time, each meeting ... And we would have been in a very different spot right now.

[gracegomez]

With markets tumbling, inflation soaring, the Fed imposing large interest-rate hike, while treasury yields are rising rapidly—which means more red ink for portfolios this quarter. How can I profit from the current volatile market, I'm still at a crossroads deciding if to liquidate my $125k bond/stocck portfolio

[bsetdays]

Every day we encounter novel challenges that have become the new standard. Although we previously perceived it as a crisis, we now acknowledge it as the new normal and must adapt accordingly. Given the current economic difficulties that the country is experiencing in 2023, how can we enhance our earnings during this period of adjustment? I cannot let my $680, 000 savings vanish after putting in so much effort to accumulate them.

[tastypymp]

It's a great demonstration of the core problem when 5% is perceived as 'high'....

[Aziz__]

The media is currently barraged with a lot of economic data right now. It takes a lot to see beyond the whole ocean of news on focus on what is important, which is that no matter how low stocks go, they always bounce back. I really ignore all the news and keep investing. I recently allocated about $121k to put in the market as we anticipate a crash. Any recommendations?

[vitalsigns]

Great show. Wish we could hear why hasn’t/isn’t the FED selling mbs? Why is QT so small? Powell said he wanted to get home prices down. So far, it is not enough. Homes are going back up in price, and there is no inventory. Unemployment is much too low.

[langleybryan]

Awesome job. Robert Kaplan is an incredibly insightful guest and jack as always is extremely well prepared with intelligent questions. I was not aware of the amount of money sloshing around in local govts that was required to be spent. Very helpful.

[williamhoffer]

This was a great, informative interview. This man and many others like him, is the reason that the United States is the most sought after country to immigrate to!

[romacro]

Jack, unbelievable interview. My favorite of your to date, and there's been a ton of great ones! Great work!

[crouchhill]

Excellent podcast with an Insider dealing VIP guest. I know, Jack is all suited up ❤😊

[eos]

Wow, what an excellent interview and guest. It was nice to hear a guest provide their thoughtful views without the "sky is falling" approach.