On September 12th, Mpls. Federal Reserve President, Neel Kashkari, spoke to public and private sector leaders at the St. Paul BOMA Thought Leaders Seminar and the Saint Paul Port Authority Expert’s Forum. Mr. Kashkari recounted the fear that pervaded the financial community in 2008, and how TARP was successful preventing a depression. He also touched on too-big-to-fail regarding large banks and how it remains a risk to the financial system.
Mr. Kashkari also announced the released an essay titled, Nonmonetary Problems: Diagnosing and Treating the Slow Recovery. The essay focuses on several possible reasons why the recovery has been weaker than is typical and potential policy options available to lawmakers and the Federal Reserve. Some of the reasons for a weak recovery include, lack of innovation, demographic trends, technological changes and frictions in the economy leading to inadequate aggregate demand, and psychological scarring from the financial crisis. (Click here to read complete essay.)
He also spoke about inflation being very low, so there isn’t a compelling reason to raise rates. Rates need to be kept at a level to accommodate economic growth. (Click here to view the presentation.)