Can The Fed Keep Raising Rates Amidst A Banking Crisis? | Michael Howell
Inflection Point
00:00
What's the Transformation of Risk?
Yellen said they're not considering coming in and guaranteeing all bank deposits. But there's a great quote from Chris Cole, which is always stuck with me: you can't destroy risk. You can only transform it. The more the Federal Reserve balance sheet expands, what they're doing is effectively reducing credit risk and duration risk in the system. And that's what the Federal Reserve can do. But to take up your analogy of the balloon, you're squeezing that balloon,.You're reducing credit risk but introducing another risk, which may be inflation risk. High street inflation is a cocktail of monetary inflation and cost inflation.
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