Curators of Black Media

Financial traps and how to beat them – Jay Morrison and Dr Boyce Watkins

Financial traps and how to beat them – Jay Morrison and Dr Boyce Watkins

In this video, Dr. Boyce Watkins and Jay Morrison talk about how to avoid financial traps.

According to project-syndicate.com, Price increases in the United States are spreading across goods and services, and inflation also can be seen in broad-based business inputs such as transportation, energy, and increasingly labor.

For its part, the US Federal Reserve has emphasized that it will contemplate raising interest rates only after it is done tapering its monthly asset purchases, which will be sometime in July 2022 at the current pace of unwinding. Nonetheless, some members of the Fed’s rate-setting Federal Open Market Committee worry that the central bank will have fallen behind the curve by that time, forcing it to raise rates more abruptly, to higher levels, and for longer than anticipated. Hence, Fed Vice Chair Richard Clarida recently indicated that the Fed might consider speeding up the taper (so that it can raise rates sooner) when its members meet again in December.
Notwithstanding the growing (but often unspoken) worries at the Fed, central bankers nowadays are reticent to see inflation as a problem. In the past, the current levels of inflation would have prompted them to square their shoulders, look determinedly into the TV cameras, and say, “We hate inflation, and we will kill it” – or words to that effect. But now they are more likely to make excuses for inflation, assuring the public that it will simply go away.
Clearly, the prolonged period of low inflation after the 2008 global financial crisis – when the Fed had great difficulty elevating the inflation rate to its 2% target – has had a lasting impression on central bankers’ psyches. The obvious danger now is that they could be fighting the last war. Moreover, even if they do not fall into that trap, structural changes within central banks and in the broader policymaking environment will leave central bankers more reluctant to raise interest rates than they were in the past.
To adapt to the pre-pandemic low-inflation environment, the Fed changed its inflation framework so that it would target average inflation over a (still-undefined) period. This meant that it could allow higher inflation for a while without being criticized for falling behind the curve – a potentially useful change at a time when elevating the public’s inflation expectations was thought to be the key problem. Gone was the old central-bank adage that if you are eyeball to eyeball with inflation, it is already too late. Instead, the Fed would stare at inflation for a while and act only when it was sure that inflation was here to stay.
Moreover, the new framework places a much greater emphasis on ensuring that employment gains are broad-based and inclusive. Because historically disadvantaged minorities in the US are often the last to be hired, this change implied that the Fed would potentially tolerate a tighter labor market than in the past, and that it would have more flexibility to run the economy hot, which is useful in an environment of weak demand. Yet now the Fed is facing an environment of strong demand coupled with supply-chain disruptions that look unlikely to abate quickly. Ironically, the Fed may have changed its policy framework just as the economic regime itself was changing.

Financial traps and how to beat them – Jay Morrison and Dr Boyce Watkins

Tags used for this video:

dr Boyce Watkins,jay morrison,financial questions,financial freedom,money,business,entrepreneur,black business,rich,poverty,real estate,house,broke,opportunity,economy,economics,finance,powernomics,cooperative economics,knowledge,black power,black empowerment,stock market,investing,investor,PHD,wealth,black wealth,generational wealth,stock,shares,home ownership,property,investors,black people,Financial traps and how to beat them – Jay Morrison and Dr Boyce Watkins

The Black Financial Channel is a news and business channel designed specifically for the African American community. We give daily financial updates on stock markets, investing and other related topics that appear in financial news.

The Black Financial Channel is sponsored by The Black Business School. To join The Black Business School and get started for free, please visit http://TheBlackBusinessSchool.com.

You can enroll in Dr Watkins’ Stock Market Investing class by visiting http://TheBlackStockMarketProgram.com.


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *