Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials.
Jerome PowellRead
While the move to central clearing has made the system safer, we need to make sure that the central counterparties have the resources and risk-management practices to withstand plausible but severe shocks.
Interpretation
Central clearing enhances safety in finance, but we must ensure counterparties are prepared for extreme risks.
Jerome Powell emphasizes the importance of central clearing in making financial systems safer. However, he warns that it is equally crucial to ensure that central counterparties have adequate resources and sound risk management practices in place to handle severe and plausible economic shocks that could threaten the stability of the financial system.
In practice
In a financial seminar discussing risk management practices.
Long experience, in the United States and in other advanced economies, has demonstrated that monetary policy is most successful when decisions are rendered independent of influence by elected officials.
I am unable to think of any critical, complex human activity that could be safely reduced to a simple summary equation.
Long-term economic growth depends mainly on nonmonetary factors such as population growth and workforce participation, the skills and aptitudes of our workforce, the tools at their disposal, and the pace of technological advance. Fiscal and regulatory policies can have important effects on these factors.
It is worth noting that 'too big to fail' is not simply about size. A big institution is 'too big' when there is an expectation that government will do whatever it takes to rescue that institution from failure, thus bestowing an effective risk premium subsidy. Reforms to end 'too big to fail' must address the causes of this expectation.
There is no risk-free path for monetary policy.
My own experience is that the best outcomes are reached when opposing viewpoints are clearly and strongly presented before decisions are made.
A stock is not just a ticker symbol or an electronic blip; it is an ownership interest in an actual business, with an underlying value that does not depend on its share price.
A stock certificate is not a tool, like a shovel, or a commodity, like a pound of cheese. What we sell a customer is not a share in a business, but a view of the Elysian Fields. A financier is a creative artist. Our function is to stimulate the imagination. We are poets!
Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer.
We are all powerless as children, and money looms so powerfully... we don't grow up to claim our financial power until we look money directly in the eye, face our fears, and claim that power back.
You will either learn to manage money, or the lack of it will manage you.
I think a very good system in a world with a lot of passive investors is one in which there are at least a few entrepreneurial investors, prepared to say what they think, prepared to propose a change in management, change in strategy, change in cost structure, capital structure.
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