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.
The stock market really isn't a gamble, as long as you pick good companies that you think will do well, and not just because of the stock price.
When our financial system - essentially our money managers, marketers of investment products and stockbrokers - put up zero percent of the capital and assume zero percent of the risk yet receive fully 80% of the return, something has gone terribly wrong in our financial system.
The basic story remains simple and never-ending. Stocks aren't lottery tickets. There's a company attached to every share.
Just because a stock is down doesn't mean it's a great buy.
Investors should invest on what they know. The biggest mistake is to invest on what they don't know.
Money management has been a profession involving a lot of fakery - people saying they can beat the market, and they really can't.
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