堪萨斯城联储主席：对经济扩张持久性乐观，关注支付原子结算

Since the last DoD, unemployment has fallen from 4.3%, I believe, to 4.1%. That fits with what you're saying. The economy is growing. Do you? Have you changed your when you think about this sort of pace of economic gains or just the rapidity of the growth? Have you lifted up your sort of general, um, view of what trends state growth looks like? Have you become more optimistic about the durability of the expansion? Uh, I'm pretty optimistic about the durability.

I so I, uh, I think about last year, uh, I dissented a couple as a voting member of FOMC. Uh, I talked a lot about last year. Still do talk about that. The labor force is going through a very fascinating structural change. I mean, uh, people in my generation, the baby boomers, I mean, we're retiring at about 4 million people per year. So just when you think about the dynamic of what that creates in the labor force, one, uh, it creates opportunities, too.

It creates risk. I mean, I we're I'm signing more retirement letters in the last three months and I have sort the last three years. But I worry about the intellectual muscle that we're losing in that. So what that does is that challenges my 25, 35, 45 year old fed, uh, economist and banker saying, look, how do we how do we think about what the job entails and how do we use AI to transfer what the 65 year old retiree knows to what they need to know now, not wait till they're 55 or 65?

Well, hello and welcome to another episode of the Thoughts podcast. I'm Tracy Alloway and I'm Joe Weisenthal Joe, we're back in Jackson Hole. Where else could we be? I guess if you're watching on video, it's pretty obvious if you're listening on the audio, maybe there's some mystery, but if you're listening on Audio Switch and watch this on video and you'll see, okay, for the old school audio listeners, we are back. And the backdrop to this is always literally beautiful, right?

We have the mountains in the background, but I think I say this every year. I think this genuinely might be one of the most interesting Kansas City fed economic symposiums ever. The most interesting until the next year. But yes, there's quite a bit going on, both in terms of the substance of what everyone is here to talk about, plus the context of so many unresolved questions in the economy and so forth. So thrilled to be here.

All right. Well, we should get into it. And I'm glad to say we do, in fact, have the perfect guest, perfect gift. We're going to be speaking with Kansas City Fed President Jeff Schmidt. So thank you so much for coming back on all thoughts. Well, welcome to Jackson Hole. I mean this is amazing 49th year. So next year the big 50. Oh wow. So we'll definitely be back. You got to come back. You'll have us. Oh absolutely. I mean, it's, uh, it's a such an amazing thing that Kansas City Fred created, uh, half century ago.

And we just keep on trying to add to it, uh, as we go forward. Well, thank you for giving us an excuse to come back to one of the world's most beautiful places every year. So the theme of this year's symposium is Financial Innovation in Payments. But it's coming against this backdrop of general economic uncertainty and pretty, you know, high bond yields. Is there a connection between the two? Yeah. So, uh, let's let's park that last question because it's a good one.

And let's talk a little bit about why this is important. Because some people would say, oh man, payments. That's boring. Uh, but actually yeah, yeah, but but you know, we want it ultimately as a Federal Reserve, make payments boring. I mean, we move 5 to $10 trillion a day through the system, through multiple different pipes, payment pipes. Uh, what's really fascinating about what you're going to see in the next couple of days with some of the research that's being done is, uh, we're moving toward I've seen the words atomic settlement, uh, in the marketplace, which is actually when payments are actually going to be instant, uh, and in through our lives, lease my life.

Uh, you've always talked about floating fees. There's always been a friction and a cost to payments. Well, this innovation that we have now in technology is going to move money from me to you instantaneously, and it's going to be reconciled instantaneously. So that's the atomic side of this whole settlement business. And it's going to be one very innovative, but two, it's going to be somewhat disruptive too. And so that begs the question about how do you accommodate a system that's instant gets back to your last question is the we're going to be talking a lot more as we go forward about two main things in our world.

One is duration, duration of assets. The second is going to be liquidity. Uh, and so when you think about it, if you're if the payment is instant, then there's got to be liquidity proven liquidity behind it, right. To settle it. And so, uh, I think the there's a couple things in your question that I think it begs. One is, uh, what's happened in the economy that's changed the nature of the yield curve, the price of money, uh, be it short term, long term.

Well, a lot of things. I mean, the economy is going is is moving along nicely. Uh, it's growing uh, it and it, you know, as long as we can try to get this inflation thing back to our mandated 2%, uh, we're going to see a more normalized yield curve. Uh, so if you think historically, uh, whatever's happening, the bond market is pretty good at pricing risk and price. And so, you know, the nature of what's happening for me is I try to simplify this because I'm not that smart is to go back to demand.

Uh, supply and demand. If prices are changing, then there's a dynamic between supply and demand that's occurring. It could be a bond prices or corn and wheat, whatever it is. It gets down to that with with. When it comes to economics, the obvious move here would be to dive in a little bit more on the inflation question, but maybe that's obvious. Maybe instead I'm curious, since the last dollar, it's actually, uh, unemployment has fallen from 4.3% to 4.1%. that fits with what you're saying.

The economy is growing. Do you? Have you changed your mind when you think about this sort of pace of economic gains, or just the rapidity of the growth? Have you lifted up your sort of general, um, view of what trends state growth looks like? Have you become more optimistic about the durability of the expansion? Uh, I'm pretty optimistic about the durability. I so I, uh, I think about last year, uh, I descended a couple as a voting member of FOMC.

Uh, I talked a lot about last year. Still do talk about that. The labor force is going through a very fascinating structural change. I mean, uh, people in my generation, the baby boomers, I mean, we're retiring at about 4 million people per year. So just when you think about the dynamic of what that creates in the labor force, one, uh, it creates opportunities, too. It creates risk. I mean, I we're I'm signing more retirement letters in the last three months and a half for the last three years.

But I worry about the intellectual muscle that we're losing in that. So what that does is that challenges my 25, 35, 45 year old fed, uh, economist and banker saying, look, how do we how do we think about what the job entails and how do we use AI to transfer what the 65 year old retiree knows to what they need to know now, not wait till they're 55 or 65? So so the labor force is changing. I mean, uh, immigration policy has an influence on it as well.

But we're going to we're we're going to continue to go through this probably for the next decade, uh, as we kind of see the baby boom generation, uh, go out of the labor force and the new entrants come in. Uh, but that's all going to be net positive for the economy. Okay. Well, I'm going to ask the obvious question then, and go back to inflation and what's going on with bond yields. So the 30 year above 5%. The new fed chairman Warsh, he says that you know yields can be a valuable signal for polic