1. Are Big Changes Coming to the Fed? David Beckworth
Thank you for inviting me to talk with you today.
David Beckworth

3. Big Changes To Come--Maybe
Big Changes Since 2008
Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Targets
New Tools

4. Big Changes To Come--Maybe
Big Changes Since 2008
Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest Rate Targets

5. Big Changes Since 2008 Large Scale Asset Purchases
“Quantitative Easing” or QE
Goal: reduce risk premiums
Focus on asset side of balance sheet
Intended to be temporary

6. Big Changes To Come--Maybe
Big Changes Since 2008
Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest Rate Targets

7. From Small to Big Balance Sheet

8. Big Changes To Come--Maybe
Big Changes Since 2008
New Tool: Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest Rate Targets

9. The Force is Strong with this Target.
2012: 2% PCE Inflation Target
The Force is Strong with this Target.

10. Big Changes To Come--Maybe
Big Changes Since 2008
New Tool: Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest Rate Targets

11. Uh oh, the Force is Not Strong with this Target.
New Economic Problems
Inflation Target has Problems
Interest Rates are Trending Down
Balance Sheet is Not Shrinking

14. New Economic Problems Inflation Target has Problems
Interest Rates are Trending Down
Balance Sheet is Not Shrinking

15. Downward Trending Interest Rates% % % % %

18. Amount of Negative-Yielding Debt in the Global Economy
$18
$16
$14
$12
$10 $8 $6 $4 $2
Amount of Negative-Yielding Debt in the Global Economy
30%
25%
20%
15%
10% 5% 0%
Trillions of Dollars (left scale)
Percent of Total Debt (right scale)

19. Current
August

22. New Economic Problems Inflation Target has Problems
Interest Rates are Trending Down
Balance Sheet is Not Shrinking

26. Monetary Policy Very Limited
Interest Rates Trending Down
Fed Balance Sheet Not Shrinking
New Economic Problems
Inflation Target has Problems
Interest Rates are Trending Down
Balance Sheet is Not Shrinking
Monetary Policy Very Limited

27. Big Changes To Come--Maybe
Big Changes Since 2008
New Tool: Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest Rate Targets, Other Asset Purchases

28. New Targets – all about “make up”
Price Level Target
Average Inflation Targeting
Nominal GDP Level Target

31. Big Changes To Come--Maybe
Big Changes Since 2008
New Tool: Large Scale Asset Purchases
Small to Big Balance Sheet
Implicit to Explicit Inflation Target
Big Changes To Come--Maybe
New Economic Problems
New Target: Price Level Target, NGDP Level Target
New Tools: Negative Rates, Yield Curve Control, Dual Interest, Other Asset Purchases Rate Targets, Other Asset Purchases

32. New Tools Negative Interest Rates Yield Curve Control
Dual Interest Rate Targets
Other Asset Purchases

33. Helicopter Drops
Treasury & Federal Reserve

34. Policy Implications Negative Interest Rates Coming to USA
Next Recession Going to be Messy
Increased Fiscal Policy – Monetary Policy Coordination
Some kind of ‘make-up policy’ adopted

35. Are Big Changes Coming to the Fed? David Beckworth
Thank you for inviting me to talk with you today.
David Beckworth