March 24, 2020

How the Fed’s Coronavirus Response Impacts You

The economy is hurtling toward a likely recession every day. And just like you can rely on your roommate eating all the good WFH snacks on day two, you can rely on markets experts to the government going to do anything here?

The economy is hurtling toward a likely recession every day. And just like you can rely on your roommate eating all the good WFH snacks on day two, you can rely on markets experts to the government going to do anything here?

For its part, the Federal Reserve is doing something. Several things, in fact, from last-minute emergency rate cuts to major loans for big banks.

But what does the Fed’s rapid fire monetary policy mean for your day to day, from getting a mortgage to choosing a bank? And will it even work? This week on Morning Brew’s Business Casual podcast, the Brew’s Kinsey Grant interviews her college Econ professor to get those answers.

Washington & Lee University’s Professor Art Goldsmith gives a master class in how Fed policy works, why it exists in the first place, and what we can expect from central bankers as COVID-19 wreaks havoc on business.

Because when “explain it to me like I’m five” fails, there’s always “explain it to me like I’m 19.”


How the Fed’s Coronavirus Response Impacts You with Art Goldsmith


Note: Business Casual transcripts are generated using speech recognition software and human transcription. They may contain errors, although we do our best to avoid them. Please check the corresponding audio before quoting a transcript in print. Questions? Errors found in a transcript? Email



[00:00:01] [sound of coffee being poured]


[00:00:04] [intro music plays]


Kinsey Grant, Morning Brew business editor and podcast host [00:00:08] Hey there, and welcome to Business Casual, all the Morning Brew podcast answering the biggest questions in business and the economy. I'm your host and brew business editor, Kinsey Grant.


Kinsey [00:00:17] And now let's get into it. I'm back again for another special episode as we try to parse out what exactly the long-term ramifications are of the many coronavirus headlines. I know for most of you listening to Business Casual, the second most important thing, aside from the health of you and your loved ones, is the health of the economy. And that's one of maybe many things you and Fed Chair Jerome Powell have in common. This week, the Federal Reserve has taken serious action to gird the economy for what's looking more and more like a coming recession. We've seen last-minute emergency rate cuts, a bond buying spree, strategies to make U.S. dollars more available to foreign entities, and major backup loans for big banks, all within the last couple of weeks. That almost never happens, at least not that quickly. But what do those changes mean in context for you and for me? How does the monetary policy the Fed implements trickle down to regular everyday businesses and even our own personal finance decisions today? To help me make sense of Fed policy and answer all those questions, I am very excited to welcome Professor Art Goldsmith, my very favorite econ professor from my undergrad years. Professor, thank you for coming on business casual.


Professor Art Goldsmith [00:01:28] Hi, Kinsey. Thank you for those kind words. And it's a pleasure to be with you today.


Kinsey [00:01:33] I'm just really excited to first reconnect with you and be able to chat them, but also to introduce you to my new life outside of undergrad—hosting this podcast. I took your Principles of Macroeconomics class when I was at Washington and Lee University, my alma mater, and it was fantastic. And I felt like there are a lot of experts you could talk to about this, but the one person who made the Fed make sense to me was you. And I wanted to introduce the Business Casual audience today as well. But like I said, Professor of Economics at Washington and Lee, you taught my macro class, but your focus is a lot on interdisciplinary econ, global econ perspectives, and things like that. Oh, thank you for coming and taking the time. I know you're probably very busy right now with all of the changes happening at campuses across the nation, but definitely AWOL too.


Art [00:02:22] Well, my pleasure to be with you. And again, thanks for those kind words. And yes, this is a very unsettling time right now. We've closed the university, essentially. We've sent all of the students home. It's a very odd situation. But the questions you're asking about, you know, how the economy is functioning right now, the role of the Fed and, of course, whether there'll be new fiscal policies implemented, are all important questions for us to think about collectively. I think one of the ways to start this whole thing is to just remind ourselves or review some simple basics about the economy that are fundamental to understanding what the Fed can and cannot do with its policies.


Art [00:03:04] So, you know, I would like to just remind people what a recession is. How does an economy typically transition into and out of a recession? And then, of course, let's get into the mechanisms of monetary policy, open market operations, and the theory of what the Fed is actually trying to accomplish. A recession is two quarters in a row where GNP or aggregate economic activity falls. And we're not really currently in a recession. This has happened so rapidly. But as you pointed out in your introduction, we're clearly on our way.


Art [00:03:38] How does an economy slip into a recession? It does it in one of two ways. The most common way is for there to be just a straight-out decline in spending. We call that a demand deficient contraction or recession. And that kind of demand-led recession is clearly what's going on now. But there is another type of recession, and that's a producer-led recession. That's where some key input in the production process is now less available. So producers simply can't make as much.


Art [00:04:14] Now, the important thing to understand, if we're going to get into the role of the Fed and how it impacts the economy, is that we need to recognize that most of the developed countries in the world, including the U.S., have what's called a fractional reserve banking system. And that means that when individuals and families and firms deposit money in a financial institution like a bank, the bank only needs to hold a fraction of those deposits. If you deposit $100, they don't hold $100 in the bank. They only need to hold a fraction. And that's called required reserves, and the rest of those reserves called excess reserves. They can be lent out. And, of course, banks make money in two ways. I mean, they're businesses. They're trying to make profits. They do that by charging fees on services and interest rates on loans. So they're loaning out those excess reserves.


Art [00:05:16] A bank is really like an echo chamber. There's not a lot of cash in there. Most of it is gone. It's been lent out. To just give you an example in the United States: Banks with assets of less than $120 million only have to hold 3% of what's deposited as required reserves. So on a $100 deposit, they've got $3 in the bank and they're trying to lend out the other 97. Banks with more than $120 million have to keep 10% because they're a little riskier. You know, they're lending money for bigger projects.


Art [00:05:53] Right now, there's one other thing that I should mention before we move forward, because this will come into play, and that is that sometimes banks lend to each other, believe it or not. The way I like to think of it is that there are two kinds of banks in the United States. They're what I call active banks. Those are banks in areas where they can lend out not only all of their excess reserves, but firms and households want to borrow even more than are available. And so they are frustrated. Now, on the other hand, we also have what I call sleepy banks.


Art [00:06:36] And sleepy banks would be in places like this lovely little town that I live in, Lexington, Virginia. And that just means that they have excess reserves that they can't fully lend out. There just is not enough business activity or households wanting to borrow. So the active banks are in places like Nashville, where my son is a professional songwriter, or Washington, D.C., where my daughter works for the U.N. High Commissioner for Refugees. There they have customers that want to borrow more than they have available in a sleepy bank. They have no customers waiting to borrow all those excess reserves. So the Fed allows them to cut a deal, but it's only for 24 hours. So for a day, the sleepy banks can lend all of those unused excess reserves to the active banks.


Art [00:07:28] And the active banks have to pay a small interest rate to do that, which is called the interbank loan rate, or the overnight loan rate.


Kinsey [00:07:39] And not overnight. It is what the Fed said.[D1] 


Art [00:07:42] That's correct. The interbank overnight rate. Some people call that the benchmark rate and the rate at which the Fed would actually directly lend money to banks. Commercial banks is just called the base rate[D2] , but they're related to each other, very closely related.


Kinsey [00:08:01] OK, so explain to me what the Fed has been doing in recent weeks that impacts these sleepy banks and active banks. You know, we've seen rate cuts happen really, really rapidly. What is the context for those kind of cuts? They know that they came faster than most usually do since the Fed began announcing rate cuts in the ’90s. This is the first time that they've moved to cut interest rates on two separate occasions in between their scheduled meetings. What does that mean?


Art [00:08:32] Yeah, you're absolutely right. This is most unprecedented. We've had two rate cuts from the Fed in the last two weeks. The fundamental principle is pretty straightforward. And everybody knows this and understands that you don't have to be a professional economist, that households borrow money for pretty much big-ticket items, cars, and houses and horses and boats and college for their kids. They're not borrowing for toothpaste, typically. And firms borrow money to spend it on plant and equipment, which we call investment or new technologies or worker training or purchasing land, things of that nature. And the idea there is if the expected profits that would come from borrowing that money, expanding their production, and selling that output, exceeds the cost of borrowing the funds, then it's profitable to do so. Now, typically the way we think about this is if the interest rate is lower, that would inspire households to borrow more money. And firms to borrow more money. So what happens with the banks and the Fed is pretty straightforward.


Art [00:09:44] Suppose the Fed would like to insert into the banking system, more liquidity, more funds, then what they would do is they would say to a bank, “Well, you have an IOU from us. And what we'd like to do is we would like to make an arrangement with you. We would like to buy that IOU and give you cash,” if you like, or in a lot of cases, they just type into an Excel spreadsheet that they have more reserves. And so this is really important when the government—so when banks have excess reserves, typically the way they will start their portfolio is they'll lend to the government because they are very safe. The government can always tax people and pay off their liabilities.


Art [00:10:45] So the way they lend to the government is they say we’ll lend you money, but you have to give us an IOU so that we have an asset on our books that corresponds to that loan. So what the Fed is really doing is buying their IOUs back and they can always do that by offering a high enough price. Then the bank would make a capital gain by selling them back their IOU. And now the bank has all these excess reserves. And of course, if they have lots of excess reserves, the idea is that in order for them to lend them out, they would have to lower the interest rate. And by lowering the interest rate, they would inspire households and firms to borrow more money and then spend it and drive up expenditures, and the idea is that would help get rid of this deficient demand recession. So that makes sense.


Kinsey [00:11:41] Yeah, it does. So that would essentially stoke consumers in the, let's say, stoke U.S. consumers to buy more things, to take on bigger projects because they can get money easier from whatever entity they're borrowing from.


Art [00:11:55] Absolutely. Now, here's the big question. So here we've got this idea that a lower interest rate will inspire households to borrow money and put new cabinets in their kitchen or expand their garage or send their kid to a paid summer / unpaid summer internship over the summer or what have you, and that firms would borrow money because they want to spend on new plant and equipment. So maybe there's a coffee shop in town and they have one expresso machine, and they'd love to have another that may cost $5,000 from Italy. So, you know, the idea is that with that lower interest rate, they would borrow the money and buy that second coffee brewing piece of machinery.


Art [00:12:41] But at a moment like this, in the face of a pandemic where household incomes are falling and people are being furloughed from work and there's less economic activity, I mean, my town looks like a ghost town. And firms are experiencing declines in profit expectations. The question is, will they actually borrow and spend just because the interest rate went down a little bit? In other words, will this activity by the Fed, called an expansionary open market operation—they go into the market and they buy their loans, their IOUs held by banks for higher amounts of money to put more liquidity into the banks. So the banks are now flush with cash that they want to lend and to get rid of it. They're offering at a lower rate. Will households and will firms borrow in that environment?


Kinsey [00:13:35] So you start to imagine that they would. It seems like right now, especially with the idea of social distancing and that we're also said to be staying at home and not talking to other people unless we really need to and only going out for essentials. This doesn't seem like the time that anybody would be taking on a big project, especially for a business to expand in some way. Doesn't seem right, right now.


Art [00:13:58] Yeah, well, that's why you got an A in the principles of macroeconomics. You’re right—


Kinsey [00:14:02] Could you say that one more time? [laughs]


Art [00:14:03] Yeah, sure, for your mom. She got an A, mom. It's, it's very unlikely. And that is one of the stories about monetary policy that people need to understand, is that if it's a really dire set of circumstances. Then when you're trying to use monetary policy is probably least likely to be effective. So during most parts of the business cycle, monetary policy is pretty effective. It can help speed the economy up by putting liquidity into the system or slow the economy down by drawing it out. But when you get to the extremes, right, when the economy is going so rapidly, it's hard to shut down the party by raising the interest rate a little bit. And when it's in sort of a dire situation like now, it's really hard to stir up interest in borrowing and spending when there's just so much uncertainty all around us.


Art [00:15:01] And, in fact, there are some people that would say that the Fed's action in the last two weeks may have actually been counterproductive and the story would work like this. Everybody thought that profit expectations had gone down a bit by the Fed cutting rates 2 times. And let's face it, we're down to a quarter of a point interest rate now. So it's effectively zero. It looks like the Fed is panicking and trying as hard as possible to get the economy moving. And some people might say, “My gosh, it's even worse than I thought it was.” And that might curtail firm and household spending even more. So I'm not saying that the Fed did the wrong thing. I'm just saying this is an environment in which it's very hard for the Fed to reverse the course of the economy and flip it around in a more positive direction. What we've got right now is the banks are just flush with excess reserves and it's going to be tough to lend them out.


Kinsey [00:16:03] OK. I want to talk more about whether or not this policy from the Fed is or is not counterproductive in just a second. But really quickly, let's take a short break to hear from our sponsor. — And now back to the conversation on the Fed's policy and how it impacts you with Professor Art Goldsmith, my old econ professor from my undergrad years.


Kinsey [00:16:24] Professor Goldsmith, we were just talking about whether or not this policy is going to work or is capable of working. I'm interested to hear your perspective on whether or not the Fed is kind of shooting its shot too early. They only have so many tools in the toolkit to be able to implement when the economy is tanking. And one of the biggest tools is these rate cuts when we are at near zero interest rates right now. Does that remove some of the Fed's ability to impact markets in a more meaningful way if things do get worse than they are now? Are they kind of using up all of their ammo today when they might need to save them or down the road?


Art [00:17:03] Kinsey, that's a great question. And economists, I've been thinking about this for quite some time. In fact, Larry Summers, who was the head of the Council of Economic Advisers at one point and also the president of Harvard University, a very prominent macro theorist, has argued pretty convincingly in recent years that we need to keep the interest rate high enough so that when we do need to use expansionary monetary policy, there's room to lower it enough to make a significant effect. So if you just go back two months ago, the benchmark and the base rates were already at very low levels. And, you know, in the area of 1.5%, 1%.


Art [00:17:47] So, you know, moving it down all the way to a ¼% is not a huge reduction. If it had been at 4% and you reduced it all the way to a ¼%, well, then you might entice some households and firms to take on that additional risk, you know, of borrowing money and expanding their operations or spending more on big ticket items in the face of a declining economy. But a 1% change is very different than a 3% change. So the Fed really was in a position where they were near the bottom anyway. You know, the rates were so low as it was. They didn't have as many bullets in there, in their vest there as they had wanted. So they were kind of limited in what they could accomplish. Yes.


Kinsey [00:18:37] I'm interested to hear your thoughts on how Congress can be of use in all of this. Like we're just talking about, the Fed only has so much that it can deal. What do you think the role should be of the government outside of just what the Fed can do?


Art [00:18:53] You know, I think that's a really great question, because now we're switching gears to the other policy lever that we have and that we can use when there's a recession. And that is what's called fiscal policy. Fiscal policy entails two things, entails direct spending by the government to offset the declines in spending that led to the demand deficient recession. Or it could be tax cuts that the government imposes and that, in theory, would increase people's disposable household income and lead to consumer spending. Or if it's cuts in profit, taxes, things of that nature, then firms would have more profit and they might be willing to spend more money. So fiscal policy is the other alternative.


Art [00:19:44] Unfortunately, you know, we're in a tough situation right now because with the decline of the stock market, which has been quite substantial, households realize that their financial wealth position has declined. And that, we know, is called a pogo effect. It means that consumer spending will decline. So consumer spending is declining now for two reasons incomes falling or earnings, because so many people are being furloughed, laid off. Things of that nature end because their wealth positions have declined at the same time. Investment spending is falling because profit expectations are down. At the same time, our capacity to export around the world is really diminished because this is a global pandemic and people are being furloughed and sent home from work, and incomes and wealth are falling around the globe. It's kind of like a perfect storm for a demand deficient, a recession. It's great for teaching the principles of economics, but it's not so great for living through it. We know there's a really big reduction in expenditures or aggregate demand for economic activity. So the question…


Kinsey [00:21:00] Do you think that the idea that a lot of people in D.C. have floated of giving Americans money, giving a cash handle a $1,000, the Andrew Yang method, if you will. Will that actually stoke consumer spending in a way that would help stymie some of this economic downturn?


Art [00:21:20] What a great question. Just, I would say, a week ago there was no conversation at all about a fiscal stimulus. It was all about what the monetary authorities can do. And in light of what we talked about earlier, the Senate seemed to approve a House program that basically would have to separate $250 billion direct payment activities to households. So on April 6, we're going to send a check to virtually every adult, you know, household head in America. And we're gonna do that again on May 18th. And there is some sensibility to what they're doing because it's going to be linked—the payment, how much you get in that check is going to be linked to family income and to family size. So that's $500 billion, a half a trillion dollars.


Art [00:22:14] But here's the real question. What will people do with those monies that come in those checks if they save it? Because there's so much uncertainty that will not be pushing expenditures back up and offsetting the declines in consumer spending, investment spending and exports that we just talked about a moment ago. So to the extent that we can target that as much as possible to lower income households that have a higher propensity to spend any additional money, that would be a good thing. There's also talk about putting more money into the unemployment insurance program and potentially some funds for paid sick leave and things of that nature. But my fear is that a lot of households that receive that check, even if it's a small check because you're a middle income or higher income household, are going to save those funds. And when they save them, then the banks will be awash with even more liquidity, that the interest rate is already essentially zero that they can't get.


Kinsey [00:23:18] It didn't really matter. Yeah. So kind of while we're on this topic of how this impacts the everyday person listening to this podcast, when we think about lower interest rates, it makes sense for the banks. I think that we probably understand that a little bit better now. But what are the effects of lower interest rates on things like a mortgage or a car payment, things like that in the payments that we interact with every day? Will they change because of the Fed's policy?


Art [00:23:46] Well, that's a really great question. I think what you're likely to see is a lot of people moving to refinance their mortgages. Right. So I borrowed money at 3.5% and bought a house. Now the interest rates are so low, I want to refinance. That's probably not going to be highly stimulatory for the economy, but the banks will do some of that. There's probably going to be some refinancing on cars because lots of people buy cars on time as well. So there will be some consumer relief, if you like, in that way. There'll be some small fees involved with doing that. But to really get the economy moving again, you would want to, of course, be selling new cars or used cars. And you would want to be selling new and used homes—second-hand homes. And I don't see that really on the horizon.


Art [00:24:41] I think the big fear, frankly, is that the financial system might be weakened substantially and noticeably by this set of events associated with the coronavirus. So let's think about it this way. Banks make a lot of loans to small and medium-sized firms so that they can cover their payroll each month, and the inputs that they use to make pizzas or whatever it is that they're, you know, the products that they're making and selling. And then as the profits roll in over the course of the month, at the end of the month, they pay the bank back and then they borrow again. If they can't pay banks back, then banks have non-performing loans. And if they become unprofitable by having too many non-performing loans, they may fail and go out of business. And that would create what is typically called a credit crunch.


Art [00:25:42] And if there's less suppliers of loanable funds, you would think the interest rate will go up. But it won't go up because the Fed is flooding these, what the financial institutions that are left, with funds. And so I think we're going to try to keep these banks alive. The Fed, by providing them with a lot of liquidity right now, because they know many of their customers, households that have monthly mortgage payments, monthly car payments, payment on the boat. And firms that are borrowing to keep their businesses rolling along are going to struggle to make payments in the next few months. And that's why I expect to see some relief for small businesses, including banks in this. What they're now calling—the Senate is calling—Phase 3, which is another even bigger stimulus package that will certainly have aid to the airline industry, aid to a lot of other hard hit industries. They're talking $50 billion for the airlines. $150 billion for other industries. I would think that banking is going to be in there. They're talking about a loan program for small businesses. But we don't have the details of that yet.


Kinsey [00:26:57] OK. So I think we covered a lot of the specifics, too, today with all of these possible bailouts coming, a billion dollars seems like a ton of money. And that's just one industry. We are covering a $50 billion deal and warning it would be a top story headline treatment. I want to talk more about the comparisons between today and previous crises in just a second. But quickly, let's take a short break to hear from our partner. — And now back to the conversation with Professor Art Goldsmith about the economy and how it impacts us today. I want to hear your perspective on what ways you think today's issues are similar or different to what we experienced in the 2008 financial crisis. You know, I was reading recently in FTD, the Financial Times, Ben Bernanke and Janet Yellen, former Fed chair, has put out a piece basically saying at least in 2008, they could do something. It was a policy-driven issue. Today, the recession, like you were talking about before, a demand-driven recession is being driven by the fact that people are just not spending as much money because they're not going out or they're concerned about getting sick. And it's not like the Fed can stop coronavirus in its tracks. How else do you think it's different from 2008? Are there similarities to be drawn between the two?


Art [00:28:16] Well, that's a wonderful question. Let's think about it this way. There's a place in the economy—split the economy into an expenditure side and a financial side. And more often than not, recessions start. And the expenditure side. For some reason, firms or households get spooked, they start worrying and they start spending less. And because they spend less, incomes fall. And then it becomes, you know, a second round of less spending and profits are down and there's less economic activity. And so demand becomes deficient. And what happens is it spreads. It can spread to harm the financial system. In 2007-8, the great recession worked the other way around. It was a financial sector meltdown that led to less spending by households and firms. So that was a slightly different situation.


Art [00:29:12] Let's remember what was going on. Housing prices were just going up all around the country very, very rapidly. So banks were making lots and lots of loans, including loans to modest-income households for housing that was probably outside their means. So these were kind of risky loans, right? They were called subprime loans, and they paid relatively high interest rates. And one of the things the financial institutions started to do was they started to make what some people called tranches. I call them financial burritos. So they would make a loan to a high-income person for a home that might carry an interest rate of 2% and a loan to a medium-income household for a house that might carry an interest rate of 4%, a little more risk, and a loan to a modest-income family for a home that's pretty risky and that might be 6 or 8%. And then they'd make a taco or a burrito out of those and it would pay a pretty high interest rate depending on how many of those really risky loans you mix in. And then they were selling these loans or slices of these loans out in the marketplace to people that had accumulated savings in firms that had accumulated savings so that they could get a slightly higher interest rate. They were taking on some additional risk, but in that burrito were lots of good loans, too.


Art [00:30:43] And what happened is the housing prices started to fall because there was so much housing speculation. We built so many houses that when housing prices fell, lots of people said, “Oh, my gosh, you know, my house isn't worth that much anymore. I'm going to stop making payments on this loan.” It was a lot of foreclosures, if you remember. And consequently, the large financial institutions became insolvent because nobody was paying them back. So those periods like we're going through now and in 2008, the Great Recession, are very different because of where the source of the recession started. And, of course, we had a terrible credit crunch during the Great Recession because the financial situation collapsed so rapidly. There was so much less funds available and the Fed tried to put funds in to get rid of the credit crunch. And eventually, you know, two years later, we came out of that and we had a lot of growth since then.


Kinsey [00:31:43] I think in terms of figuring out where this is going now, that is highly, highly uncertain.


Art [00:31:54] I would think that to move our economy back in a positive direction, we would probably have to do three things. And I don't have a crystal ball or a Ouija board, but I'd say that we're going to have to find some kind of viable medical treatment for the people that do have this virus. Ultimately, we're going to have to find a vaccine and we're going to have to vaccine an awful lot of people. And that can be done, of course. Few years ago, I got vaccined in a car—like I literally drove up to the hospital one day when there was a line and they just rolled your window down, gave you the shot, and you drove away [Kinsey chuckles]. So we can do these kinds of things. And the other thing we're gonna have to do is we're gonna have to get some very good scientific information on what this means going forward. So if you've been exposed but you didn't manifest this virus, can you infect other people? For those people that had the virus, can they recidivate and get it again?


Art [00:33:00] You know, we're gonna need to learn a lot more about what the prospects are for gathering together, because a lot of our economy entails social interaction. Hey, let's go out Friday night and have dinner together and a few laughs. Let's go to a football game. In my son's industry, he’s a songwriter in Nashville—let's go to a concert. I just don't know that people are gonna be leaning into those kinds of important activities. They're a huge part of our economy in the near future. So there's a lot of uncertainty as to, you know, how we can, through even a fiscal policy, get this thing turned around. But for sure, one thing we have to realize, is that a tax-driven policy, where you cut people's taxes, then you're hoping that they will spend the money and they may save it. So the more logical approach to probably stimulate the economy is for direct government spending. And so we may we may see a movement in that direction as well.


Kinsey [00:34:10] It's so interesting to kind of understand the concept that this is a recession or likely a recessionary period here in our economy that is almost entirely reliant on science, which is not how most students of economics or even people investing in the stock market today would expect this kind of, you know, bull market to have come to an end—that we would be waiting for a vaccine and waiting for people to stop getting sick. It's not necessarily the bank did this or manufacturing industry did this. It's science. And it's hoping that we are people with the right information and the right access to information to make good decisions and hopefully get better. But like you mentioned, a lot of uncertainty, a lot we just don't know yet. And I think that we are probably still in the early days of that uncertainty. As much as I hate to say it, I think this will probably be sticking around for at least a little bit here.


Art [00:35:08] Yeah, I agree with you completely. But I tell you, I am optimistic in one sense. We have a lot of great scientific minds in this country. We have people in the health professions who studied public health and epidemiology, who are very thoughtful, and there's clearly a sense of urgency. And there are people are coming together and working on these problems. So I'm optimistic that on the scientific front, we're going to be able to make some breakthroughs over time.


Art [00:35:39] And I think that people in general will accept those and we'll be able to bring this very troubling epic to some kind of closure. I'll tell you, though, my worry right now is about the emotional well-being of the people in our society. I worry about retired and elderly people who see that they've lost a lot of paper wealth becoming sad or having a lot of anxiety. I worry about young people who say, “My gosh, look at what's happened. It's turned my college years upside down.” It's making me nervous about what the future would look like and them generating a sense of helplessness, which is often associated with systematic and sustained sadness or depression. And I'm certainly worried about the disconnection that is taking place between friends and family because of social distancing.


Art [00:36:38] Social distancing is clearly the right thing to do. Right now, my wife is a public health person. She has a master's in public health from USC Chapel Hill and works at Washington Lee as a health educator. And I would say that we all know that we need the social distance. But, you know, we're social creatures. Most of us like hanging out with our friends and having a laugh here and there. And when you can't do that or you say, you know, let's have a virtual dinner party or whatever. It's a new normal for a while. And I do worry about people at some point just becoming a bit morose about that. So there are some worries, there's some optimism to be had. And I would just, you know, we're just going to have to let this roll out. I would say that. A lot of things happened in the last two weeks, and we can only hope that the next two weeks, lots of things happen that are more positive than negative.


Kinsey [00:37:35] Yeah. I completely agree. And I think you make a really, really important point here beyond just talking about the Fed and talking about what Congress is doing. We need to also take care of ourselves and take care of our communities because we are separated more than we ever have been or more than a lot of us are used to being. And we just need to look out for each other and try to stay optimistic and recognize that we're in this together. And if we all join hands and try to make the best of it, hopefully we can make some good progress. But Professor Goldsmith, thank you so much for talking to me and indulging me in another econ lesson. I joke a lot that I missed taking econ classes and drawing all these beautiful graphs and charts in my color-coded pens, which I hope you might remember. I appreciate you taking the time. And I feel like I learned a lot and I hope everybody else did too. Thank you for coming on Business Casual.


Art [00:38:27] My pleasure. See you.


[00:38:29] [sound of coffee being poured]


[00:38:32] [outro music starts]


Kinsey [00:38:33] Thank you so much for listening to this week's episode of Business Casual and allowing me to relive the glory days of my time as an econ student. Now is a great opportunity for people who are sitting at home to reach out to old professors and experts in your life to ask important questions, because chances are those old professors that you used to love in college are sitting at home as well, doing a lot of the same things as you. So if you have a question, reach out to someone you consider an expert in your life or even reach out to me at Kinsey at Morning Brew. If you've got any questions about the Fed or the economy or markets, I'll do my best to get you an answer, and if I don't know the answer, I'll tap on Professor Goldsmith. Thanks so much for listening. See you next time.