{"id":50291,"date":"2019-05-01T21:48:00","date_gmt":"2019-05-02T01:48:00","guid":{"rendered":"https:\/\/prefblog.com\/?p=50291"},"modified":"2025-10-15T21:50:28","modified_gmt":"2025-10-16T01:50:28","slug":"may-1-2019","status":"publish","type":"post","link":"https:\/\/prefblog.com\/?p=50291","title":{"rendered":"May 1, 2019"},"content":{"rendered":"

The FOMC issued its statement<\/a>:<\/p>\n

Information received since the Federal Open Market Committee met in March indicates that the labor market remains strong and that economic activity rose at a solid rate. Job gains have been solid, on average, in recent months, and the unemployment rate has remained low. Growth of household spending and business fixed investment slowed in the first quarter. On a 12-month basis, overall inflation and inflation for items other than food and energy have declined and are running below 2 percent. On balance, market-based measures of inflation compensation have remained low in recent months, and survey-based measures of longer-term inflation expectations are little changed.<\/p>\n

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 2-1\/4 to 2-1\/2 percent. The Committee continues to view sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective as the most likely outcomes. In light of global economic and financial developments and muted inflation pressures, the Committee will be patient as it determines what future adjustments to the target range for the federal funds rate may be appropriate to support these outcomes.<\/p>\n

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.<\/p>\n

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michelle W. Bowman; Lael Brainard; James Bullard; Richard H. Clarida; Charles L. Evans; Esther L. George; Randal K. Quarles; and Eric S. Rosengren.<\/p>\n<\/blockquote>\n

Scott Barlow in the Globe<\/a> picks up on a piece by Barry Ritholtz on Bloomberg<\/a> about financial literacy:<\/p>\n

This is well-meaning, but without a radical break from how financial literacy is taught, it is destined to be ineffective … There are some potential solutions for these issues:<\/p>\n

No. 1. Hands-on education: Teaching finance is not well-served by the standard format of classroom lectures. Instead, if we want to make students proficient in budgeting, help them understand credit and teach them about investing, a better approach would be a learning experience from real life. Student-run businesses on campus, and internships at local businesses, or actual jobs in finance do better at showing students how to do these tasks than the lecture-and-test approach.<\/p>\n<\/blockquote>\n

Student-run businesses on campus? How many door-to-door chocolate bar salesmen can the country actually support, anyway? As far as hands-on experience goes … most people have a job. If they’re not interested in how that business works, why are they going to seek out some heavily subsidized student pretend-business?<\/p>\n

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No. 2. Repetition: Unless financial literacy is constantly reinforced, as we noted above, it fades pretty fast. Core concepts need to be repeated and reinforced after graduation. It is not realistic for us to expect high schools to be able to accomplish this.<\/p>\n

Some of the burden for repetition and reinforcement must fall on the private sector, particularly the financial industry itself. More firms need to make a commitment to integrate financial literacy in their client-services operations. The key is keep the basic concepts of compounding, cost drag, valuations, diversification and cyclicality in front of customers, ensuring that they understand and are familiar with the terms and concepts.<\/p>\n<\/blockquote>\n

Sure. Right. If people were financially literate, at least 75% of the financial industry would go bankrupt. Where’s the incentive for teaching? And where are all these paragons of wisdom and virtue going to come from, anyway? Most financial professionals know nothing about finance, beyond a few platitudes about mumble-mumble risk and [unintelligible] expected returns – they’re salesmen who happen to be selling investments.<\/p>\n

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No. 3 … A complement to the real-life experiences (above) is a more Socratic method of instruction. Rather than mere lecturing, instructors should lead students on a guided hunt for information. Let the students figure out the ideas for themselves, with the instructor as the pilot. This sort of approach leads to harder-won knowledge, which tends to be more durable. <\/p>\n

Rather than teaching a body of information to remember, education also needs to give students the skills to think critically, to puzzle through problems, to be skeptical, to ask questions. Unfortunately, this broader approach to problem solving and independent thinking is rarely on the curriculum, no matter the subject being taught.<\/p>\n<\/blockquote>\n

That’s a pretty broad issue, given that critical thinking is supposed to be the whole point of education, the more so the further you progress. But people – in general – don’t want to think critically. They want to find something quickly that will confirm their bias and then they want to sit down and watch The Price is Right.<\/p>\n

I’m not sure there is a good solution for The Financial Literacy Problem. In the first place, it’s not really all that important a problem: the only financial literacy most people need is:<\/p>\n