Why SVB makes the Federal Reserve’s inflation fight awkward

Make Me Smart March 20, 2023 Transcript

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Kimberly Adams 

Hello, I am Kimberly Adams, and welcome back to make me smart where we make today make sense.

Kai Ryssdal

I’m Kai Ryssdal thanks for joining us on a Monday. This one is the 20th of March. First we’re going to do the news then we’ll do a little smile at the end. And then you can get on about your days or you know your afternoons or evenings or whenever you listen to us. So let’s begin here, shall we? Ms. Adams, you want to go first?

Kimberly Adams 

Sure I’ve got two today. The first one is very much on the news that we’ve been covering and covering and covering about, you know, banking and bank failures and you know all the action over the weekend with the Federal Reserve and other global banks and buying UBS buying Credit Suisse. And there’s just so much action, which you can hear about on our show and elsewhere. But what I wanted to do was look ahead, because this week, the Federal Reserve is meeting or the, the Board of Governors of the Federal Reserve Open Market Committee. And they have been, as we have also discussed, raising interest rates to try to tamp down on inflation for quite some time now. However, a lot of the talk around what’s been going on in the banking sector has linked it directly back to the rising interest rates and that it’s affecting the ability of these banks to hold on to capital and meet the liquidity requirements that they need to not have what happened to SVB happened to them. So it’ll be very interesting to see how this week, the Federal Reserve balances the need to continue their push to tamp down inflation while not feeding into this frenzy around the increase in interest rates factoring into the chaos happening in the banking sector. There are two interesting stories that we’ll have in the show notes. Reuters has a good write up about sort of: “Did SVB break the Fed?” And how, you know the Fed is really going and other global central bankers are going to have to sort of factor these things in. And then Bloomberg has a piece called in a new one of their newsletters: “five ways banking turmoil will impact the Fed’s and decision.” It’s gonna be really interesting to watch this week.

Kai Ryssdal 

I think it’s gonna be super interesting. And I think the communications challenge that Jay Powell and the Fed has in its Powell in his press conference on the Fed itself in the statement, it’s gonna be really, really big. I think it’s just so tricky to tie, walk the tightrope that they’re gonna have to walk.

Kimberly Adams 

Yeah, for sure. My other one is the latest IPCC report is out. And that would be the Intergovernmental Panel on Climate Change. It’s not exactly a new chunk of the report. It’s a synthesis of all the reports that have come out. And, you know, it’s, it attempts to be optimistic, in that it says we have the technical know how, and the ability to fight human induced climate change. We could deal with this problem, but we have a very, very long way to go. And it looks like it’s going to be really difficult. One of the report’s authors and I’m reading here from The Guardian, “pointed out that emissions fell by 6% in 2020, owing to the COVID-19 lockdowns and a similar fall would be needed each year for the next decade to meet our climate goals.” And so if you think about that, that is COVID lockdown level of not burning emissions every year for a decade, which is unrealistic. But the scale of the problem is big, and maybe it will make people do something different. I don’t know.

Kai Ryssdal 

Look, you got to hope. You got to hope it make people pay attention. And I think we’re all paying more attention. I don’t know that the people in a position to do anything about it, the politicians and the policymakers are, but I think certainly the rest of us are. Or maybe I hope so. I don’t know.

Kimberly Adams 

All right. What do you got?

Kai Ryssdal 

So mine is domestic politics, and it’s a veto the President Biden issue today. It is his first veto. And it’s about investing and federal managers of the retirement plan. So here’s what the the the veto was about. Republicans wanted to ban the government from considering environmental impacts or potential lawsuits when making investment decisions for people’s retirement plans. It’s called ESG. And Republicans in Congress want to ban it. They want to let people, not let people consider that when they’re managing other people’s money. And that, to me, seems to be kinda just going back to what we were talking about when the IPCC report, seems to be kind of nonsensical, right? Environment, society, environment, ESG sustainability and governance, right. You want environmental awareness, you want sustainable awareness, and you want good government awareness. And Republicans in Congress want to not let money managers consider that. It would have reinstated a Trump era ban on money managers doing that. And the President today vetoed that bill. It’s noteworthy for two reasons. One is it’s his first veto. That’s always a measure of of, you know, sort of what’s going on in the White House. And it’s talking about here, the president moving away from the Congress as he runs for election and he deals with a fractured Congress. But also, are you kidding me?! You’re not gonna let people consider that stuff? Come on, man. That’s it. That’s my rant.

Kimberly Adams 

Got nothing to add there. I mean, yeah, yeah. Yeah. Okay, we really need to smile after that?

Kai Ryssdal 

Juan Carlos take it.

Kimberly Adams 

Why don’t you go first, because…

Kai Ryssdal 

I will go first. I am going to out myself as a lover of the Oxford comma, sometimes called the serial comma. I think it adds clarity and purpose to good writing. And it makes it confusing when it’s not. And I’m not the only one Kings County, Washington, the home of Seattle and various other good cities up in the state of Washington, has legislation on the floor. An ordinance, I’ll read you the title, “an ordinance relating to the use of zero commas in ordinances and motions and adding a new section to Kings County Code, Chapter 1.0. Beginning the effective date of this ordinance it goes on use with a zero comma is the standard for Kings County ordinances and motions.” Yes. I’m all about the Oxford comma, the serial comma. You go Kings County.

Kimberly Adams 

I am all the way full, not half full. all the way full. Yeah. All the way. Yes, I love this. This definitely makes me smile. You know, it’s so funny. The fights on social media over the Oxford comma, just like…

Kai Ryssdal 

Oh they’re just huge.

Kimberly Adams 

Let’s be clear, just clarity, clarity. It’s not a bad thing. All right. So mine takes a little bit of setup. So there is a guy who goes by the handle Spiritwalker on Tik Tok, and I guess he’s like a costume designer and engineer. But he’s known for kind of putting on this incredibly scary looking monster costume and kind of walking around and surprising people. And sometimes they freak out. Sometimes they run and it’s a really scary, scary looking costume. But I guess in one of their like street escapades, they come up to this little girl who just is delighted by this monster and finds it so fascinating. And I’m talking like a little little girl like, had to be like maybe three or four or something like that. And she’s just smiling and she’s laughing and it is all very, very cute. And so it got like 50 million views on TikTok or something like that. And so somebody actually went and found the little girl and the family and they reunited her with this scary monster and she was so thrilled and they gave her like a little plushie of the monster and she’s adorable again. And she’s like, “it’s the dinosaur.” And she’s hugging this like very creepy looking monster. I probably need to send you a better link because you were you able to even see that on Tik Tok, or no.

Kai Ryssdal 

No but that’s okay.

Kimberly Adams 

Click the link you will I want you to watch it. Super cute.

Kai Ryssdal 

All right. Let me get it on Slack here. Are you Slacking it to me.

Kimberly Adams 

No I just put it in the script.

Kai Ryssdal 

Alright. Going to the doc, going to the doc. Standby (plays the video). Oh my god look at that thing. She loves it. That’s great. Oh my god.

Kimberly Adams 

It’s so cute.

Kai Ryssdal 

Hi, dinosaur. Oh, that’s super. That’s super cute.

Kimberly Adams 

Yeah, anyway, that made me really happy.

Kai Ryssdal 

Who says TikTok is full of spies for the Chinese government. Come on.

Kimberly Adams 

It’s also a filled with cute little girls and not having fear of anything and embracing all kinds of differences.

Kai Ryssdal 

That’s right. It was cool. It was great. Yeah, not at all scary. Not at all scary.

Kimberly Adams 

Oh, right. Because I should have because scary movies. Now I would not want to see that creature in a movie. That’s for sure. It’s pretty scary. Okay, that is it for today. We will be back tomorrow. But before we go, we wanted to say thank you so much to everyone who donated for our March fundraiser. You might remember that we had quite a bit of a gap left towards the final days of our fundraiser. But thanks to over 1000 people who donated on Friday. We almost made it. We got really close within $8,000 of our goal. So thank you to everyone who donated. We almost got there. If you missed your chance to donate last week, you can still give now and help us close that gap. And just go to marketplace.org/givesmart and that would be wonderful if you were able to. But really thank you again we are so appreciative and inspired by all your support.

Kai Ryssdal 

Please and thank you. So much.

Kimberly Adams 

Make Me Smart is produced by Courtney Bergsieker. Today’s program was engineered by Juan Carlos Torrado. Ellen Rolfes writes our newsletter. Our intern is Antonio Barreras.

Kai Ryssdal 

Marissa Cabrera is still our acting senior producer. Bridget Bodnar is the director of podcasts. Francesca Levy is the executive director of Digital and On Demand.