Raphael Bostic also pushes for greater societal engagement on issue
The president and chief executive of the Federal Reserve Bank of Atlanta preached to the choir Thursday about the critical importance of financial literacy to the success of the nation’s economy.
Raphael Bostic emphasized his point by underscoring that the key ingredient to navigating the financial system is education — beginning in elementary school. Money-management habits are established as early as age 7, he said, and a simple thing like a piggy bank helps.
He spoke to a crowd of financial wizards attending the second annual Financial Literacy Day at the University of South Florida Sarasota-Manatee campus.
The daylong event included panel discussions by experts on such topics as municipal financial market developments; the use of quantitative measurement/technical analysis in the stock market; the outlook for the U.S. stock market and the world; and the U.S. banking system.
Bostic ditched his prepared remarks to answer questions from David Kotok, chief investment officer and cofounder of Cumberland Advisors. Sitting in club chairs, the relaxed exchange kept the crowd’s attention.
Bostic applauded Florida and other states that require classes in financial matters. Knowing how to save, budget and pay bills plays a major role in financial literacy, he said. “Everyone in this room has an obligation to increase financial literacy — including me,” he said.
The Atlanta Fed, like most of the 12 central banks in the Federal Reserve System, pushes what it preaches as one of its core missions. Bostic cited the “teach-the-teacher approach” as a key initiative that has proven to be successful. His education team reaches more than 10,000 teachers annually through about 300 presentations and workshops.
His team also reaches hundreds of high school students as part of another program.
Financial literacy intersects with equal opportunities and upward mobility in a career, and with the economic stability and resilience that are essential to being able to cope with a personal financial crisis, Bostic said.
He also addressed a range of other topics.
On trade tariffs: “The question is whether the strategy will work,” he said. Everyone will pay more for goods, “it’s just a matter of who pays less of the more.”
On national debt: Citing the Trump tax cuts ($2.3 trillion over a decade), Bostic said: “In and of itself, debt is not necessarily a bad thing. It depends on whether those investments pay off. We don’t know the answer to that.”
Exactly how businesses will spend their tax windfall — whether that be stock buy-backs, increased wages or investments in company growth — will determine that answer.
On the housing market: He noted that its something he monitors. “I always worry about the housing market,” he said. Sustainable housing arrangements instead of financial overreach are dominating the market today.
Housing is “not at levels that give us a lot of concern,” Bostic said. “I don’t think we’re at the cusp” of another meltdown.
On a cultural shift in real estate: “When we started flipping houses, it was seen as predatory,” he said. “Now there are TV shows about it.”
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