"As financial markets continue to broaden and deepen, the behavior of asset prices will play an important role in the formulation of monetary policy going forward, perhaps a more important role than in the past"
About this Quote
A technocrat’s warning, delivered in the calm diction of someone who knows panic is contagious. Geithner’s line is less a neutral observation than a quiet redefinition of what central banking is for. “Broaden and deepen” sounds like progress, but it’s also an admission that finance has become the economy’s nervous system: more instruments, more leverage, more ways for shocks to travel. When markets get big enough, they stop merely reflecting policy and start coercing it.
The intent is to normalize a shift that used to be controversial. Monetary policy, in the old civics-book version, targets inflation and employment; markets are just one channel among many. Geithner hints that this hierarchy is flipping. If “asset prices” are now “more important,” then the Fed isn’t just managing the cost of money, it’s managing the mood and solvency of a financial ecosystem that can seize up overnight.
The subtext is unmistakably post-2008. Geithner, as Treasury Secretary in the aftermath of the crisis, lived through the moment when collapsing asset prices weren’t a Wall Street problem; they were a mass layoff engine. His phrasing also anticipates a political problem: if central banks watch stocks, housing, and credit spreads more closely, they will be accused of privileging asset owners. He doesn’t deny that; he frames it as inevitability. Markets have “broadened and deepened,” therefore policy must adapt.
What makes the quote work is its bureaucratic understatement. It smuggles a large concession - finance’s dominance - inside language that reads like a routine briefing. It’s an argument for a world where stability means protecting the plumbing of asset valuations, because if that plumbing breaks, everything else floods.
The intent is to normalize a shift that used to be controversial. Monetary policy, in the old civics-book version, targets inflation and employment; markets are just one channel among many. Geithner hints that this hierarchy is flipping. If “asset prices” are now “more important,” then the Fed isn’t just managing the cost of money, it’s managing the mood and solvency of a financial ecosystem that can seize up overnight.
The subtext is unmistakably post-2008. Geithner, as Treasury Secretary in the aftermath of the crisis, lived through the moment when collapsing asset prices weren’t a Wall Street problem; they were a mass layoff engine. His phrasing also anticipates a political problem: if central banks watch stocks, housing, and credit spreads more closely, they will be accused of privileging asset owners. He doesn’t deny that; he frames it as inevitability. Markets have “broadened and deepened,” therefore policy must adapt.
What makes the quote work is its bureaucratic understatement. It smuggles a large concession - finance’s dominance - inside language that reads like a routine briefing. It’s an argument for a world where stability means protecting the plumbing of asset valuations, because if that plumbing breaks, everything else floods.
Quote Details
| Topic | Money |
|---|---|
| Source | Help us find the source |
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