Kansas City Fed President Jeffrey Schmid on the First Jackson Hole of the Warsh Era

“We move five to ten trillion dollars a day through the systems,” Kansas City Fed President Jeffrey Schmid said at the 49th Jackson Hole Economic Symposium. “I’ve seen the words ‘atomic settlement’ in the marketplace, which is actually when payments are going to be instant.” That fact — trillions in daily flows on the verge of becoming instantaneous — anchors his argument that the “boring” topic of payments innovation is anything but. For Schmid, the shift toward instant settlement forces central bankers to think harder about two things: duration and liquidity. “If the payment is instant, then there’s gotta be proven liquidity behind it to settle it,” he explained. This technical reality connects directly to the broader macroeconomic backdrop of high bond yields, persistent inflation, and a new Fed chair.

The yield curve as a supply-and-demand signal

Schmid resists the temptation to treat the 10-year yield above 5% as a simple policy signal. Instead, he frames it in terms of supply and demand for credit across the economy. The Fed influences short-term rates directly, but longer-term rates are shaped by competition between commercial and public borrowers. “If there’s more demand for credit, you’re gonna have a competition between commercial and public credit, and that’s going to affect the price,” he said.