Money and Banks

Recorded in Nashville, Tennessee, on September 23, 2023. Includes audience Q&A period.

If the only antidote offered to prevent a 2008-style contraction is monetary easing, then the risk of stagflation is even higher. Without drastic cuts to deficit spending, or a recession, the likely outcome is stagflation.

If we read between the lines, it is apparent that the Fed is hoping that price inflation will fall to politically acceptable levels without any additional tightening, and without a recession.  But "hope" is all the Fed has. 

Fed policymaking is all about political expedience. When we see Fed policy, we must keep in mind that "managing the economy" is secondary to managing public debt service and public expectations.

No matter the situation, bank CEOs believe that the Big Score is just around the corner. Then reality hits.

Fed policymaking is all about political expedience. When we see Fed policy, we must keep in mind that "managing the economy" is secondary to managing public debt service and public expectations.

Decades of low interest rates have ruined saving in the US economy, and banks are going to pay dearly for it.

We should not be surprised that credit in the eurozone is falling along with monetary aggregates. The entire burden of monetary normalization is falling on the productive sector, families, and businesses, while many governments continue to increase deficit spending.

The Fed wants you to believe that neither its negative capital nor its giant losses matter because it is the Fed and can print money. But it does matter because the Fed’s losses will cost not only it, but also the Treasury and the taxpayers, over $100 billion this year.

Most BRICS currencies are weak and getting weaker, and creating a new joint  "BRICS currency" won't solve the problem.  Joining together a bunch of weak currencies does not somehow create a strong currency.