Transcripts
Erik: Joining me next on the program is Danielle DiMartino Booth, author of Fed Up. Danielle and I spoke off the air and agreed since we already did a full-length interview on the book we’re going to leave that alone.
But, before going on, I just want to suggest to all of our listeners that if you missed that interview, it was an excellent one. Fed Up is an excellent book. It’s the inside story from Danielle’s experience at the Dallas Fed talking about how the Fed works from an insider perspective. It was a fascinating book. I couldn’t put it down.
We’ve decided not to focus on that though. You can go back and listen to that entire interview. It’s still there, free of charge at macrovoices.com.
Danielle, let’s move on. That book was entirely about the historical perspective of all the things that have been wrong with the Fed in your experience and you’ve been very outspoken in your critique.
There is a new horse in town, though. Jay Powell is a different kind of Fed Chairman, or so it would seem to a lot of people. What’s your take on Jay Powell? Is this guy a different story? Are you optimistic? Or is it more of the same?
Danielle: I’m cautiously optimistic. I have not founded the Jay Powell fan club just yet, but many of the things that he has done since becoming Chair of the Fed, I predicted that he would do and held my breath. And then he did them. So I’m happy as a barking seal.
One of the first things I wrote about him was that he had no agenda at all. He did not have to be at the Fed. This is a gentleman who worked for a dollar salary to educate the Congress on the perils of the United States defaulting on its debt.
And has absolutely no political fight to pick. He has no economic agenda. He’s not a PhD in economics. He doesn’t sit in a Keynesian camp or an Austrian camp, for that matter. He’s a pragmatist with a markets background and appreciates the intersection of the two.
And he also cares for taxpayer dollars, because one of the first things he did, which I implored him to do, was to implement a press conference after every Federal Open Markets Committee meeting, which, as we know, is beginning in January. So that means we have eight live meetings a year instead of what we have been contending with since Bernanke imposed the press conference at every other FOMC meeting policy years ago.
Erik: Welcome to Part 7 of MacroVoices Eurodollar University with Alhambra Investments CIO, Jeffrey Snider. I’m your host, Erik Townsend. There is a slide deck to accompany this podcast and we recommend that you download it before listening, as we’ll be referring to the charts and graphs it contains throughout this program. You’ll find the download link, along with the other parts of this series at https://www.macrovoices.com/edu (for Eurodollar University).
At the end of the last episode, Jeff explained in detail how the system had broken down to the point where collapse was accelerating and starting to get out of control. Now let’s jump back in right where we left off as Jeff starts to explain the Fed’s efforts to intervene. We’re on Slide 93 on the PowerPoint deck.
Erik: Okay, Jeff, given that description of the problem, moving on to Slide 93, where and how does the Fed try to intervene, and how successful are they?
Erik: Welcome to Part 6 of MacroVoices Eurodollar University with Alhambra Investments CIO Jeffrey Snider. I’m your host, Erik Townsend. There is a slide deck to accompany this podcast and we recommend that you download it before listening, as we’ll be referring to the charts and graphs it contains throughout this program. You’ll find the download link, along with the other parts of the series at https://www.macrovoices.com/edu (for Eurodollar University).
As you know, it was a challenge to decide in the editing room where to break Parts 5 and 6 apart, because Jeff Snider was really on a roll, talking about how the sheer panic across the industry associated with the subprime mortgage crisis was creating a liquidity crisis, even in cases where the underlying credit itself was actually sound. We cut off just before Jeff began to explain how gold would come into the story as the collateral of last resort.
Just to refresh your memory, we’re going to rewind by a couple of minutes and replay the final two minutes or so of Part 5, just to keep the continuity of thought going as Jeff brings gold into the story.
Be sure to download the slide deck that accompanies this conversation. You’ll find the download link at https://www.macrovoices.com/edu (for Eurodollar University).
We left off at Slide 45 in the deck. Now here is Alhambra Investments CIO, Jeffrey Snider.
Erik: Welcome to Part 5 of MacroVoices Eurodollar University with Alhambra Investments CIO Jeffrey Snider. I’m your host, Erik Townsend. There is a slide deck to accompany this podcast and we recommend that you download it before listening, as we’ll be referring to the charts and graphs it contains throughout this program. You’ll find the download link, along with other parts of the series at https://www.macrovoices.com/edu (for Eurodollar University).
Now, you might be wondering how this could be Part 5 in what we’ve described in the past as a four-part series. The original four-part series, produced in 2017, focused on the history of the Eurodollar system before the great financial crisis. In Season 2 of Eurodollar University, produced in 2018, we’re going to analyze how and why the system broke down, beginning on August 9 of 2007, and hasn’t been the same since. Season 2 adds Parts 5, 6, and 7 to what has now become a seven-part series overall.
So, without further ado, let’s bring back Alhambra Investments CIO, Jeffrey Snider.
Erik: Jeff Snider, thanks so much for joining us again for Eurodollar University, Season 2. This is Part 5 in what was originally conceived to be a four-part series. And the reason for that is the original series really was focused on the history of the Eurodollar system up until it broke down in 2007. In Season 2, we’re going to talk about what’s happened since 2007. Thanks so much for being with us and doing this again with us, Jeff.
Erik: Joining me next is Jesse Felder, editor and publisher of The Felder Report, one of the most popular newsletters, as well as the occasional Felder Report podcast, which is also extremely popular with listeners.
Jesse, thanks so much for joining us. I’ve got a lot I want to cover. First of all, listeners, Jesse put a great slide deck together for us. The download link is in your Research Roundup email. We’re going to start with that. Then there is also a blog post to discuss, also linked in your Research Roundup email.
Jesse, let’s start with this chart deck. As I go to Chart 2, I notice that you’re talking about some popular concepts: dot com bubble, housing bubble, and then everything bubble. I love the metaphor. It feels good.
But I want you to be really specific with me. What are you talking about, “everything bubble?” Exactly what do you mean? Because dot-com bubble and housing bubble – everybody knew exactly what that meant.
Why is it an everything bubble? And what is causing there to be a price inflation bubble in so many different asset classes all at once?
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