The Macro Moment: The Fed Manages Hype
We are conditioned to believe in the power of the Federal Reserve and other central banks. Here we feel they have their fingers on the pulse of the economy, pulling strings as needed to avert disaster. But really, what do they control?
In this video I discuss how, ultimately, the Fed delivers hype. That is what their job is. The idea of "Dont fight the Fed" is promoted by the financial media, to most people's loss. Here we cover some of what makes the situation different from what people believe.
▶️ 3Speak
0
0
0.000
Dollar dollar bill, that's a sinkhole... this is why cryptocurrencies will rise and change the entire financial world system.
Posted Using LeoFinance Beta
When it comes to how much money is actually in circulation, we have to trust numbers we get from the central banks and the commercial banking system. Cryptocurrencies, on the other hand, are transparent and their supplies (minus some privacy coins) can be audited by anyone. Their total supply and/or emission schedule is open-source and verifiable. It will take some time, but eventually the consensus will be that crypto is a better form a money.
Thank for sharing boss
Summary:
In this video, the speaker challenges the conventional thinking around the role and power of the Federal Reserve. He argues that the Federal Reserve primarily manages expectations and is not as powerful as commonly believed. The speaker delves into the concept of quantitative easing and how it actually tightens economic conditions rather than easing them. He also discusses the impact of liquidity crises, the importance of the dollar in global transactions, and the role of the bond market in determining interest rates. Additionally, he highlights the economic struggles globally, including China's dependence on the U.S. dollar.
Detailed Article:
The speaker starts by asserting that the Federal Reserve primarily manages expectations, contrary to the widespread belief in its omnipotence. He challenges the narrative that the Fed controls the money supply, arguing that it does not print dollars as commonly perceived. The speaker emphasizes that the Fed's actions, such as quantitative easing, can actually tighten economic conditions rather than stimulate growth as expected.
He discusses the liquidity crisis and the scarcity of U.S. dollars in the global economy, pointing out that international players require dollars to participate in treasury auctions. This scarcity of dollars can lead to economic contraction and hinder efficient global transactions. The speaker emphasizes the significance of the dollar as the reserve currency in facilitating trade between countries.
The video also touches on the role of the bond market in determining interest rates, highlighting that the market ultimately dictates whether rates go up or down. The speaker suggests that despite the Fed's attempts to raise interest rates, economic conditions tightening typically lead to lower rates, citing historical precedents like the Great Depression where interest rates decreased.
Furthermore, the speaker discusses the challenges faced by China, despite having its own currency, due to its dependence on U.S. dollars for trade. He explains how China's economy is essentially dollarized, reflecting the interconnectedness of global economies and the dominance of the dollar in international transactions.
In conclusion, the speaker encourages viewers to rethink the conventional wisdom regarding the Federal Reserve's control over the economy and monetary policy. He hints at providing further evidence and insights in subsequent videos. The overarching theme revolves around questioning mainstream narratives about central banks, monetary policy, and the global economic landscape.