FED Policy Mistake to Accelerate Inflation? with Joseph Wang

Interview Recorded - 1st of March, 2023

On todays episode of the WTFinance podcast I had the pleasure of speaking with Joseph Wang - CIO at Monetary Macro, writer at the Fed Guy, author of the great book “Central Banking 101” and Former Senior Trader at the Federal Reserve Bank of New York.

During our conversation we spoke about why QE has not cause hyperinflation, How QT is different to QE, Whether we will see a soft landing moving forward and impact high interest rates for longer will have on the markets. I hope you enjoy!

0:00 - Introduction
1:00 - Why has QE not caused hyperinflation?
5:00 - Did we know what QE would do before starting it?
6:40 - How can the FED help the economy?
9:15 - How is QT different to QE?
17:35 - How will treasury fund the deficit in higher interest rate environment?
22:30 - Why has the market remained strong with high interest rates?
25:35 - Will we see a soft landing this year?
32:05 - The FED has become political
34:55 - Todays policy similar to 1970’s?
37:25 - Changing FED tone
38:00 - What impact will high interest rates for longer have on markets?
40:15 - Geopolitical risk
43:15 - One message to takeaway from our conversation?

Joseph is the CIO at Monetary Macro and previously a senior trader on the open markets desk. The Desk sits at the center of the dollar system as its ultimate and infinite provider of dollars. It has access to virtually all regulatory and financial data, as well as open lines of communication with all major market participants. It is one of the few places in the world where one can definitively learn how the system works.

Earlier in his career, Joseph was a credit analyst and in another life he practiced law. He holds a B.A. in Economics from Northwestern University, a J.D. from Columbia Law School, and an MSc. in Financial Economics from Oxford University.

Joseph Wang -

WTFinance -

[WTFinancepodcast]

Can the FED find a way to reverse there previous blunder?

[trevordowney]

Sure, I understand the concept that Treasuries are money. But the fact remains that they "Printed" NEW currency no matter what form and this automatically debases the total amount of currency in the system. Then, when asset prices rise, people do eventually access this equity and spend it in retail which then causes inflation.

[cbar]

Always enjoy listening to Joseph Wangs analysis on Central Bank piping. Was so disappointed today to listen to neophyte commentary on US military intervention globally and how "certain groups in the USA want conflict". Coming from an Oxford Scholar I would expect a bit more sensitivity to the important role US and UK have had in maintaining a global order and protecting liberal democracies. Instead we get broad brush sweeping generalizations of suggested "unnecessary" invasions in Afghanistan Libya Iraq etc... The comment about Nancy Pelosi hugging the President of Taiwan made me cringe. Is Joseph aware that Taiwan was up to 1971 the representative of China in the UN and there is a history of protecting and supporting democracies with our allies?

[Noallegiance]

Currency to banks. Rates to the floor. Bubbles in stocks, bonds and real estate. Asset prices up. Assets used as cash machines.

The eventual result of loose policy targeted at asets is currency out on main street.

That's been turbo charged by handouts direct to consumers.

Monetary policy since 1971 is absolutely the cause of the falling value of currency against goods and services. There is no other reason that a product that hasn't changed for 60 years costs more currency units.

[HMangat]

All this interview has taught me is that doesn’t matter what degree you have or your work experience, you can still be dead wrong. Japan started QE in early 2000 and gold has 5x since then in yen. 2008 QE has resulted in gold up 2.5x in CDN

[HMangat]

Is QE technically money printing, no. does QE lower interest rates and results in tremendous amount of borrowing by everyone, yes. Has the money supply increased many times over, yes. It basically just allowing governments to keep on spending beyond their means and use more debt to pay old debt, yes. Sounds highly inflationary to me. Gold is going to keep inching higher and possibly stocks will go on a run after another correction

[darrenstewart]

The problem for America is that knowone now wants their bonds because they are paying less than inflation and loosing value. People and other countries are sick of swapping goods and services for US dept, ie bonds. People want a stable currency backed by real money which is Gold and Silver. That is why central banks are buying Gold hand over fist. Then there is the FACT that the Gold and Silver price has been manipulated by the likes of JP Morgan for the last fifty years. If they keep the Gold price down then it keeps the dollar strong. Well those days are over. Even private buying of physical Gold is skyrocketing. The writing is on the wall.

[darrenstewart]

Oh you think Japan is in a good spot. I don't think so. Their interest rates are starting to get out of control. We need to go back to the Austrian school of economics not this Bernanke rubbish of printing to infinity! It doesn't work, you can't print dept forever and expect to get away with it. Thats just dumb!