Peter Stella, Former Head of the IMF Central Banking Division, joins Joseph Wang, former senior trader for the New York Fed and author at Fedguy.com, and Jack Farley for a wide-ranging discussion on:
-what really causes inflation
-monetarism, fiscal theory of the price level, and modern monetary theory (MMT)
-the unrealized losses on the Fed’s balance sheet
-why yield curve control likely won’t be necessary (or so Peter argues)
-the longer the duration of a governments’ debt, the less inflation is required to inflate it away
-when a central bank incurs unrealized losses, who “wins” and who “loses”?
Filmed on March 29, 2023.
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Follow Joseph Wang on Twitter https://twitter.com/FedGuy12
Joseph Wang’s writings: https://fedguy.com/
Joseph’s latest piece, “Ameridollars”: https://fedguy.com/ameridollars/
Peter Stella on Twitter: https://twitter.com/Stellar_Consult
Peter Stella’s work: https://www.centralbankarchaeology.com/
“Do Central Banks Need Capital?” by Peter Stella:
https://www.imf.org/en/Publications/WP/Issues/2016/12/30/Do-Central-Banks-Need-Capital-2260
Follow Jack Farley on Twitter https://twitter.com/JackFarley96
Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidance
Follow Blockworks on Twitter https://twitter.com/Blockworks_
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Timestamps:
(00:00) Intro
(00:15) Peter Stella's Background At The International Monetary Fund (IMF)
(03:55) Joseph Wang On The Flaws Of Monetarism
(05:52) Milton Friedman: It's The Government That Prints Money
(07:56) The Fiscal Theory Of The Price Level
(13:38) Modern Monetary Theory (MMT)
(24:12) Real Value Of U.S. Debt Is Lower Now Than March 2020
(37:33) Permissionless
(38:38) The Fed Has Huge Unrealized Losses On Its Balance Sheet
(45:29) Details About The Fed's Mortgage-Backed Securities (MBS) Purchases In 2020
(51:51) Did The Fed Help Wealthy Homeowners Refinance Their Mortgages In 2020?
(54:21) Blockworks Research Plug
(55:22) When The Federal Reserve Has Unrealied Losses On Its Balance Sheets, Who Loses and Who Gains?
(01:13:50) Joseph Wang's Summary Of This Conversation
(01:15:08) Yield Curve Control and Potential Debt Death Spiral
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
