Odd Lots

Josh Younger on the Origin Story of the Shadow Banking System

Nov 7, 2022

Josh Younger, JPMorgan's global head of asset and liability management research, explores the shadows of financial history. He dives into the pivotal year of 1953, revealing its surprising parallels to today's economic turbulence. Younger discusses how early decisions shaped the repo market and the enduring impacts these have on current bond stability. The conversation examines the Federal Reserve's strategies in navigating post-war economics and the evolution of a complex shadow banking system that still influences modern finance.

45:15

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Episode guests

Josh Younger

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Episode notes

Intro

2min

Lessons from 1953: Economic Echoes

6min

Balancing Bonds: The Fed's Transition Strategies

7min

The Evolution of the Bond Market Post-WWII

19min

The Transformation of the Shadow Banking System

2min

The Repo Market: Evolution and Impact

13min

Connecting with Odd Lots and Introducing Innovative Services

2min

There are a bunch of historical analogies that people like to reach for in order to describe some of the economic trends we're seeing today. There's obviously the period of high inflation in the 1970s and early 1980s, or the disruptions caused by the Spanish Flu pandemic around 1918. But there's also a single year -- 1953 -- which not only contains some eerie similarities to today's economic environment, but also ended up having far-reaching consequences that reverberate all the way to 2022. On this episode, Josh Younger, JPMorgan's global head of asset and liability management research and strategy, tells the origin story of the decisions made in 1953 that helped create the vast repurchase or repo market. At a time when there are plenty of concerns over the stability of the market for US bonds, we go back in time to explore the reasons why repo exist at all.

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