Trouble Brewing with Sovereign Debt | Weekly Round Up

Michael and Mark take a break today for the Thanksgiving holiday, and welcome Jack Farley from Forward Guidance onto the podcast for a special cross-over episode. This episode from Forward Guidance is with William White, senior fellow at the C.D. Howe Institute, and Joseph Wang, former senior trader for the New York Federal Reserve.

They discuss why economic forecasts are so often wrong, how the world can escape the “debt trap,” and how central bankers face a trade-off between price stability (low inflation) and financial stability.

William White’s work can be found here: https://williamwhite.ca/

Joseph Wang’s writings can be found here: https://fedguy.com/

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Academic papers referenced:

"Where Has All the Liquidity Gone?" by Raghuram Rajan and Viral Acharya: https://rb.gy/n47fah

"Why Do We Think That Inflation Expectations Matter for Inflation? (And Should We?)" by Jeremy Rudd: https://rb.gy/4wjzx8

"Some Unpleasant Monetarist Arithmetic" by Thomas J. Sargent & Neil Wallace: https://rb.gy/53kikq

William White's recent presentation on the future of policy modelling:

https://rb.gy/robwk2

This episode is sponsored by Curve. Curve is unlike any other credit card. It gives you the power to connect multiple credit and debit cards into one, convert your cashback into crypto rewards, Go Back in Time ®, create Smart Rules, and more. Apply now through https://link.curve.com/blockworks_on_the_margin, you’ll earn $20 in Curve Cash after your first transaction. So sign up today! Terms and conditions apply.

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Timestamps:

(00:00) Introduction

(01:09) Looking Back At 2022

(04:20) Quantitative Tightening (QT) is Causing Disruptions

(11:55) "The Central Bankers Have Made A Profound Ontological Error"

(23:17) Does Fed Chair Jay Powell Pay Attention To Economic Models?

(25:25) Algorand Ad

(27:09) If Inflation Is Supply-Side Driven, What Should Central Bankers Do?

(40:43) The Debt Trap

(46:04) Powell Is Not Worried About a Recession - Is This A Mistake?

(54:39) Getting Out Of The Debt Trap

(58:36) The Fed Has Lost A Lot Of Money

(01:04:22) A Global Economic Slowdown is Here

(01:09:52) Crypto Contagion and the Fall of FTX

Disclaimer: Nothing discussed on On the Margin or 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.