Peter Stella & Joseph Wang on Debt Death Spirals, Monetarism, and The Fiscal Theory Of The Price Level

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.