American Monetary Association 437: Joseph Wang- Mortgage Rates Will Go Even HIGHER!
Jason Hartman invites Joseph Wang aka The Fed Guy, to the show today. Who better to talk about the inner workings of the Federal Reserve than someone who actually worked there! Joseph Wang is a former senior trader on the open markets desk at the Federal Reserve and the author of Central Banking 101.
Jason and Joseph tackle the biggest question on everyone’s mind: will mortgage rates go higher? How much higher can they go? Why did the Fed wait so long to start quantitative tightening and raise rates? Why didn’t they do it more gradually?
Do you think Powell really thought inflation was transitory as he kept saying? It seems there was a political basis for him thinking that way, which filtered into policy and partially resulted in the huge inflation we're seeing right now. But what gives? If you don’t raise rates in order to avoid increased unemployment, then inflation will continue.
Joseph Wang also gives his take on the Fed’s response during times of economic crisis such as the Great Recession and the recent pandemic. Was it right of the Fed to get involved and stimulate the economy, or should they have let the economy and markets work themselves out?
Is the Fed part of a greater conspiracy? Is there a man behind the curtain pulling the strings? Joseph Wang tells all!
Key Takeaways:
0:28 Welcome Joseph Wang, former senior trader on the open markets desk at the Federal Reserve, author of Central Banking 101
1:33 Interest rates and mortgage backed securities
4:03 Quantitative easing - buying mortgages and treasuries, quantitative tightening - higher mortgage rates
7:21 Raising the borrowing rate above the inflation rate
9:33 Rents are going higher
11:36 Short term vs long term interest rates
12:55 Decreased labor supply and higher wages
14:33 China is the fastest aging country in the entire world
17:24 The Fed is absolutely political
21:37 Debt to GDP ratio and the dollar collapse
24:22 Why do other countries buy dollars?
27:53 Bloodbath in the cryptocurrency markets
29:53 Understanding the Fed - is there a man behind the curtain?
31:56 Was the Fed right to interfere during Covid and the Great Recession?
34:53 What is a shadow bank?
36:56 The story behind Long Term Capital Management
37:58 Economic outlook: be cautious with financial assets
39:36 Joseph Wang’s book Central Banking 101, learn more at FedGuy.com, follow Joseph on Twitter @FedGuy12
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