We Study Billionaires - The Investor’s Podcast Network TIP233: Dr. Jim Rickards - Central Banks, QT, QE, & the FFR (Business Podcast)
Mar 10, 2019
In this discussion, Jim Rickards, a renowned expert on central banking and author, dives into the intricate world of monetary policy and its far-reaching effects. He explains how the Federal Reserve is bracing for the next recession and the implications of a strong dollar as an economic strategy. The conversation also touches on the US dollar's dominance and the counter-efforts by countries like Russia and China. Additionally, Rickards warns about the risks posed by passive investing and algorithmic trading in today's unpredictable market.
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Dollar Dominance and Weaponization
- The US dollar's dominance in global reserves, payments, and the oil market gives the US significant political and military leverage.
- This power is further amplified by currency swaps, allowing the US to influence other nations' financial systems, as seen in the 2008 crisis.
Market Volatility and Fed Response
- The 20% drop in the stock market around Christmas 2018 did not immediately deter the Fed from its course.
- However, subsequent market reactions and historical parallels led to a significant market bounce, highlighting the interplay between Fed policy and market sentiment.
Rickards' 2009 Rate Hike Advocacy
- Jim Rickards recalls advocating for a rate hike in 2009 on CNBC, contrary to the Fed's prolonged zero-interest-rate policy.
- He argues that QE2 and QE3, unlike the necessary QE1, primarily inflated asset values rather than stimulating substantial economic growth.
