Peter St Onge Podcast
Episode 35: Weekly Roundup 12.18.2023
Dec 18, 2023
The podcast discusses topics such as the Federal Reserve's balance sheet and its impact on the economy, central banks buying gold as a backstop, the broken link between economic sentiment and unemployment rates during COVID, the confusion in global financial markets caused by conflicting signals from oil, gold, and government bonds, and the potential impact of a recession on the economy.
25:43
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Quick takeaways
- The Federal Reserve faces a dilemma of either reducing its $8 trillion balance sheet, potentially causing high inflation, or holding the assets and risking inflation leaking out over time.
- Central banks' increasing gold purchases suggest concerns about the economy and the potential need for a secure and stable asset.
Deep dives
The Federal Reserve's Stolen Goods: An $8 Trillion Mountain
The Federal Reserve owns an $8 trillion balance sheet, a result of their money-printing practices and purchasing assets like government bonds and mortgage-backed securities. The balance sheet has grown significantly since 2008, especially during COVID-19. This accumulation of assets presents a dilemma for the Fed: they must either reduce their balance sheet, leading to potential high inflation, or continue to hold the assets and incur the risk of inflation leaking out over time.
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