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The podcast delves into the concept of interest rates and how maintaining low interest rates can lead to an unnatural environment. It highlights the idea that inflation can act as a modern-day debt jubilee, eroding the real value of debt over time.
The episode discusses how the current everything bubble and speculative behaviors in various markets are influenced by the low interest rate environment set by central bankers. It explores the intertemporal disequilibrium caused by distorting the natural rate of interest.
The podcast explains the correlations between the low interest rate environment and the swelling of asset prices, particularly favoring long-term growth stocks. It mentions the effects of margin loans on stock investments alongside the rise of speculative SPAC companies.
The podcast title summarizes the essence of tying interest rates with the value of time. It reflects on the impact of interest rates on financial activities over time and how aberrations like negative interest rates can lead to unconventional financial phenomena, akin to moving the clock backwards in financial markets.
The podcast delves into the effects of zero or negative interest rates on financial markets, highlighting the shift in investment strategies where bonds with negative yields were bought for capital gains, while stocks were valued for income. The narrative explores how the traditional roles of bonds and equities were reversed as interest rates veered into negative territory, creating a surreal market dynamic. The central role played by central banks in issuing reserves to purchase securities is emphasized, pointing to a key driver behind the unusual market behaviors.
The conversation extends to the potential risks in the current financial landscape due to artificially low interest rates and governmental responses to economic crises. The podcast touches on the emergence of new monetary technologies like cryptocurrencies and debates the role they could play in challenging the existing financial system. There's a discussion on the implications of a central bank digital currency replacing traditional fiat currencies and the balance between privacy and state control in monetary transactions. The episode also explores the predictions for future market trends, suggesting a prolonged and challenging transition out of the ultra-low interest rate environment.
Edward Chancellor is a financial historian, journalist, and author of, "Devil Take the Hindmost: A History of Financial Speculation" and his latest, “The Price of Time: The Real Story of Interest”
The two books link together the history of money and finance, and human culture.
In today’s episode we explore the ways in which money and finance is embedded deeper in our lives than we may have previously thought.
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------ We’re living in the era of Central Banker Capitalism, low interest rates and everything bubbles. Is this a new era? What does history tell us will happen next?
Edward Chancellor is going to help us answer these questions. And along the way, you’ll learn timeless lessons about interest, debt, and the time value of money.
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------ TIMESTAMPS:
0:00 Intro 8:24 Edward’s Book Overlap 19:32 Speculative Bubble’s Inevitability 26:27 Interest, Debt, & Loans 31:15 Debt Jubilee & Inflation 35:05 The Necessity of Inflation 41:55 The Natural Rate of Interest 53:35 The Everything Bubble 1:04:10 The Price of Time 1:07:38 Devil’s Take the Hindmost 1:10:40 Have We Learned From Past Bubbles? 1:17:30 Austrian vs. Keynesian Economics 1:21:20 Edward’s Thoughts on Crypto 1:38:50 Predictions: What Happens Next? 1:42:27 Closing & Disclaimers
------ RESOURCES:
The Price of Time https://www.amazon.com/Price-Time-Real-Story-Interest/dp/0802160069
Devil Take the Hinemost https://www.amazon.com/Devil-Take-Hindmost-Financial-Speculation/dp/0452281806
Primitive Money https://www.elsevier.com/books/primitive-money/einzig/978-0-08-011679-2
Digital Chicago Plan - Column In Breakingviews https://www.breakingviews.com/columns/digital-chicago-plan-fixes-many-financial-woes/
Irving Fisher 100% money https://mises.org/library/100-money
----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures
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