Why Yield Curve Control Failed - FedWatch 124

Fed Watch is a macro podcast like no other, with a clear contrarian thesis of a deflationary financial system’s breakdown leading to bitcoin adoption. We question narratives and schools of thought, trying to form our own understanding. Each episode we use current events to question mainstream and bitcoin narratives across the globe, with an emphasis on central banks and currencies.

In this episode, CK and I dive deep into yield curve control (YCC), after a discussion of bitcoin and other macro charts like the dollar and US Treasury yields. What is YCC, what are its aims, has it been successful, can it ever be successful? Of course, we look at this both from a general perspective but also specifically in the case of Japan, since the big news this week was the Bank of Japan (BOJ) relaxed their YCC band from +/- 0.25% to +/- 0.5%.

Our last topic of the day is the 2nd and final revision to US Q3 real GDP. It increased from the original estimate of 2.9% to 3.2% annualized. This is fairly big news, because so many people are utterly convinced the US is about to experience a horrible and deep recession in 2023. The main influences in Q3 and likely in Q4, have been a plunging nominal GDP and plunging price effects. Therefore, it becomes a race of which falls faster, GDP or “inflation” as to whether the real GDP will be negative or positive.

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