Everything You Know About the Economy is Wrong with Jeff Snider

 
 

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“The inflation target is, pardon my French, bullshit. And it’s supposed to be: it reinforces the idea that the Federal Reserve is a central bank, and therefore, it is targeting inflation and just responsible for inflation; but it simply reinforces what the Federal Reserve actually does, which is trying to manipulate opinions and emotions.”
— Jeff Snider

SHOW DESCRIPTION

Jeff Snider is co-host of the Eurodollar University podcast and Head of Global Research at Atlas Financial Advisors. In this interview, we discuss the fundamentals of money, how the Eurodollar controls the global monetary system, and signals of a deflationary depression.

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The common narrative about the global economy is bleak. Money printing by central banks has been out of control. This new money fed into the economy and resulted in runaway inflation. Years of interest cuts to stimulate economies means cash is now trash, whilst economies are stagnating. Debt is unmanageable. The search for alpha is focused on wealth protection.

But others think this narrative is wrong. Our perceived reality is a mirage. Central banks are not in control of the levers of money, they are mere bystanders playing the role of the wizard behind the curtain. The global monetary system is controlled by an opaque and unregulated dollar exchange market developed in the 1950s: the Eurodollar system.

The Eurodollar market is sending signals that defy the forecasts that inflation will endure. The market predicts inflation will be transitory. In its wake, an aggressive period of deflation will soon rock the global economic order. Various economists over time have argued that whilst inflation is damaging, deflation is a worse evil. It has been blamed for depressions throughout history.

If these forecasts are right, we could be about to enter a period of significant economic stress.

Whilst there is consensus on the cause of the current economic malaise, i.e. profligate behaviours within the financial industry, opinions on solutions couldn’t be more different. Those who follow Eurodollar signals believe global financial systems need more US dollars in the form of debt. A lack of liquidity is leading to a lack of risk-taking that is hurting the global economy.

So, as we stand on the brink of widespread societal hardship, we have a representation of cause and response at odds with conventional wisdom. With the stakes so high, can we afford to reject these emergent opinions?

TIMESTAMPS

00:03:26: Introductions
00:05:12: Jeff's background
00:05:56: What is money?
00:11:55: Properties of a good monetary system
00:16:41: Splitting unit of account/medium of exchange and store of value
00:21:07: The eurodollar, and Triffin's paradox
00:36:28: The consequences of ledger money systems
00:40:45: False inflation targeting, and the Great Inflation
00:49:46: Creation of central bank reserves
00:52:39: Three reasons for quantitative easing
00:56:59: The pandemic and the resulting supply shock
01:01:16: Chart depicting historical inflation
01:05:43: The demand for Safety and liquidity
01:09:32: What actually drives inflation
01:17:57: The silent depression
01:22:28: How the economy plays out in the next few years
01:26:17: Backwards elasticity, and preparing for recession
01:32:32: Japan's decades of deflation and depopulation
01:36:06: Final comments

 

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SHOW NOTES

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