^^

Second this!

I have too agree. Jeff is in my top 5 as an RVT guest.

Yes. I think every guest who comes on and talks about the problems should be ask what's their solution

He does tell you. He says in the 1930's governments came up with Bretton Woods, provided stability, but got out of the way and let the economy and market forces take over. From the interview: "Again, that's my point. We don't need the government to get in the way and try to hamper what are inherent and natural economic processes. We need the government to realize that it's limited in what it can do and realize that what it needs to do is essentially its responsibility is to create and foster that stability and therefore let the economy grow, let it breathe, let it let it go."

Roberto, FYI Bretton Woods was actually a 1944 conference & subsequent agreement. I think we all know (at least those of us that read history) that a new system is definitely coming. The problem is that normally it takes a crisis to get politicians to act and when they do they then use the crisis to take unpopular steps "for the good of the nation", even when it was obvious that the system was under threat for a long while. I think Bretton Woods served the world, but particularly the USA, reasonably well for almost 3 decades. What is incredible is that if you look at a suite of statistical data you can clearly see everything starting to go "tits up" once the dollar was effectively decoupled from gold by Nixon.

I have an idea on what happens when the Fed buys bonds. In the case of the Fed buying government bonds, i.e. QE, it cannot buy the bonds directly from government auctions, but it buys them on the open market as they are sold by the banks. Ultimately those dollars go to government spending, but a portion of them go to the banks that were already buying them. In that case, if banks get more dollars, but they are still too risk averse to be issuing loans, the dollars end up being used by the banks (at their trading desks) to inflate risk assets. At least that is what I think was happening after the GFC. And it is not just banks - it is who-ever buys the bonds at the government auction with the intention of turning around and selling them to the Fed. I don't know how much they make on the turn around. If anyone can point out a flaw in that argument, please say so. I have read things that indicate this is what is happening, but I would be very interested to hear any other ideas. As for the Fed buying the corporate bonds, like they are doing now, naturally those bonds go to keeping corporations afloat. In particular, it keeps insolvent companies from going insolvent, and gives them enough time to try and scratch things together and perhaps sell their smaller company to a larger company. I have heard that some of this has been going on since the stimulus began in March and April. The negative effect that this has is two-fold. First, if insolvent companies would be allowed to go insolvent, then a lot of the top minds at those companies (some of them are really smart but just got caught in this difficult environment) would be out of work. But because they are smart, they would eventually figure out something else to do and would become productive again, possibly employing people again, which would benefit the entire economy. Instead, they end up staying at work at insolvent companies that have laid off most of their workers, keeping only the top management receiving salaries (from Fed funds through junk bond purchases), and working on how to either get out of the hole with the new Fed funds or working on convincing a larger company to buy them. But the labor force remains unemployed for a long time, and the shareholders and bondholders (who were taking a risk by owning shares and bonds) don't end up losing out (even though the company is insolvent), along with company management. So this is the mechanism by which Fed bond purchases perpetuates the wealth gap. This is why it is of such grave moral hazard for the Fed to do this. Eventually the labor class gets fed up with seeing the wealthy get wealthier while they are unemployed and have nothing, and suddenly we have a socialist revolution on our hands.

Sadly, there are fewer and fewer regional smaller banks around - this is part of the problem. There was HUGE consolidation after 2008, and a lot of signs point to this as one of the key weaknesses of the economy over the last decade.

Jeff does a great show with Emil Kalinowski on youtube. search eurodollar university

Watching every episode the minute it's uploaded :)

Agreed, that would be a great pair to discuss the financial conditions or rules we need for genuine future growth.

Yes! Two of my absolute favorite outside the box thinkers!

Wears shirt and tie at home too. Top man

No pants tho. Smart man.

If it happens just refresh the browser and then it's fine.

I had trouble with audio when the video goes on 2x. Fixed it by downloading the video first.

When you file a bug report it's only effective when you tell what operating system, browser type and version, and ISP you are using. "It doesn't work. Fix it." isn't really helpful because there are thousands of permutations of software out there.

"Jeff Snider has been one of the most insightful experts..." agreed

I don't want to speak for Jeff, but having conducted a few interviews with him now and knowing his keen focus on issues surrounding collateral I'd lean that way. It is also briefly discussed in this interview with Steen Jakobson and Roger Hirst: https://www.realvision.com/shows/the-interview/videos/the-next-waves-of-the-financial-crisis I think both Jeff and Steen would agree that if a history of success and a solid business model isn't enough to get a loan we will always be constrained by the supply of what is considered to be sufficiently safe/liquid collateral and that credit will find its way to those that have collateral and not those who have the best ideas.