This is a special edition of Macrovoises with hedge fund manager Eric Townsend.

The premier financial podcast targeting professional finance, high net worth individuals, family

offices, and other sophisticated investors.

Now for this special edition of Macrovoises, here's hedge fund manager Eric Townsend.

Macrovoises All Stars episode number 35 was recorded on July 22nd, 2019.

I'm Eric Townsend. All Stars Luke Groman is back with us today. Luke, what's caught your attention

this week? Hey Eric, thanks for having me on against. Great catching up. What's caught my attention

recently has been the degree of confusion about why the Fed is still likely to cut rates next week

despite the better than expected job numbers three weeks ago, followed by last week's better than

expected retail sales number. I've read a number of articles talking about how the Fed is

cherry picking data to arrive at the need for a rate cut. What I find fascinating is that still

virtually no one is discussing what we think is the real reason for the Fed cutting rates, which is that

US fiscal deficits are increasingly being financed by the US domestic private sector.

And as we've discussed in our last couple conversations, the true message of Fed funds rates

going over interest on excess reserves back on March 20th, 2019 and staying there ever since

is that the US private sector does not have enough balance sheet to finance US government deficits

without the Fed's help. And so, you know, in our view, the Fed is cutting rates to provide that help

to the US private sector and financing US government deficits. Luke, I'm glad you brought up this

topic of Fed funds going over I O E R. In last week's Macrovoises All Stars discussion with Jeff

Snyder, Jeff mentioned the importance of Fed funds going over I O E R as well. I'm curious, Luke,

did you happen to catch that interview and what were your thoughts on one of Jeff's major

conclusions that banks are afraid of something out there, which is the reason perhaps that Jeff

...