BREAKDOWN: How Monetary Policy Undermined American Resilience
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 10 September 2020
⏱️ 15 minutes
🧾️ Download transcript
Summary
A legacy of artificially low interest rates is not just the death of savings, but a forced buying into the perpetual growth machine of financial asset prices.
This episode is sponsored by Crypto.com, Bitstamp and Nexo.io.
Today on the Brief:
- Jobless claims slightly exceed expectations at 884,000
- ECB keeps policy unchained; euro rises versus dollar
- Survey: What’s the right way to understand the business and market cycle in the U.S. today?
Our main discussion: interest rates and the undermining of American resilience.
In this discussion, NLW looks at a number of artifacts of the low interest rate world, including:
- Increasing cost of child care
- Declining share of total net worth held by bottom 50%
- New startups using lottery tactics to incentivize savers
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Transcript
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| 0:00.0 | Everyone has been pushed so far away from savings and so far out onto the risk curve. |
| 0:06.9 | There are simply no financial options for savers other than stocks. |
| 0:11.9 | This creates a cycle where stocks have to keep going up so it doesn't crater the system. |
| 0:18.6 | But designing the entire system around this means that we have to |
| 0:22.8 | keep inflating the asset bubble more and more. If and when we experience the mother of all |
| 0:29.2 | asset bubble pops, what are those, quote, savers left with? Put differently, stocks are |
| 0:35.1 | really safe until they're not. |
| 0:42.0 | Welcome back to The Breakdown with me, NLW. |
| 0:47.8 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:55.6 | The breakdown is sponsored by crypto.com, BitStamp, and nexo.io, and produced and distributed by CoinDesk. |
| 1:02.9 | What's going on, guys? It is Thursday, September 10th, and today we are talking about how monetary policy undermined American resilience. First, however, let's do the brief. First up on the brief today, it is Thursday, which means it is jobless claims day, and this |
| 1:15.4 | week we saw 884,000 new claims versus about 850,000 that were expected. |
| 1:23.5 | The total number of people receiving state and federal assistance, which includes help for self-employed |
| 1:30.0 | and gig workers, stands at 29.6 million. So a huge, huge portion of workers are getting some |
| 1:37.3 | type of assistance or another. Basically, the way to interpret this is one great big holding pattern. |
| 1:46.6 | For some things are getting better. |
| 1:54.9 | For others, it's still really difficult. We're stuck in this in-between that has a lot to do with, again, |
| 2:00.3 | the health, the lack of clarity about the future, changes in consumer spending that result from that, it really is this |
| 2:02.1 | confluence of factors that keep things treading water, and it's hard to see how we exactly |
| 2:08.4 | get out of that. It feels very unlikely that consumer confidence is going to soar in the way |
| 2:14.4 | that we need it to to bring consumption back, to get companies back to hiring |
| 2:18.3 | again, et cetera, et cetera, et cetera, without some major change in health outcomes. And it looks |
... |
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