BREAKDOWN: Lyn Alden’s Latest – Why Currency Devaluation Is Inevitable
CoinDesk Podcast Network
CoinDesk
4.8 • 689 Ratings
🗓️ 20 September 2020
⏱️ 37 minutes
🧾️ Download transcript
Summary
This week’s “Long Reads Sunday” reading is from macro analyst Lyn Alden and focuses on the inflation vs. deflation debate in historical context.
This episode is sponsored by Crypto.com, Bitstamp and Nexo.io.
On this week’s “Long Reads Sunday,” NLW reads macro analyst Lyn Alden’s latest: “A Century of Fiscal and Monetary Policy: Inflation vs Deflation”
The article looks at:
- When monetary policy is effective versus when fiscal policy needs to take over
- How short-term debt cycles add up to long-term debt cycles that have very different remedies
- Why long-term debt cycles inevitably end in default or devaluation
- Why the conclusion of the last long-term debt cycle in the U.S. – the 1930s and 1940s – suggests that devaluation is the most likely outcome
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Transcript
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| 0:00.0 | Welcome back to The Breakdown with me, NLW. |
| 0:09.1 | It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. |
| 0:15.3 | The breakdown is sponsored by crypto.com, BitStamp, and nexo.io, and produced and distributed by CoinDesk. |
| 0:23.3 | What's going on, guys? It is Sunday, September 20th, and that means it's time for long |
| 0:29.1 | reads Sunday. I'm going to keep the introduction this week very brief because our article |
| 0:34.3 | is very long. It is by the one and only Lynn Alden. You've heard Lynn on this show |
| 0:40.9 | and know how brilliant she is. I've called Lynn the breakout macro voice of the year, and I genuinely |
| 0:47.6 | believe that's true. Nick Carter tweeted this piece and basically asked if there was anyone |
| 0:52.9 | explaining things in macro as well, |
| 0:55.2 | and the topic is one of the most quintessential debates that we have right now. The piece is called |
| 1:02.3 | a century of fiscal and monetary policy, inflation versus deflation, and I hope you enjoy it. |
| 1:09.7 | There has been a lot of discussion lately about how effective |
| 1:12.8 | monetary policy can be. In my view, the big debate between fiscal policy and monetary policy |
| 1:18.5 | or inflation versus deflation mostly comes down to looking at a long enough historical timeline to |
| 1:24.4 | see the full context. The effectiveness of monetary policy, including |
| 1:28.3 | interest rate manipulation and asset purchases, diminishes significantly when debt is high, |
| 1:33.8 | interest rates hit the zero bound, and the money multiplier is low. The role of monetary policy |
| 1:38.8 | doesn't stop then, but it takes a backseat to supporting fiscal policy. In essence, monetary policy is effective at putting |
| 1:46.0 | the brakes on an economy, but bad at stimulating an economy, whereas fiscal spending has the opposite tilt. |
| 1:52.4 | Let's dive into some history to see how it can apply in today's economy. In this context, |
| 1:57.4 | rather than focusing on one quarter or even one year ahead, it's a high-level |
| 2:01.2 | outline of some of the fiscal and monetary environments that investors are likely to face as we head |
... |
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