Can the New Fed Boss Shrink QE Without Crashing Everything?

The David McWilliams Podcast

David McWilliams

News & Politics

4.5 • 692 Ratings

🗓️ 12 February 2026

⏱️ 44 minutes

🔗️ Recording | iTunes | RSS

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Summary

If central banks “control money,” why do we still get credit booms, banking crises, and bubbles, and what can a new Fed chair actually do about it? Who actually controls money, the central bank, commercial banks, or the markets? We break money into two parts: currency and finance . Once you see that split, a more unsettling reality appears: central banks can set the price of money (interest rates), but they don’t directly control the quantity, because commercial banks create new money every time they approve a loan. From fractional reserve banking and the “pull” model of credit creation, to why Treasuries sit at the centre of the whole machine, we explain what central banks actually do Can Kevin Warsh tighten and cut at the same time? Markets moved on a single sentence. The politics want low rates. The plumbing wants discipline. Only one of those can win.

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Transcript

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0:00.0	On the podcast today, who controls money?
0:05.0	Central bankers are the market, is it push, is it pull?
0:09.7	And ultimately, will the new Federal Reserve Governor in the United States achieve what he wants to achieve?
0:16.6	That's all coming up in a couple of minutes.
0:19.7	Just a quick note before we start. why don't you join the crew?
0:24.9	That's the David McWilliams podcast crew.
0:27.7	It's David macwilliams.a.e. forward slash crew.
0:30.3	Now, what you're going to get from joining the gang is every episode will be ad-free.
0:35.3	There'll be a full archive of past premium episodes.
0:38.4	There's going to be access to the macroeconomic audio course, which is every Friday, fresh new lecture every Friday.
0:44.8	And we're going to have a Q&A once a month where I'm going to be available to answer all your questions.
0:51.0	You'll have pre-sale access to live shows, podcast shows, priority access
0:55.6	to Kilkenomics and dokey book festival tickets, and you will be in the mix for signed
1:03.1	book giveaways. That's all, david macwilliams. i.e. forward slash crew. Join the crew.
1:10.4	To understand the economy, you have to understand human nature.
1:16.5	This podcast is powered by ACAST.
1:22.5	How are you doing there?
1:23.8	It is podcast time.
1:25.6	And as this podcast is going out on a Thursday, we're going to really pick up where we left off on Tuesday.
1:32.7	We were talking on Tuesday about not necessarily just cryptocurrencies and Bitcoin and actually we're doing Archimedes. We were doing Newton. We were doing Dante. We were all over the shop.
1:42.0	It got very scientific. Very scientific. I know where all John's head was melted. I love all that stuff. But what we're going to do this time around is we're going to, John, look at central banking. Yes. And we're going to, it's going to be a little bit wonkish this particular podcast. But I think it's important. More wonkish. More wonkish. No, but I think it's important,
2:01.6	right? Because there's a lot of talk about economics, finance, monetary economics, currencies,
	...

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