The Mirage of the Money Printer: Why the Fed Is More PR Than Policy, Feat. Jeffrey P. Snider

The Breakdown

Blockworks

Investing, Business

4.8 • 806 Ratings

🗓️ 5 June 2020

⏱️ 64 minutes

🔗️ Recording | iTunes | RSS

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Summary

The conventional wisdom is that central banks are the most important economic actors in the world. Markets hang on their every word. Yet, what if that power has less to do with actual monetary policy and more to do with how the performance of that policy creates a self-fulfilling prophecy as market actors respond to media coverage? Jeff Snider is the head of global research at Alhambra Investments. In this conversation, he and NLW explore: How the Fed lost the ability to even determine what the money supply is. How the financialization in the 1980s exacerbated monetary confusion. Why the most important force in the global economy isn’t central banks but the eurodollar and shadow banking system. How the eurodollar and shadow banking sector creates a drag on real economic growth. Why the conventional wisdom and “central bank savior” narrative around 2008 was dead wrong. The problem with “survivor’s euphoria.” Why “money printer go brr” is actually a flood myth.

Transcript

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0:00.0	Welcome back to the breakdown, an everyday analysis breaking down the most important stories in Bitcoin, crypto, and beyond.
0:13.0	This episode is sponsored by BitStamp and Cipher Trace. The breakdown is produced and distributed by CoinDesk.
0:22.6	And now here's your host, NLW.
0:28.0	Welcome back to The Breakdown.
0:30.4	It is Thursday, June 4th, and I am really excited for this conversation today, guys.
0:35.6	I'm joined by Jeffrey P. Snyder from Alhambra Investments.
0:39.6	And as you guys know, usually I kind of just give my own rendition of what makes someone interesting
0:44.6	rather than reading their own bio. But for Jeff, I have to read at least part of his bio.
0:49.6	So this is from the Alhambra website. It says, Jeff is the head of global research at Alhambra
0:54.1	Investments. He is not an economist, which is the head of global research at Alhambra investments.
0:54.9	He is not an economist, which is probably why he's been able to develop a working model
0:58.8	of the global monetary system. His research is unique and informative in ways that an
1:02.6	economist would never consider. I think that that perfectly captures Jeff's tone and his
1:08.4	different outlook, let's say, on the world. And that's a lot of what we talk
1:12.6	about today. Jeff, I've noticed for a long time, he puts out some of the most interesting and
1:18.0	compelling essays and writing and just thinking on macroeconomics, and in particular, focuses on
1:23.7	a number of areas of the system that many others simply don't. So in this interview, you'll hear a lot
1:29.6	about the euro dollar system and the shadow banking system and these forces, which are
1:34.6	huge significant drivers in the economy, but are hidden. They are subalternian, they're subterranean
1:41.1	to what we see. And they have, in Jeff's estimation, a huge determining
1:45.8	impact on what monetary policy can and can't do. In fact, as you'll hear, one of Jeff's
1:52.2	key thesis is that central banks just simply don't have the power they believe they have to
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