The Recession Discussion Is Incredibly Dumb

The Breakdown

Blockworks

Investing, Business

4.8 • 786 Ratings

🗓️ 30 July 2022

⏱️ 20 minutes

🔗️ Recording | iTunes | RSS

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Summary

This episode is sponsored by Nexo.io, Chainalysis and FTX US. “Recession” is the latest word to run afoul of our shifting definitions and political newspeak. This week, numbers from Q2 came out showing that the U.S. had seen a declining GDP for the second quarter in a row – a fairly standard definition of a recession. The political spin was immediate and tortured, but in today’s episode, NLW argues that the caring about the label itself may be the bigger problem. - Nexo is a security-first platform where you can buy, exchange and borrow against your crypto. The company safeguards your crypto by relying on five key fundamentals including real-time auditing and insurance on custodial assets. Learn more at nexo.io. - Chainalysis is the blockchain data platform. We provide data, software, services and research to government agencies, exchanges, financial institutions and insurance and cybersecurity companies. Our data powers investigation, compliance and market intelligence software that has been used to solve some of the world’s most high-profile criminal cases. For more information, visit www.chainalysis.com. - FTX US is the safe, regulated way to buy Bitcoin, ETH, SOL and other digital assets. Trade crypto with up to 85% lower fees than top competitors and trade ETH and SOL NFTs with no gas fees and subsidized gas on withdrawals. Sign up at FTX.US today. - “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Eleanor Pahl`` and research by Scott Hill. Jared Schwartz is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsors is “The Now” by Aaron Sprinkle. Image credit: Malte Mueller/Getty Images, modified by CoinDesk. Join the discussion at discord.gg/VrKRrfKCz8.

Transcript

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0:00.0	Welcome back to The Breakdown with me, NLW.
0:09.2	It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world.
0:14.8	The breakdown is sponsored by nexus.i-o, chain aliasis, and FtX, and produced and distributed by CoinDes.
0:22.8	What's going on, guys? It is Friday, July 28th, and today we are talking about,
0:27.7	candidly, why the recession discussion is just incredibly mind-numbing and stupid.
0:33.4	Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it,
0:37.7	give it a rating, give it a review, or if you want to dig deeper into the conversation about
0:42.1	why this discussion is incredibly dumb, come join us on the Breakers Discord. You can find a link
0:47.7	in the show notes or go to bit.ly slash breakdown pod. Also a disclosure as always. In addition
0:53.5	to them being a sponsor of the show, I also
0:55.3	work with FTX. Now, today we are doing another macro day, and in some ways, this is part two of
1:02.8	yesterday's episode. Wednesday was, of course, FOMC day, and we got a 75 basis point rate hike,
1:10.5	which led to markets being kind of euphoric.
1:14.2	Why was that? Well, the big thing seems to have been the Fed's argument that the federal
1:19.2	funds rate at around 2.5% was now in the range of what they considered neutral.
1:24.7	In other words, it meant that the interest rate was no longer contributing to
1:28.1	an overheating economy. That plus really the end of forward guidance and the Fed saying that from
1:34.0	here on out, we were going to take things meeting by meeting based on the current data,
1:38.4	left many people interpreting the Fed as having hit and perhaps passed their peak hawkishness. Now, of course, many market participants
1:46.9	disagree and warn that this could be an extremely volatile period, a period in which one bad
1:52.7	inflation surprise to the upside, for example, could produce an even bigger than expected rate hike
1:57.8	in September. This is something that Fed Chair Jerome Powell explicitly
	...

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