I recently discussed the future of Monetary Policy with Hunter Thompson, the host of the Cash Flow Connections podcast. It was an interesting and timely conversation.
Last week, the Fed injected more than $125 billion of liquidity into the financial markets and cut the Federal Funds Rate by an additional 25 basis points. The week before, the European Central Bank relaunched Quantitative Easing in Europe. The People’s Bank Of China recently lowered the required reserve ratio to permit Chinese banks to create more credit. And, in Japan, the BOJ continues to create Yen on an enormous scale.
In short, the global central banks are working overtime to keep stock markets rising and the global economy out of recession. Nevertheless, there is a growing realization that Monetary Policy, acting alone, is nearing exhaustion.
A radical policy shift is on the horizon. It is crucial to understand the form it is likely to take and how it is likely to impact the economy and the financial markets. This policy shift is the subject of this interview.
Topics discussed include:
- The reasons behind the global collapse in bond yields and the Fed’s dramatic monetary policy U-Turn.
- Why the Fed can’t afford to allow the stock market to fall.
- The significance of the Yield Curve inversion.
- What is the next stage of Monetary Policy, MP3, and why Ray Dalio is right when he says it will be our best policy option going forward.
- The most important thing to understand about economics in the 21stCentury.
Please find the link to this interview below.
After listening to this interview, if you would like to subscribe to Macro Watch at a 50% discount, click on the link below and, when prompted, use the discount coupon code: connections
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