The FOMC is dominating the macro conversation right now. Many are wondering what the Fed is doing, when the hike cycle is going to be over, when we may see rate cuts and what could happen as we head into 2024.
Joseph Wang, the CIO at Monetary Macro fund, also known as “The Fed Guy,” joins Eric Chemi. He previously worked at the Fed. Joseph will break down how the Fed really works, why he thinks the bond bear market isn’t over and what he expects the Fed to do next.
TIMESTAMPS
0:00 Federal Reserve’s decision-making process and transparency.
6:58 Fed policy and inflation expectations.
10:20 Fed’s macroeconomic models and their accuracy.
14:51 Federal Reserve policies and their impact on the economy.
21:41 Fed’s quantitative easing and its impact on inflation.
24:21 US Treasury debt management and interest rates.
29:20 Monetary policy and interest rates.
34:40 Fed’s impact on interest rates and asset prices.
36:35 Fed’s monetary policy and its impact on the economy.
46:39 Last thoughts with Joseph Wang.
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#FED #ratecycle #JosephWang #fomc
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The Federal Reserve, often referred to as the Fed, is the central bank of the United States and plays a critical role in the country’s economy. Contrary to popular belief, the Fed’s operations are complex and often misunderstood by the general public. Economist Joseph Wang offers insights into how the Fed really works and its impact on the economy.
At its core, the Fed is responsible for implementing monetary policy, supervising and regulating banks, and maintaining the stability of the financial system. One of the Fed’s primary tools for achieving these objectives is through the manipulation of interest rates. By adjusting the federal funds rate, the rate at which banks lend to each other overnight, the Fed can influence the overall level of interest rates in the economy.
Wang explains that when the Fed wants to stimulate the economy, it lowers interest rates to encourage borrowing and spending. Conversely, when it seeks to curb inflation or prevent asset bubbles, it raises interest rates to discourage borrowing and spending. These actions have a ripple effect throughout the economy, impacting everything from consumer and business borrowing costs to the value of the dollar in international markets.
In addition to interest rate policy, the Fed also engages in open market operations, the buying and selling of government securities in the open market. This allows the Fed to inject or withdraw money from the banking system, thereby influencing the overall level of bank reserves and the money supply.
Wang emphasizes that the Fed’s decisions are not made in a vacuum. The Federal Open Market Committee (FOMC), comprised of the seven members of the Board of Governors and five Reserve Bank presidents, is responsible for setting monetary policy. They meet eight times a year to assess current economic conditions and determine the appropriate course of action.
Furthermore, the Fed’s regulatory and supervisory responsibilities are integral to maintaining the safety and soundness of the financial system. This involves monitoring banks for compliance with regulations, conducting stress tests to assess their ability to withstand economic downturns, and taking corrective action when necessary.
In recent years, the Fed has also expanded its toolkit to include unconventional measures such as quantitative easing, asset purchases, and forward guidance. These tools were employed during the 2008 financial crisis and subsequent recession to provide additional stimulus to the economy when traditional monetary policy measures fell short.
Understanding how the Fed really works is crucial for businesses, investors, and policymakers alike. As the central bank continues to navigate the ever-changing economic landscape, it is essential to grasp the intricacies of its operations and the potential implications for the broader economy. Through Joseph Wang’s insights, individuals can gain a deeper understanding of the Fed’s role and its impact on the financial system.
Where is Adam……..
Thoughtful Money.
Where is Adam ? Anyone know where I can find him?
The problem is not the fed being wrong, the problem is they act as if they are always right, never wondering why they were wrong in the first place.
Fed is not transparent
Technically speaking, only the bureau of engraving and printing, a subdivision of the US Treasury can legally print paper bills. The US Mint, with its four facilities at West Point, Denver, San Francisco, and Philadelphia, can coin money. These are the physical representation of dollars, most of which exist in the ether, in ledgers.
Commercial banks and the central bank (in case of the US it is the Federal Reserve), create money, today it is in an electronic ledger. Federal reserve does this in a bond auction, when it swaps newly created money (book entries) with the primary dealers recently purchased US treasury. Commercial banks do this when they create "loans", such as mortgages, auto loan, etc.
It is important to note that banks are not depository institutions. When a customer "deposits" money at the bank, he becomes an unsecure creditor of the bank. The bank does not keep the money "safe" for the customer nor does it use these deposits to fund loans for its customers.
Adam left to create his own channel? I thought wealthion was his own channel. Whose channel is wealthion?
great guest, Joseph I have listen to many times but some thing felt off or awkward AF in this interview
Must be tough to lose your anchor and be a permabear channel responsible for the loss of listener capital in ill-advised bear market calls over the past 12 months. Off the air by the new year?
Clear as mud.
One other point…where is the inflation??? After QE…still no one wants to accept asset price inflation, i mean if you really want to call a home an asset for investment? Financial investment…if you plan on moooching off your kids?
It’s an investment for a quality of life, not finance.
QE was so good, we did not see inflation of prices (consumer) until covid…so it was working fine?
No one can afford a frigging huose !! The asset inflation is still not enough for people to say QE was bad?
Stop with the consumer prices inflation being the only concern of living…home price inflation suffered from the quantity of money inflation. And it’s not the central banks that did it directly…they did it indirectly by allowing the “pillars of society” to print up all these loans for govt wanted home purchasing, investment house in purchases (reduce their own public housing commitments).
House price inflation leads to further credit for lounges, new beds, TV’s and the other items to make one feel validated…then throw in a new car too…are these all assets?? So cannot be of concern.
Then when all is said and done, will it flow through to consumer prices…it ain’t covid, it’s printing up money leading to entitlement…and at the same time the exhaustion of an oppressed country of resources.
J powell needs to squeeze out Greenspan and bernanke, and Yellen…plus counter the forces of crony globalisation and the exhaustion of goodwill from the little guys that been kicked for too long. Which all the economist cry victory over, ie this is the biggest lift out of poverty (for the Chinese) that human kind has ever seen. Load of crap!!
Joseph, when you have 1 million in treasuries and the fed pays you for them, let’s not forget about the counter parties…ie the treasury who owed someone money, who now does not…because the Fed does not need money…because it can create its own.
And what if the owner of the treasuries had borrowed money for those treasuries…the loan is paid off? Therefore now money sitting dormant and available, which (to a financial wizard) needs to be allocated…at the same time the treasury now has more money in its wallet that….guess what…needs to be allocated. So, loss of investment by ways of interest bearing instrument….and yet double the money by people who are vested in allocating money elsewhere.
Even the simplest of explained things are complicated with nuance which are overlooked…and then we all keep wondering why things are going so wrong? When explanations say ‘ take this for granted’…right there is a problem.
Funnily…the politicians would need to tax their people in order to get money to spend, because the only service they provide is for the people, and paid by the people (of the current living/day)….now, with central banks, govt does not need to raise a good case to acquire money through taxes, and instead they can borrow it into existence from help of the central banks….whcih leaves then beholden to no one. If they dont need our money fresh from our hands, but borrowed from other people (we dont seem to care too much about our kids it seems…ie the future), then they are beholden to no one….the question of public interest is…do they care about the people, or do they care about themselves more in this situtation…that is rhetoric, of course that is not even a real question as we know they are all desperate to be seen as great, changing the course of humanity and saving us all with their intellectual decision making.
It’s like HR in a company…once it establishes itself it is self serving and growing….like a cancer. But how do cells come to be this way, and want to grow differently compared to what has occurred for the bodies previous 20-30-40 years?…because it is attempting to repair and protect itself from something it deems as a danger…sounds familiar to a lot of current events in the politician and socio spheres dont it?
The central banks creates reserves in the exact same way that a fraudulent company balances its books, so it does not operate insolvent. Think Enron….thats what the central banks do, but who and why? I hear you cry…this is illegal?
No, because the central banks and their governors (govt of teh day), say…no this money will be earnt in the future…when we are finallly productive, or more productive…but dont you doubt it, we all getting bigger, better and stronger…so we are good for it. I think Enron thuoght the same way…but not sure, you might need to ask the senior mgt.
the URL looks the same as the great energy transition. interesting
Dear Wealthion, If you're reading the comments, then you have seen many viewers complaining about the "guest" cutting off the host. This is clearly not true and instead is shoddy editing on Wealthion's part. Perhaps you can edit the video description and respond to the viewers' comments apologizing for the poor edit so the guest is not blamed. Secondly, this is yet another example of having a GREAT guest who has a wealth of knowledge, who I have listened to on many channels, and turn it into a sub-standard video. The host added nothing to the conversation, and hats off to Joseph for still managing to provide valuable content.
End the money changers ..the fed !!!!!!!!!!!!!!!!!!!!
> it wasn't inflationary
doesn't include housing fully in inflation
Joseph as long as you stick to this IMHO you're a joke
Joseph Wang = Always Excellent
views are really falling of a cliff eh?
Unfortunate if this was an editing issue, I had to give up watching because I couldn't concentrate on what was being said. Maybe re-edit and upload again?
Too bad that Adam is not doing these anymore
Thanks
Good Question – What would you do if you were the Fed Chairman? – Mr. Wang – Powell is doing a good job but I'd be more vocal about letting Congress know that they need to cut spending because their excessive govt spending is making the Fed's job more difficult.
You are no A.T. 🙁
10 years of almost zero interest rates and then the icing on the cake the quantitative easing has stolen the purchasing power of savers, and has decimated the poor and middle class and the Fed will probably get some award, just insanity to me.
"If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children wake up homeless." – Thomas Jefferson
This channel isn't the same without Adam! Pretty disappointing content following his departure as host.
"The modern banking system manufactures money out of nothing. The process is perhaps the most astounding piece of sleight of hand that was ever invented."
-Sir Josiah Stamp, former Bank president
Even though most politicians, economists, and mainstream pundits won't admit it, central banks exist to help governments finance themselves by stealthily transferring wealth away from the average person's savings.
It’s the hidden, but real, reason why central banks exist.
Need to upgrade that microphone.
Where’s the good host? Time to unsubscribe!!!
terrible editing.
The Fed is transparent? LOL Come on man, when was the last audit?
Two weeks ago, this fed guy said I expected the rate to be going higher, and 10 years would go higher. Now that the risk will be on and the rate is cutting down. Next, cpi # will tell you something else. Fedguy has no clue! Selling courses by marketing his name as a fed boy.
It's an editing issue. No one is cutting anyone off.
People need to learn to talk about the BIS anytime they talk about the Fed.