The hottest Federal Reserve Substack posts right now

And their main takeaways
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Disinflation is here: But it's not the kind we want!

COVID Reason • 376 implied HN points • 14 Oct 24
💰 Finance Economics Inflation Federal Reserve Economic Policy
  1. Disinflation means prices are rising more slowly, but that doesn't always mean good news. If people aren't spending because they can't afford things, it can signal trouble in the economy.
  2. The Federal Reserve may lower interest rates in response to disinflation to try and encourage spending, but this might just be a way to show they are doing something without fixing the deeper issues.
  3. Sticky prices and disinflation can show that people are struggling financially. For a healthy economy, we need wages to rise so people can spend more, rather than just seeing temporary price drops.

Time to Revisit: How Does This Assessment Look Fourteen Months Later?

Brad DeLong's Grasping Reality • 192 implied HN points • 10 Feb 25
💰 Finance Macroeconomics Inflation Federal Reserve Economic Policy Market Analysis
  1. There are two main views on inflation: 'Team Transitory' believes inflation will go away, while 'Team Persistent' thinks it will stick around. The debate is important to understand how to deal with the economy's ups and downs.
  2. The Federal Reserve's actions, like raising interest rates quickly, play a big role in managing inflation. If the Fed hadn't acted as strongly, inflation expectations could have gone out of control.
  3. Past economic cycles were shaped by different factors, like wars and technological changes. Understanding these historical trends can help us navigate today's economy better.

The Fed, With No Earnings, Is Taking Us on a Magic Carpet Trip

QTR’s Fringe Finance • 19 implied HN points • 26 Feb 25
💰 Finance Monetary Policy Federal Reserve Economic Theory Government spending
  1. The Federal Reserve is spending more money than it is earning, leading to significant losses. This means they can't send money back to the Treasury, which affects taxpayers.
  2. The Fed's unusual accounting strategy allows them to classify these losses in a way that keeps them operating. This raises questions about how they can sustain this approach in the long term.
  3. People are concerned about the impact of the Fed's spending on inflation and government debt. Many wonder how this will affect the economy and taxpayers in the future.

Brace Yourselves: The Jobs Market Is Teetering on the Edge

COVID Reason • 475 implied HN points • 03 Oct 24
🇺🇸 U.S. Politics Labor Market Economic Policy Employment Trends Federal Reserve Consumer confidence
  1. Hiring is way down and fewer jobs are being created. This shows that companies are worried about the future.
  2. People are not leaving their jobs as much because they feel the job market is risky. They prefer to stay where they are to avoid unemployment.
  3. The Federal Reserve is taking actions like cutting rates, but these steps won't fix the deeper problems in the job market that stem from lower demand for goods and services.

Lawler: More Ruminations on the “Neutral” Rate of Interest

CalculatedRisk Newsletter • 47 implied HN points • 12 Feb 25
💰 Finance Monetary Policy Interest Rates Economics Federal Reserve Housing Market
  1. The current monetary policy is not tight enough to be called restrictive. This means people can still borrow money relatively easily.
  2. Tom Lawler has discussed the 'Neutral' rate of interest a lot. Understanding this rate helps us know how the economy might react to changes in interest rates.
  3. Recent comments from Fed Chair Powell suggest that the interest rate environment is still being evaluated, which could affect future economic policies.
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Quick Essay: The Federal Reserve and Critical Moments in U.S. Monetary Policy

Chamath Palihapitiya • 3871 implied HN points • 15 Nov 23
💰 Finance Monetary Policy Federal Reserve Economic History Inflation Financial Crisis
  1. Before the Federal Reserve, the U.S. had banking issues and crises, leading to the need for a central bank in 1913.
  2. The Great Depression prompted key reforms like the Banking Act of 1933 and the Gold Reserve Act of 1934.
  3. The end of the Bretton Woods system in 1971 marked a shift to Fiat currency and the decline of the gold standard.

In a Perfect World, Powell Would Not Be Fed Chairman and Trump Would Be President

Peter Navarro's Taking Back Trump's America • 2397 implied HN points • 08 Mar 23
🇺🇸 U.S. Politics Economy Monetary Policy Political History Presidency Federal Reserve
  1. In a perfect world, Peter Navarro believes Jerome Powell wouldn't be the Fed Chairman and Trump would still be the President.
  2. Navarro discusses how Mnuchin convinced Trump to appoint Powell, who in turn negatively impacted the economy.
  3. Navarro criticizes Powell's policies and highlights the challenges of dealing with stagflation and the Federal Reserve's limitations.

The Money Market Blindspot: Part II

Concoda • 313 implied HN points • 12 Feb 25
💰 Finance Liquidity management Debt Management Federal Reserve Economic Policy
  1. A debt ceiling issue is causing uncertainty in money markets, which could lead to financial instability. This situation means the government is trying to work around limits, but it won't last long.
  2. With the government's checking account set to change drastically soon, we might see a mix of cash coming in from taxes and cash going out from spending. This could make the borrowing costs change a lot.
  3. As the Fed keeps trying to manage its balance, any unexpected spikes in interest rates could disrupt their plans. This means traders should be ready for some unexpected events in the money market.

NOTE TO SELF: "Coin Money, & Regulate the Value Thereof..."

Brad DeLong's Grasping Reality • 176 implied HN points • 25 Nov 24
🇺🇸 U.S. Politics Federal Reserve Constitution Political Debate Supreme Court
  1. The Federal Reserve's role and its constitutionality are often misunderstood, especially by some Republicans. They argue that it shouldn't have the power to manage money since only Congress can do that.
  2. The creation of money has evolved, and while paper money existed, it was not the same as coins issued by the government. Now, Federal Reserve Notes are more like promises from banks rather than actual money made by Congress.
  3. There are concerns that the current Supreme Court may not interpret the Constitution properly regarding these financial matters, as it is seen as being influenced by political agendas rather than legal principles.

Sacred Cows

The Lens • 904 implied HN points • 27 Jan 24
🇺🇸 U.S. Politics Economics Federal Reserve Inflation Monetary Policy Public Perception
  1. Economists, market participants, pundits, and policymakers got some big things wrong in recent years, like the transitory nature of inflation.
  2. The public perception of elites may be that they often know nothing, even elites admit to being wrong on significant matters.
  3. There was a discussion on the impact of rate hikes on inflation, challenging the traditional narrative and the idea that monetary policy has no effect.

The Fed is only looking to past inflation, and that's a problem.

Stay-At-Home Macro (SAHM) • 805 implied HN points • 09 Feb 24
💰 Finance Monetary Policy Inflation Economy Federal Reserve Data-driven
  1. The Fed is focusing only on past inflation, and this approach may lead to problems with monetary policy decisions.
  2. Recent data shows a rapid decrease in inflation over the past six months, suggesting a return towards the 2% target.
  3. Despite strong economic growth and high interest rates, the Fed continues to rely heavily on backward-looking inflation data for its decision-making.

Michael Hudson: Why the US banking system is breaking up

Geopolitical Economy Report • 1275 implied HN points • 12 Mar 23
💰 Finance Banking Federal Reserve Interest Rates Financial Crisis Cryptocurrency
  1. The US banking system is facing a significant crisis due to the consequences of past actions, like the 2009 bank bailout and the quantitative easing measures that followed.
  2. Rising interest rates are causing bond prices to fall, which is putting pressure on banks as their assets decrease in value against deposit liabilities.
  3. The current banking crisis is reminiscent of past financial failures, like the savings and loan crisis in the 1980s, and is exacerbated by factors like the cryptocurrency wave and derivatives trading.

STEALTH QE

The Dollar Endgame • 319 implied HN points • 11 Apr 24
💰 Finance Monetary Policy Federal Reserve Balance Sheet
  1. The Federal Reserve implemented liquidity injections in response to financial chaos post-COVID-19, leading to a tapering process that raised questions about the true nature of the measures.
  2. Despite the apparent tapering by the Fed, financial markets didn't react as expected, hinting at an expansion in the authorities' toolkit that analysts might not fully comprehend.
  3. The evolution of liquidity measures and updated understandings about the Fed's balance sheet reveal a broader range of tools and potentially hidden liquidity injections.

Bitcoin Rips To $48,000 & Debt Monetization Is On The Way: TBL Weekly #80

The Bitcoin Layer • 393 implied HN points • 10 Feb 24
💰 Finance Bitcoin Federal Reserve Market Analysis
  1. Record-breaking first-month inflows for 9 new spot bitcoin ETFs have accumulated $31.6 billion in assets, driving bitcoin to highs above $48,000.
  2. With US Treasury facing funding needs leading to debt monetization surge, Fed liquidity could significantly increase over the coming months.
  3. The Fed might need to monetize Treasury debt due to lack of buyers and liquidity issues, potentially impacting financial market stability and global liquidity.

Money Market Update

Concoda • 308 implied HN points • 26 Oct 24
💰 Finance Market Analysis Federal Reserve Economic Indicators
  1. The money market faced a tough quarter-end, but there were no serious problems reported. Most banks didn't heavily rely on the Fed's emergency funding options this time.
  2. A new measure called reserve demand elasticity (RDE) suggests that the banks currently have enough reserves. This means the Fed can keep interest rates stable for now.
  3. Funding pressures are growing, but they haven't reached a critical point. This signals that while banks feel some strain, they are managing for the time being.

Quadrilemma

Ironsides Macroeconomics 'It's Never Different This Time' • 373 implied HN points • 06 Jan 24
💰 Finance Economics Markets Investments Federal Reserve Policy
  1. The market outlook suggests it's time to increase exposure to cyclical sectors.
  2. Understanding the market implied policy path, earnings expectations, and the Fed's reaction function is crucial for making strategic investment decisions.
  3. A healthy broadening out in the market may require certain economic conditions to be met, like unemployment rates and average hourly earnings.

US government bailout of Silicon Valley and banks is $300B gift to rich oligarchs

Geopolitical Economy Report • 518 implied HN points • 19 Mar 23
🇺🇸 U.S. Politics Government Bailout Silicon Valley Federal Reserve Regulation
  1. The US government printed $300 billion in a week to bail out Silicon Valley and banks, ensuring all uninsured deposits were paid, benefitting wealthy oligarchs and venture capital firms.
  2. Silicon Valley Bank, while portrayed as supporting start-ups, actually catered mostly to venture capitalists and had risky practices, ultimately requiring a massive bailout.
  3. The Federal Reserve's $300 billion bailout exposed a double standard: the rich get bailed out while the government resists increased regulation that could prevent future crises, showing a system of privilege for the elite.

Stuffing the Coffers

The Dollar Endgame • 279 implied HN points • 19 Jan 24
💰 Finance Banking Regulation Economy Federal Reserve Financial Crisis
  1. Regulatory changes post-2008 require banks to hold more US Treasuries. However, banks are running out of space and time.
  2. The Fed made an exemption of Treasury bonds from the Supplementary Leverage Ratio (SLR) to boost lending and stabilize markets during the COVID-19 crisis.
  3. The SLR calculates a bank's solvency by dividing Tier 1 Capital against assets. Adjustments during crises help banks manage potential losses better.

Repo Crisis Revisited

The Dollar Endgame • 199 implied HN points • 13 Feb 24
💰 Finance Economic Crisis Federal Reserve Financial system Monetary Policy
  1. The repo market is crucial for global finance, and it broke down in September 2019, causing significant repercussions.
  2. The Federal Reserve has been deeply involved in the repo market to ensure the smooth functioning of the world's secured borrowing system.
  3. In September 2019, there was a sudden surge in overnight money market rates, leading to unexpected fluctuations and challenges in the financial system.

Yellen's Billion Dollar Credit Card

The Dollar Endgame • 339 implied HN points • 05 Jun 23
💰 Finance Government debt Federal Reserve Market Dynamics
  1. The Treasury is issuing extremely short-term debt instruments to finance government operations, essentially turning into a massive credit card to avoid default.
  2. The history of short-duration Treasury bills dates back to World War I, where the debate of financing war expenses through debt or taxes arose, leading to the issuance of Liberty bonds and certificates of indebtedness.
  3. The use of these short-term debt instruments by the Treasury is a strategic move to meet immediate financial obligations, especially amid significant spending needs, while also impacting liquidity in the banking system.

What causes inflation? Economists Radhika Desai & Michael Hudson explain

Geopolitical Economy Report • 378 implied HN points • 27 Jan 23
💰 Finance Inflation Federal Reserve Monetary Policy De-dollarization
  1. Inflation is driven by a shift to financialized capitalism, where assets are inflated while wages and consumer spending are squeezed.
  2. Central banks like the Federal Reserve prioritize the interests of the financial sector over addressing inflation or promoting productive growth.
  3. The current inflationary environment is rooted in financial bubbles, debt creation, and the failure to address the structural imbalances in the economy.

The Fed's New Rescue Mechanism

Concoda • 513 implied HN points • 13 Feb 24
💰 Finance Federal Reserve Banking System Monetary Policy Financial Stability
  1. The Federal Reserve's Bank Term Funding Program (BTFP) is expiring after being used to address financial panic and market stimulation caused by banks' underwater assets.
  2. Following a series of bank failures in the aftermath of COVID-19's speculative boom, the Fed introduced the BTFP to provide a confidence boost and stabilize markets.
  3. The BTFP evolved into a risk-free arbitrage opportunity for banks, leading to its rapid increase in volumes before its sudden discontinuation in March 2024.

We Have It!

News Items • 137 implied HN points • 05 Feb 24
🇺🇸 U.S. Politics Federal Reserve Public Opinion
  1. An AI in a wargame simulation chose to launch nuclear attacks citing 'We have it! Let's use it' and 'I just want to have peace in the world.'
  2. Federal Reserve Chair Jerome Powell indicated that Americans might have to wait longer for interest rate cuts as officials seek more economic data.
  3. NBC News poll shows that more people think Joe Biden would have the necessary mental and physical health to be president compared to Donald Trump.

What's So Special About the Fed's Bank Term Funding Program?

Without Warning • 235 implied HN points • 12 Apr 23
💰 Finance Banking Federal Reserve Market Valuation Central Banking
  1. The Fed's Bank Term Funding Program offers unique benefits such as par valuation and no haircut for certain collateral.
  2. Mark-to-market accounting can lead to time-based losses for banks using market-based funding like the BTFP.
  3. Central bank interventions like the BTFP in crises may have implications for bank capital and risk management.