The hottest Monetary Policy Substack posts right now

And their main takeaways
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Top Finance Topics

It’s Fed Day; who cares?

Klement on Investing • 1 implied HN point • 28 Jan 26
💰 Finance Monetary Policy
  1. A Fed rate decision may have limited impact right now because the chair is a lame duck and shifting US policy (like tariffs) makes the inflation outlook uncertain.
  2. When policy uncertainty is high, companies generally revise their inflation expectations faster and more strongly in response to rate hikes or cuts.
  3. Firms and traders who closely follow central-bank signals tend to anticipate moves and therefore adjust their inflation expectations far less, especially during periods of high uncertainty.

Erb and Harvey are at it again

Klement on Investing • 3 implied HN points • 16 Dec 25
💰 Finance Monetary Policy
  1. Gold has had a huge rally, rising more than 50% in about ten months and breaching record highs around $4,000/oz, which has reignited investor enthusiasm and big price forecasts.
  2. Academic analysis says gold has not been a reliable inflation hedge over typical investment horizons and that high current prices tend to predict poor future real returns, so lofty prices imply limited expected gains.
  3. The rise of gold ETFs created a steady, structural demand that lifted prices, and the only realistic way to trigger much more demand would be a regulatory change letting commercial banks hold gold as reserves — something that looks unlikely.

Steve Hanke: 80% To 90% Chance Of Recession

QTR’s Fringe Finance • 19 implied HN points • 06 Jul 25
💰 Finance Monetary Policy
  1. There's a high chance, about 80% to 90%, that the U.S. will face a recession soon. This is due to slow growth in the money supply which affects the economy negatively.
  2. Current monetary policy focuses too much on interest rates and ignores how changes in money supply impact inflation and economic activity. This could lead to more problems in the future.
  3. There's a lot of uncertainty in politics and finance, which makes it tough for young workers to find jobs. People are worried about where the economy is heading and how it could affect their lives.

The "Neutral" Rate and Implications for 30-year Mortgage Rates

CalculatedRisk Newsletter • 38 implied HN points • 18 Feb 25
💰 Finance Monetary Policy
  1. The neutral rate, which helps determine monetary policy, has increased back to levels seen before the financial crisis. This means current monetary policy might not be restricting the economy as much as previously thought.
  2. Some economists believe that the actual neutral rate is higher than expected, which could indicate that interest rates may not be as high as people fear.
  3. Fed Chair Powell agreed that the neutral rate has risen significantly since before the pandemic, suggesting a change in how we should view economic policy now.
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Accidentally testing NGDP level targeting

Erdmann Housing Tracker • 126 implied HN points • 06 Feb 24
💰 Finance Monetary Policy
  1. Accidentally testing market monetarism, particularly nominal GDP targeting, yielded successful results during economic shocks.
  2. Nominal GDP targeting can help stabilize the business cycle by allowing for counter-cyclical inflation and smoothing disruptions in nominal incomes.
  3. Adopting nominal GDP level targeting could lead to improved productivity and reduced reliance on interest rates in monetary policy discussions.

Lessons for today’s investors from the UK in the 1970s

Klement on Investing • 3 implied HN points • 10 Dec 25
💰 Finance Monetary Policy
  1. Cost-push shocks like big commodity price jumps can become long-lasting inflation when governments boost wages and spending while central banks keep rates too low.
  2. Large fiscal deficits or tax cuts can create a short-term growth 'sugar rush' but risk reigniting inflation later if monetary policy is pressured to stay easy.
  3. Fiscal and monetary coordination is crucial: when fiscal policy is expansionary the central bank must act to anchor inflation expectations or inflation will remain elevated.

MMTers Love When Governments Burn Money

QTR’s Fringe Finance • 14 implied HN points • 29 Jul 25
💰 Finance Monetary Policy
  1. Historically, some governments have burned money they received in taxes instead of spending it. This shows a different approach to managing currency and taxes.
  2. Modern Monetary Theory (MMT) suggests that the way governments handle money matters differently than traditional views, claiming that taxes serve to create demand for fiat currencies.
  3. However, there are criticisms of MMT, particularly regarding its historical accuracy about how money is created and the role of taxes, suggesting that it may misinterpret past events.

Let’s Dance

The Transcript • 79 implied HN points • 13 Feb 23
💰 Finance Monetary Policy
  1. Signs of deflation in the economy are emerging.
  2. Companies are slowing down price increases and labor markets are loosening.
  3. Consumer spending remains strong with notable growth in January.

Running on Empty

The Last Bear Standing • 32 implied HN points • 14 Feb 25
💰 Finance Monetary Policy
  1. The Federal Reserve's balance sheet reduction is mostly just moving money around rather than actually reducing the money supply. This means the impact on inflation might not be as significant as it seems.
  2. The Reverse Repo Facility, which helps maintain liquidity in financial markets, is running low. As it decreases, there could be less stability in short-term funding.
  3. While some people say the situation is either a disaster or not a problem at all, it's more complex. We might see tighter banking conditions and more market volatility as the Fed continues its quantitative tightening efforts.

When cash is still king

Klement on Investing • 3 implied HN points • 03 Dec 25
💰 Finance Monetary Policy
  1. Everyday cash use is falling, but the total value of banknotes in circulation has risen sharply, largely because people hold more large-denomination notes.
  2. Low or negative interest rates lower the opportunity cost of holding cash, so people hoard big bills as a store of value and the velocity of those notes falls when rates are low and rises when rates increase.
  3. Large banknotes make it easier to pay off the books or hide gifts, so the growth in big bills likely reflects tax evasion and a larger shadow economy, which reduces government tax revenue.

November 2024 Erdmann Housing Tracker

Erdmann Housing Tracker • 42 implied HN points • 17 Dec 24
💰 Finance Monetary Policy
  1. Inflation has been steadily around 2% since July 2022, excluding housing costs. This shows a consistent trend rather than sudden spikes.
  2. The Federal Reserve has managed to control most types of inflation, but rent prices remain outside of their control. This situation creates a misunderstanding about overall inflation levels.
  3. There's a belief that inflation might change direction suddenly, but the speaker sees no reason for that to happen. The last 29 months have shown stability in most areas.

Why Price Stability Is A Dangerous Illusion

QTR’s Fringe Finance • 14 implied HN points • 15 Jul 25
💰 Finance Monetary Policy
  1. Many economists believe that keeping prices stable is really important for a healthy economy. They think it helps businesses understand consumer needs better and allocate resources effectively.
  2. However, the idea that money is neutral and only affects price levels can be misleading. When money supply changes, it can cause unfair advantages for some people over others, which leads to wealth redistribution.
  3. Overall, the belief in price stability might hide the real impacts of inflation. Just because prices seem stable doesn’t mean that the economy is healthy; it may actually create problems down the line.

Powell: No Pivot, No Party

QTR’s Fringe Finance • 15 implied HN points • 27 Jun 25
💰 Finance Monetary Policy
  1. Powell is sticking to a tough stance on interest rates, focusing on keeping them higher for longer. This means there won't be any quick changes to the economic outlook.
  2. His recent comments show no signs of easing up, which suggests the market won't see a big rally soon, even if world events change.
  3. For now, gold's short-term growth may be slowing down, but the long-term trend still looks positive.

Can America Escape the Triffin Dilemma?

European Straits • 11 implied HN points • 27 Jul 25
💰 Finance Monetary Policy
  1. America's economic strength comes with a downside. To keep the dollar strong globally, the US has to run trade deficits, which hurts its own manufacturing base.
  2. The Bretton Woods Agreement in 1944 established the dollar as the world's main currency, but it created a system that eventually led to financial instability when the dollar outgrew its gold reserves.
  3. The 2008 financial crisis showed the flaws in the system as banks struggled without dollar funding, while America's focus on financial markets over manufacturing deepened the problem.

The Death of QT

The Last Bear Standing • 179 implied HN points • 17 Mar 23
💰 Finance Monetary Policy
  1. The Federal Reserve struggled with liquidity tightening, leading to emergency measures and a new financial crisis.
  2. Understanding the monetary plumbing system is crucial to comprehending the impact of Quantitative Tightening (QT) on the banking sector.
  3. Quantitative Tightening (QT) may not continue for long, as challenges in the banking sector could be exacerbated without further accommodations from the Federal Reserve.

2025 Macro Outlook

The Last Bear Standing • 36 implied HN points • 20 Dec 24
💰 Finance Monetary Policy
  1. The Fed is in a new phase of monetary policy, raising questions about whether easing measures are just beginning or already finished. This uncertainty affects markets and investor confidence.
  2. The labor market is showing mixed signals, with job growth continuing but other indicators suggesting a slowdown. This could complicate future monetary policy decisions.
  3. Inflation progress has stalled, and how labor data evolves in 2025 will greatly influence inflation and monetary policy going forward.

The Other Lever

The Last Bear Standing • 97 implied HN points • 05 Jan 24
💰 Finance Monetary Policy
  1. Understanding balance sheet policy is crucial in modern monetary policy.
  2. Recent balance sheet movements have had a direct influence on money supply.
  3. Significant shifts in the balance sheet policy can impact inflation and banking sector stability.

Frank Thoughts

The Last Bear Standing • 89 implied HN points • 02 Feb 24
💰 Finance Monetary Policy
  1. Understanding monetary plumbing is important for analyzing financial markets.
  2. Recognizing the directional flow of liquidity in or out of the financial system is key.
  3. Having a sense of the size and direction of monetary flows can provide valuable insight with minimal effort.

Note on Monetary Policy and Jackson Hole

Erdmann Housing Tracker • 126 implied HN points • 25 Aug 23
💰 Finance Monetary Policy
  1. Powell's approach to monetary policy is based on conventional models, which may not fully address current economic issues.
  2. There is a concern that inflation is settling above the 2% target due to trends in goods and services.
  3. Housing supply issues contribute to 'inflation' and can be misleading when analyzing monetary policy impacts.

Trump v Powell: The Credibility Cost of Politicized Monetary Policy

QTR’s Fringe Finance • 12 implied HN points • 03 Jul 25
💰 Finance Monetary Policy
  1. Trump wants lower interest rates, but if the Fed lowers them while inflation is still high, it could lead to bigger problems like stagflation. This may feel good short-term but is risky long-term.
  2. Political pressure on the Fed can hurt its independence and credibility. If the public thinks the Fed is making decisions based on politics, it could lead to higher inflation expectations.
  3. Comparing US interest rates with other countries without considering their unique situations is misleading. Monetary policy should be based on domestic economic conditions, not just foreign examples.

No, I don't think the Fed drives future yields

Erdmann Housing Tracker • 105 implied HN points • 05 Oct 23
💰 Finance Monetary Policy
  1. Forward interest rates are mainly driven by changing economic productivity and sentiment, with the Fed playing a secondary role.
  2. Market sentiment about real future economic activity has a significant impact on interest rates.
  3. Most of the changes in long-term bond yields since 1989 have occurred during Federal Open Market Committee meetings.

The Fed Has Stopped Pretending that Price Inflation Is Going Away

QTR’s Fringe Finance • 23 implied HN points • 17 Feb 25
💰 Finance Monetary Policy
  1. The Federal Reserve recently cut interest rates, claiming confidence in lower inflation, but that confidence seems to have faded. The Fed is now uncertain about its inflation goals.
  2. Inflation remains high, especially for everyday necessities like food and housing, causing consumers to struggle with rising costs. Recent data shows that inflation is not improving as expected.
  3. Instead of lowering interest rates, which may not help ordinary people, the Fed should step back and allow the market to adjust naturally. This could help stabilize the economy and provide better opportunities for regular investors.

Five Themes of 2023

The Last Bear Standing • 116 implied HN points • 30 Jun 23
💰 Finance Monetary Policy
  1. The recession that has been expected is delayed, and there are indications that the economy continues to grow.
  2. Inflation is decreasing, and the Federal Reserve aims to maintain this trend through its monetary policy.
  3. The technology sector has seen a resurgence in 2023, particularly in big tech companies and AI developments.

A Solution for QT

The Last Bear Standing • 135 implied HN points • 24 Mar 23
💰 Finance Monetary Policy
  1. Focus on balance sheet policy over interest rates for monetary policy.
  2. Quantitative Easing has a major impact on money supply growth.
  3. Consider 'Operation Squeeze' as a solution to liquidity concerns caused by Quantitative Tightening.

Zen And The Art Of Market Crash Fear Porn

QTR’s Fringe Finance • 28 implied HN points • 21 Dec 24
💰 Finance Monetary Policy
  1. It's important to consider that you could be wrong about the market crashing; sometimes things can go up instead of down. Keeping an open mind helps in understanding the unpredictable nature of markets.
  2. Thinking about worst-case scenarios can be useful, even if they seem unlikely. It’s good to prepare yourself mentally for different outcomes.
  3. Rethinking your assumptions is healthy, especially when the market behaves in ways that don't make sense. Questioning yourself can lead to growth and better insights.

Easing Into Expansion

The Last Bear Standing • 24 implied HN points • 17 Jan 25
💰 Finance Monetary Policy
  1. Inflation is complex and influenced by many factors, making it hard to pinpoint why prices change. It often feels like a guessing game without clear answers.
  2. The market reacts strongly to data on inflation, analyzing numbers intensely, but sometimes it loses sight of the bigger picture, like underlying economic trends.
  3. Current monetary policies have shifted, and while they initially helped reduce inflation, signs suggest that prices may be climbing again as the economy changes.

What is Yi Gang trying to say in his 1st interview after retiring from PBoC?

Pekingnology • 71 implied HN points • 06 Feb 24
🌍 World Politics Monetary Policy
  1. Yi Gang discussed the historical significance of Jiaozi, the first paper money, and its implications for currency policies
  2. He emphasized the importance of competition under constraints for a successful monetary system
  3. Yi Gang highlighted the necessity of establishing and enhancing modern central bank systems to maintain currency stability

Forward Guidance

The Last Bear Standing • 133 implied HN points • 03 Mar 23
💰 Finance Monetary Policy
  1. The Dot Plot is the Fed's way of showing where they think interest rates will go in the future.
  2. Yield Curve Control is when central banks adjust short-term and long-term rates to tackle inflation and maintain financial stability.
  3. The Fed's Dilemma involves trying to raise rates to tackle inflation while avoiding destabilizing long-duration assets and maintaining financial stability.

If We Have a Strong Economy, Why Are Americans Struggling?

QTR’s Fringe Finance • 23 implied HN points • 14 Jan 25
💰 Finance Monetary Policy
  1. Many Americans are struggling financially even when the economy seems strong. High inflation and rising costs are making life harder for a lot of people.
  2. Rising treasury yields and mortgage rates are linked to ongoing inflation and economic uncertainty. This means borrowing money is becoming more expensive.
  3. When people feel the pinch of price increases and government spending on foreign issues, they are likely to vote for change. Economic struggles can greatly influence election outcomes.

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
  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.

Former PBOC Research Chief Attempts to Calm Stock Market Frenzy

Pekingnology • 33 implied HN points • 08 Oct 24
💰 Finance Monetary Policy
  1. China's central bank is not directly supporting the stock market, so investors should be careful and avoid risky speculation.
  2. Recent policies by the government have improved investor confidence but real economic improvements will take time and continuous efforts.
  3. It's important for financial institutions to help investors understand risks and ensure that loans aren't misused to invest in the stock market.

January 2024 CPI Update

Erdmann Housing Tracker • 63 implied HN points • 14 Feb 24
💰 Finance Monetary Policy
  1. Reaction to monthly CPI updates often fails to consider the lag affecting the shelter component, leading to surprises in news interpretation.
  2. Market expectations of a Fed rate cut were influenced by the latest report, shifting them further in the future.
  3. Monetary measures like currency in circulation and M2 trended down post-Covid scare, while the Fed's balance sheet shrinks without obvious disruption.