Glass Steagall bank regulations kept our economy safe for over 50 years. Unfortunately, we trashed those for Clinton’s “Bank Modernization Act”. We need an iron wall between insurance companies and banks, and another iron wall between commercial banks and investment banks. Dirivatives and credit default swaps should be relegated to Las Vegas casinos. Hedge fund creeps should never be allowed their delayed interest income loophole. Those changes would make us a better country, but it probably won’t happen.
Great interview! The sad reality is that when the fake economy of being close to the literal money printers overtakes the real economy of voluntary transactions of goods and services, the wheels come off the bus -- and the 'leaders' typically respond with even MORE money printing. This is where we've been (or been on the edge of) since 2008.
Edit: People should also remember that in the fall of 2019, the financial system was in serious trouble and the Fed was ALREADY injecting 'liquidity' into the system. Covid was a pretty convenient excuse to flood the system with trillions of dollars of cash. (Of course, only YOUR $1200 check caused inflation)
I first started trying to learn about the Fed back in 2010 when I first heard Ron Paul calling for auditing the Fed. He rang the alarm in a big way,but the media made him out to be a crank. There are too many times to count when the press has failed the American people. Think of all the good the press could do if they would just be curious, ask questions, and investigate.
IMO, the problem stems from the dual mandate from the 1970s, which tells the Fed to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates"
While these goals are laudable and come from good intentions, the net result has been that the Fed needs to keep the pedal to the metal as long as we are below full employment and inflation (solely as measured by CPI) is behaving.
This means "too much money chasing too few goods" is bad, but "too much money chasing too few assets" is ok.
And this explains the serial bubbles in gold and commodities (late 70s / early 80s), stocks (late 90s), residential real estate (mid '00s) and sovereign debt (now).
The late Fed Chairman William McChesney said in the 1950s that "the role of the Fed is to take away the punch bowl just as the party is getting going." The dual mandate eliminated that role. And the party has been raging ever since.
The ironic thing about this is that the dual mandate was intended to prevent inequality, by forcing the Fed to focus on workers as much as investors. In practice, it did the opposite of what was intended.
The FED blows asset bubbles like kids blow soap bubbles, but the kids know what they are doing. The FED economists just throw money at the problems, they don’t solve them. The bastards were more interested in goosing their stock portfolios than managing the economy. They knew neoliberal economics was a failure in 2008, but they doubled down on a failed framework rather than create a new better economic framework. And, the worst part is all of them fail upwards. They marginalized Hoenig who told them they were basically fools.
Just a simple surgeon here, but it seemed obvious for years that the FED was pumping to much liquidity into the system. Can’t say I’m surprised by our current inflationary situation. I absolutely LOVED the progressive economic theory that you could print as much money as you’d like. Brilliant!
BTW the real threat to democracy is fraudulent “fortified” elections.
I just "Sent" off an E-mail to Fabio Vighi, who has written quite a bit about the money-printing nonsense, particularly in relation to the Covid crisis, which was clearly used as a "cover story" for printing a crashing market out of crisis--at least for the moment--before reading this interview. So, some order of magnitude synchronicity there. However, I wonder why Mr Leonard would have included Jan 6 in his telling of the tale, unless this was an Editor's insistence issue, playing to the false binary around that event? Jan 6 was at most a mock-coup, and really, not even that, more a stampede of Wal-Mart shoppers (some Sam's Club) than anything else, shepherded by Federal agents as primary instigators (that's a claim, or opinion, but it seems fairly obvious that this was the case). In other words: Where were the guns? I am not in the least a "right-winger," MAGA Republican, Trumper, or anything of that ilk. Trump's obviously a useful faux-Populist, a perhaps unwitting tool of the Elite, himself a quasi-elite, used to discredit dissent of all stripes, whether legitimate or not. So, how does the Fed's QE really relate to Jan 6? Or, maybe the QE policy ultimately conditioned the fake-"insurrectionary" event of note? That correlation needs to be established, if only hypothetically...
I read these interviews and think to myself, 'that Taibbi guy is pretty fuckin smart about a lot of different sectors'
Great interview. Also, even though I have a couple degrees, and had a thirty year executive career in a very complicated sector, I absorbed maybe 10-20% of the content of this interview.
Mr. Leonard says this: "there’s a passage at the end that describes January 6th as an insurrection that endangered our democracy."
I am not looking to defend Jan. 6, but by the same token I'm not looking to play pile on.
It seems that Mr. Leonard's work shows, as does Matt's and others, that our democracy is indeed in danger. But that danger seems to have existed long before Jan. 6th. Its perpetrators are never brought before a Congressional Committee or locked in solitary for months while the media paints them as savages. They quietly chisel away at our country unnoticed or, more likely, are obfuscated & shielded by a compliant & cowed news media that finds feeding us a steady diet of crap much more profitable for them than actual journalism.
While I think Jan 6th was a strategic blunder, I also think that the revelation that the fucking FBI buried a relevant news story about a laptop in order to sway an election a much more egregious offense than anything that happened on Jan. 6th. Where's the committee looking at that?
It doesn't matter whether you give credence to Trump's blustering or the idea of 2000 mules, the burying of the Hunter Biden laptop story was election fraud.
And no matter how many times people like Hillary ramble on about how essential it is to "tell the American people the truth," without a functional news media that's not gonna happen anytime soon.
So now all the bat shit crazy talk about hyperinflation may not be as crazy as you think, right? After the Fed breaks the real estate market and the stock market what choice will they have but to print more money than ever before?
And where does all the bat shit crazy talk about The Great Reset take us now? Does it foretell a devaluation of all currencies, or maybe just all Western currencies?
I'm definitely inspired now to read the book, although from the interview I'm not quite seeing the connections. I suppose I'm deficient in understanding the role of lending in greasing the wheels of the upper levels of the economy and exactly how low interest rates necessarily widen the wealth gap. Does it have anything to do with stock buybacks, which were illegal until 1982? Is that a missing piece?
Monetary policy as currently implemented is just one gigantic black box in my life, surrounded by black boxes I can't begin to understand in any useful detail. I can only hope that Leonard's book will serve to pry this one open.
I have been following this the last several years, mainly through market commentary by a fund sponsor, John Hussman, as hussmanfunds.com. But this interview, which makes me want to get and read the book, adds a whole additional dimension to my understanding.
The market has already gone down quite a bit this year, but given the historically unprecedented valuations - price relative to sales, to gross value added, you name it - it has much, much farther to go down.
A LOT of people are going to get screwed VERY badly.
‘’ this guy to me represented this political tradition in American life that is dead now, the Eisenhower conservative. The old school conservative who believes in a market, but a market ruled by rules that restrains the worst impulses of capitalism.’’
I could never understand how running up the debt (by cutting taxes), outsourcing all the jobs and starting frivolous wars was a ‘’conservative’’ philosophy but that’s what establishment ‘’conservatives’’ have been claiming for 20-30 years.
I think the ‘’conservatives’’ are abandoning their reckless ship wreck because it’s about to sink. Remember when they said ‘’a rising tide will raise all the boats’’ as they borrowed, cut taxes and outsourced? They were mistaken, it was the tide going out. The ship was never floating it was just sitting on the beach as the tide went out. The tide has changed direction and is coming in through the gaping holes.
Glass Steagall bank regulations kept our economy safe for over 50 years. Unfortunately, we trashed those for Clinton’s “Bank Modernization Act”. We need an iron wall between insurance companies and banks, and another iron wall between commercial banks and investment banks. Dirivatives and credit default swaps should be relegated to Las Vegas casinos. Hedge fund creeps should never be allowed their delayed interest income loophole. Those changes would make us a better country, but it probably won’t happen.
Great interview! The sad reality is that when the fake economy of being close to the literal money printers overtakes the real economy of voluntary transactions of goods and services, the wheels come off the bus -- and the 'leaders' typically respond with even MORE money printing. This is where we've been (or been on the edge of) since 2008.
Edit: People should also remember that in the fall of 2019, the financial system was in serious trouble and the Fed was ALREADY injecting 'liquidity' into the system. Covid was a pretty convenient excuse to flood the system with trillions of dollars of cash. (Of course, only YOUR $1200 check caused inflation)
https://www.cnn.com/2019/12/18/investing/fed-qe-overnight-lending-market/index.html
https://www.nytimes.com/2019/10/11/business/economy/federal-reserve-treasury-bills.html
I first started trying to learn about the Fed back in 2010 when I first heard Ron Paul calling for auditing the Fed. He rang the alarm in a big way,but the media made him out to be a crank. There are too many times to count when the press has failed the American people. Think of all the good the press could do if they would just be curious, ask questions, and investigate.
IMO, the problem stems from the dual mandate from the 1970s, which tells the Fed to "promote effectively the goals of maximum employment, stable prices, and moderate long term interest rates"
While these goals are laudable and come from good intentions, the net result has been that the Fed needs to keep the pedal to the metal as long as we are below full employment and inflation (solely as measured by CPI) is behaving.
This means "too much money chasing too few goods" is bad, but "too much money chasing too few assets" is ok.
And this explains the serial bubbles in gold and commodities (late 70s / early 80s), stocks (late 90s), residential real estate (mid '00s) and sovereign debt (now).
The late Fed Chairman William McChesney said in the 1950s that "the role of the Fed is to take away the punch bowl just as the party is getting going." The dual mandate eliminated that role. And the party has been raging ever since.
The ironic thing about this is that the dual mandate was intended to prevent inequality, by forcing the Fed to focus on workers as much as investors. In practice, it did the opposite of what was intended.
We should disband the FED. It was created to keep the economy from having cycles of booms and busts. It has completely failed.
The most far reaching story of the decade and it struggles to be heard.
The FED blows asset bubbles like kids blow soap bubbles, but the kids know what they are doing. The FED economists just throw money at the problems, they don’t solve them. The bastards were more interested in goosing their stock portfolios than managing the economy. They knew neoliberal economics was a failure in 2008, but they doubled down on a failed framework rather than create a new better economic framework. And, the worst part is all of them fail upwards. They marginalized Hoenig who told them they were basically fools.
Just a simple surgeon here, but it seemed obvious for years that the FED was pumping to much liquidity into the system. Can’t say I’m surprised by our current inflationary situation. I absolutely LOVED the progressive economic theory that you could print as much money as you’d like. Brilliant!
BTW the real threat to democracy is fraudulent “fortified” elections.
I just "Sent" off an E-mail to Fabio Vighi, who has written quite a bit about the money-printing nonsense, particularly in relation to the Covid crisis, which was clearly used as a "cover story" for printing a crashing market out of crisis--at least for the moment--before reading this interview. So, some order of magnitude synchronicity there. However, I wonder why Mr Leonard would have included Jan 6 in his telling of the tale, unless this was an Editor's insistence issue, playing to the false binary around that event? Jan 6 was at most a mock-coup, and really, not even that, more a stampede of Wal-Mart shoppers (some Sam's Club) than anything else, shepherded by Federal agents as primary instigators (that's a claim, or opinion, but it seems fairly obvious that this was the case). In other words: Where were the guns? I am not in the least a "right-winger," MAGA Republican, Trumper, or anything of that ilk. Trump's obviously a useful faux-Populist, a perhaps unwitting tool of the Elite, himself a quasi-elite, used to discredit dissent of all stripes, whether legitimate or not. So, how does the Fed's QE really relate to Jan 6? Or, maybe the QE policy ultimately conditioned the fake-"insurrectionary" event of note? That correlation needs to be established, if only hypothetically...
I read these interviews and think to myself, 'that Taibbi guy is pretty fuckin smart about a lot of different sectors'
Great interview. Also, even though I have a couple degrees, and had a thirty year executive career in a very complicated sector, I absorbed maybe 10-20% of the content of this interview.
Mr. Leonard says this: "there’s a passage at the end that describes January 6th as an insurrection that endangered our democracy."
I am not looking to defend Jan. 6, but by the same token I'm not looking to play pile on.
It seems that Mr. Leonard's work shows, as does Matt's and others, that our democracy is indeed in danger. But that danger seems to have existed long before Jan. 6th. Its perpetrators are never brought before a Congressional Committee or locked in solitary for months while the media paints them as savages. They quietly chisel away at our country unnoticed or, more likely, are obfuscated & shielded by a compliant & cowed news media that finds feeding us a steady diet of crap much more profitable for them than actual journalism.
While I think Jan 6th was a strategic blunder, I also think that the revelation that the fucking FBI buried a relevant news story about a laptop in order to sway an election a much more egregious offense than anything that happened on Jan. 6th. Where's the committee looking at that?
It doesn't matter whether you give credence to Trump's blustering or the idea of 2000 mules, the burying of the Hunter Biden laptop story was election fraud.
And no matter how many times people like Hillary ramble on about how essential it is to "tell the American people the truth," without a functional news media that's not gonna happen anytime soon.
So now all the bat shit crazy talk about hyperinflation may not be as crazy as you think, right? After the Fed breaks the real estate market and the stock market what choice will they have but to print more money than ever before?
And where does all the bat shit crazy talk about The Great Reset take us now? Does it foretell a devaluation of all currencies, or maybe just all Western currencies?
I'm definitely inspired now to read the book, although from the interview I'm not quite seeing the connections. I suppose I'm deficient in understanding the role of lending in greasing the wheels of the upper levels of the economy and exactly how low interest rates necessarily widen the wealth gap. Does it have anything to do with stock buybacks, which were illegal until 1982? Is that a missing piece?
Monetary policy as currently implemented is just one gigantic black box in my life, surrounded by black boxes I can't begin to understand in any useful detail. I can only hope that Leonard's book will serve to pry this one open.
A very important article for our times.
I have been following this the last several years, mainly through market commentary by a fund sponsor, John Hussman, as hussmanfunds.com. But this interview, which makes me want to get and read the book, adds a whole additional dimension to my understanding.
The market has already gone down quite a bit this year, but given the historically unprecedented valuations - price relative to sales, to gross value added, you name it - it has much, much farther to go down.
A LOT of people are going to get screwed VERY badly.
‘’ this guy to me represented this political tradition in American life that is dead now, the Eisenhower conservative. The old school conservative who believes in a market, but a market ruled by rules that restrains the worst impulses of capitalism.’’
I could never understand how running up the debt (by cutting taxes), outsourcing all the jobs and starting frivolous wars was a ‘’conservative’’ philosophy but that’s what establishment ‘’conservatives’’ have been claiming for 20-30 years.
I think the ‘’conservatives’’ are abandoning their reckless ship wreck because it’s about to sink. Remember when they said ‘’a rising tide will raise all the boats’’ as they borrowed, cut taxes and outsourced? They were mistaken, it was the tide going out. The ship was never floating it was just sitting on the beach as the tide went out. The tide has changed direction and is coming in through the gaping holes.
Deeply repulsive war whore Glenn Beck is a grifter and liar. It is astonishing that he is still around -- only in the US.