Money Printing & the Debt Spiral with Macro Alf

 
 

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“This direct connection that mainstream economics wants to draw between the amount of bank reserves in the system and lending, stimulating the economy, doesn’t exist.”
— Macro Alf

SHOW DESCRIPTION

Macro Alf is the founder of The Macro Compass, an investment strategy firm. In this interview, we discuss different types of bank money, QE, deficits, money printing, and whether a debt spiral is looming.

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What constitutes ‘money printing’ is a hotly contested topic and something we have convered on the show numerous times. The debate among economists of what "money printing" is and its impact on the ‘real economy’ revolves around two key ideas: the definition of money printing and its actual influence on the economy.

While some experts equate money printing with direct central bank action like quantitative easing, others take into account broader credit creation and the impact that has on the broader money supply and the economy.

The delineation between the financial sector and the real economy is the crucial proponent and while some economists view money printing as primarily affecting asset prices and financial markets, with limited direct impact on the production of goods and services. Others stress that adding liquidity to the system is enough to create financial stability and increase confidence in the economy, therefore, affecting consumer and business decisions, and again, the ‘real economy’.

In this episode, we get to the bottom of money creation, how it impacts the economy and the role of central banks in managing an economy.

TIMESTAMPS

00:01:51: Introductions
00:02:47: Money creation
00:05:59: Bank reserves
00:15:10: Japan's economy
00:19:36: Portfolio rebalancing theory
00:29:09: Creation of real money
00:34:46: Inflation and austerity
00:39:03: Private sector credit, and financial elasticity
00:51:38: Skewed political incentives
00:57:53: Credit ratings
01:03:22: BRICS and the global reserve currency
01:07:51: Impending debt spiral
01:14:21: Final comments

 

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SHOW NOTES

PodcastPeter McCormack