“Fed Watch” is the macro podcast for Bitcoiners. Each episode we discuss current events in macro from across the globe, with an emphasis on central banks and currencies.
lost decades of low growth and low inflation, addressed by the best monetary policy tools of the day, by some of the best experts in economics (maybe that was the mistake). None of it has worked, but let’s take a minute to review how we got here.
who claimed the BOJ failed because they had not “credibly promise[d] to be irresponsible.” They must change the inflation/growth expectations of the people by shocking them into inflationary worry.
As the world is now dealing with massive price increases due to an economic hurricane, the government bond yield curve in Japan is pressing upward, testing the BOJ’s resolve. As of now, the ceiling has been breached several times, but it hasn’t completely burst through.
The yen is also crashing against the U.S. dollar. Below is the exchange rate for how many yen to a U.S. dollar.
Federal Reserve DSGE Forecasts
Federal Reserve Chairman Jerome Powell went in front of Congress this week and said that a U.S. recession was not his “base case,” despite nearly all economic indicators crashing in the last month.
Here, we take a look at the Fed’s own dynamic stochastic general equilibrium (DSGE) model.
The New York Fed DSGE model has been used to forecast the economy since 2011, and its forecasts have been made public continuously since 2014.
The current version of the New York Fed DSGE model is a closed economy, representative agent, rational expectations model (although we deviate from rational expectations in modeling the impact of recent policy changes, such as average inflation targeting, on the economy). The model is medium scale, in that it involves several aggregate variables such as consumption and investment, but it’s not as detailed as other, larger models.
European Anti-Fragmentation Cracks
Only a week after we showed watchers, listeners and readers of “Fed Watch” European Central Bank (ECB) President Christine Lagarde’s frustration at the repeated anti-fragmentation questions, EU heavyweight, Dutch Prime Minister Mark Rutte, comes through like a bull in a china shop.
article from Bloomberg where Rutte claims it’s up to Italy, not the ECB, to contain credit spreads.
What’s the big worry about fragmentation anyway? The European Monetary Union (EMU, aka eurozone) is a monetary union without a fiscal union. The ECB policy must serve different countries with different amounts of indebtedness. This means that ECB policy on interest rates will affect each country within the union differently, and more indebted countries like Italy, Greece and Spain will suffer a greater burden of rising rates.
The worry is that these credit spreads will lead to another European debt crisis 2.0 and perhaps even political fractures as well. Countries could be forced to leave the eurozone or the European Union over this issue.
A Look Back On 100 Episodes
The last part of this episode was spent looking back at some of the predictions and great calls we’ve made. It didn’t go according to my plan, however, and we got lost in the weeds. Overall, we were able to highlight the success of our unique theories put forward by this show in the Bitcoin space:
A strong dollar
Bitcoin and USD stablecoin dominance
The U.S.’s relative decentralization makes the country a better fit for bitcoin
Bearishness on China and Europe
That does it for this week. Thanks to the watchers and listeners. If you enjoy this content, please subscribe, review and share!
This is a guest post by Ansel Lindner. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc. or Bitcoin Magazine.