YouSaid · the spoken record

Christopher Leonard

lines on the record: 70
first: 2022-01-07
most recent: 2022-01-07
sittings or episodes: 1
sources: podcast

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“Well, if folks are interested, I'm Google or ChristopherLeonard.biz is my site and the book will be available in January from all your wonderful booksellers.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“And to me, as a reporter, one key thing is just that people can understand how we got here. At the very least, try to work from a common set of facts to kind of understand how we got into this position as opposed to this idea that Donald Trump bullied the Fed into doing something or now Joe Biden has ruined the economy. This is a systemic issue that's been building for a decade and I at least want to understand how we got here.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“A crash is terrible and terrifying and awful. I'm 46. I've lived through two of these so far, two century floods financially, one in 08, one in 2020. It's absolutely brutal. High unemployment is absolutely brutal. And so there's nothing to be celebrated at all about the dilemma that we're in. And there's nothing easy about trying to get out of the position we're in right now. So, you know, I do think that this hindsight is 2020, but like the Fed should have restrained itself and shown more wisdom starting in 2010. The situation wouldn't be as bad as it is today. But that being said, there's no easy way out of this position.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“A drop in the value of collateralized loan obligations, which are built on leveraged loans and vehicles like that. Another way of putting that is a wrenching downward adjustment.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“That price inflation could have on the Fed. In other words, price inflation is right now forcing the Fed's hand. They are going to have to tighten much more quickly than they would otherwise want to. This balance sheet of $9 trillion I just talked about, or I think it's $8.8 trillion right now. If you had the job of winding that down, you would want about five to 10 years to do it. Okay. You could kind of normalize over five, ten years. The Fed's not going to have five or ten years. So what that means is as they raise rates, as they withdraw the excess cash from quantitative easing, we're going to have to face the reality that markets will rationally readjust themselves to a new reality of higher rates and less excess cash on Wall Street and time and again. We've seen that that reality looks like a retreat from risk assets.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“And acquisitions, a run in these debt markets, didn't do much for the working class. We have now doubled down on that again to avoid the catastrophe of these lower asset prices after March of 2020. So now the Fed is a real bind. It's like getting squeezed in a vice in the sense that it keeps upping the money supply to calm down asset markets and keep asset prices high and make it look like everything's normal. And that works fine as long as you never have to pay the bill. One of the big problems with price inflation is that it can be very destabilizing economically. It's really hard on working class people if wages don't keep up, which they're not doing today. But maybe even more worrisome is the triggering effect.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Bit now, but not fast enough to keep up with the price inflation that we're seeing. You know, you can go on and on about the fragility of our supply chain, which has come into direct view. And just the falling behind of the middle class. So the Fed's policies help describe the mechanics behind this strange environment in which we find ourselves. And so what happens next, the long crash I'm talking about refers to the idea that after a financial crash, you have very weak growth. And that is exactly what we were seeing in 2010 when quantitative easing really began. And, you know, rather than grow our way out of it, the Fed tried to flood the system with money to stimulate our way out of it. Ultimately, that program only encouraged stock buybacks.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. All right. I fully validate, by the way, the point of view reflected in that tweet thread and exactly what you just said. This is why I wrote the book is I feel like what the Fed has done is critical to understanding this very bizarre economy. We live in. It is like a fun house mirror in the sense that asset prices like houses are rising double digit levels. And asset prices in the stock market are rising. Corporate debt markets are breaking records right now after they almost collapsed catastrophically in 2020. So you see this froth and ferment at the same time. Our real economy can only be described as limping sideways. I mean, wages have been flat for decades. Thank goodness they're rising a little.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, first of all, I really have to push back at that negative characterization of caffeine. You can survive off of caffeine for a long time. And I'm kidding. 12 years.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“trillion in 2014. That was a big deal and had never been that big. Now it's hovering near nine trillion. And a lot of this has been added since March of 2020. So that's where we are today as a sort of quadrupling down on the program.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“The Federal Reserve printed 300 years worth of money in about two months. And they did massive rounds of quantitative easing, which continue to this day. It has become normal operating policy. And the Fed expanded its remit dramatically. I mean, it started directly buying corporate junk debt, for example. It was one of the massive asset bubbles that the Fed had been stoking over the last decade, was in corporate debt. The Fed said it was going to directly buy those kinds of loans. When the price came due for the easy money policies of the 2010s, the Fed responded literally by quadrupling down on the easy money policies. And so, you know, there was a lot of debate, a lot of controversy over the Fed's balance sheet, which is a reflection of its intervention, how big it is. The Fed's balance sheet hit 4.5%.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Seized up. The Fed responded By executing the entire emergency playbook of 2008-2009, basically over one weekend. And what I'm saying is all the stuff Ben Bernanke did over about eight months. Was the swap lines you just talked about? And that's such an interesting part of this whole thing because the swap lines were barely disposed publicly when they first were initiated in 2008. And like you said, they're basically a subsidizer guaranteed loan in dollars to foreign central banks that are dollar dependent. So it means that the Fed is expending its dollar creation power to help central banks in Europe. And it was employed to a huge level in 08. And then it sort of quietly died down. And then it was deployed once again very, very quickly in 2020. But even the swap lines were just the beginning of what happened in 2020. I mean, I talked about earlier how the Fed printed 300 years worth of money in a few years. In 2020,”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Well, it's fascinating. Okay. So the swap lines really open up in March 2020 when COVID hits. I want to point out, you know, there's a great book about COVID called Shut Down by Adam Toos. And it really brings to light this was a historic generational economic catastrophe. There's no getting around that. But we've also got to recognize this was a wave that hit financial markets that were tremendously fragile priced to perfection and vulnerable to a shock, as we just talked about. I mean, the Fed couldn't even raise interest rates. And that's why COVID hitting that market created a financial crisis that was worse than 2008. And it's amazing what happened in the market for U.S. Treasuries in March of 2020, Financial Times put it well when they said this analyst said this wasn't supposed to be possible. The Treasury markets literally”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Keep the basic bread and butter, nuts and bolts of Wall Street working just to keep the repo markets settled. And the reason I call it an invisible bailout is because, you know, the Fed presented this as like a plumbing maneuver. Okay. This is what we had to do to keep the system flowing. But really what they were doing in the book lays out how this works is they were bailing out hedge funds who had taken on enormous risky, highly leveraged bets called basis risk trades. And they got caught short by the repo price increase and they got bailed out by the quantitative easing. And this was standard operating procedure in late 2019. And that's before the first COVID case.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Much excess cash out of the banking system. They had, quote, quantitatively tightened just a little bit too much. And just that little bit too much caused the markets to seize up. And we've got to remember, there were still tremendous amounts of excess cash at this time, but it was too little to keep the system operating. And the Fed had to rush in with a bailout. First, they did hundreds of billions of dollars in repo loans, but then they unleashed quantitative easing again, which had once been an emergency program but is now necessary for daily maintenance of the financial system. The Fed printed $400 billion in a few months to pump cash back into Wall Street, and that brought those repo prices down again. And to me, what's so telling about this story is it shows the Fed was trapped in this money printing cycle just to”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“And the traders who worked for them talk about being shocked in early September when RIPA rates start to spike. They knew there might be a little bit of increase at this time for various reasons. The short-term market rate jumps from about 2% to 10%. It can't be overstated that these are bank panic numbers. When a repo loan costs 10%, it's a bank panic. What was so strange about this was there was no reason for a bank panic. I liken it to that sort of thing we see now in the era of global warming, the so-called sunny day flooding when a town will flood when there's no storm. It was like, why would we be seeing the repo market seize up when there's no big news on the horizon? Because, you know, back in 2008, the repo markets had spiked, but Bear Stearns had collapsed. It made sense. What was going on and what the Fed understood is that they had taken too much.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“But it's a short term loan market that's really the lifeblood of Wall Street. It's an ultra-safe overnight loan market whereby I, as a big bank, loaned somebody some treasury bills. They give me the corresponding same amount of cash. And then we flip back really quickly the next day and I pay a minuscule interest rate for the privilege of that loan. The interest rates are so low because a repo trade is supposed to be riskless. The person loaning the money has hold of these treasury bonds that are the collateral. In early September 2019, the repo market seized up. It was shocking. You know, I interviewed the top officials at the New York Federal Reserve Bank whose job it was to oversee the repo market and Lori Logan, who was over the trading desk and John Williams, who's president of the New York Fed.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“That's right. It's such a fascinating story. This happened in September of 2019, which in retrospect was sort of as good as things were going to get for a long time. This was a few months before the first COVID case shows up in the United States. And the Fed at this time, in late 2019, was involved in the struggle I just described. They knew they needed to withdraw the excess cash from Wall Street, that they had pumped in through quantitative easing. They knew they needed to raise interest rates slowly but surely up to a level of maybe 3% to 4%. They never got higher than 2.5%, by the way, which is historically a very low interest rate. So the Fed was struggling to quote normalize when in September we saw a banking panic. It's very interesting. I'm sure your listeners, you know, there are enough in financial markets. They know what the repo market is.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Bizarre it was for the Fed to cut rates as the economy was growing. And what it shows was the Fed was trapped. Just as Thomas Honegg warned they would be the Fed was trapped and had to keep pumping money into the system or else the system would short circuit.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“They couldn't raise any higher than 0.5%. They were never able to truly withdraw the excess cash from the financial system through so-called quantitative tightening. All of this came to a head in late 2018. I don't know if you remember Christmas Eve 2018. There was a stock market crash that was very bizarre because Christmas Eve is usually a pretty light trading day, but the S&P was down 3% that day. And Powell pivots. Powell pivots in January 2019 and says, we are not going to normalize. We are going to stop raising interest rates. We're going to stop drawing this excess cash out of the banking system. And then by July of 2019, Jay Powell is cutting interest rates in the face of economic growth. The Washington Post reported on this really well. Heather Long, great reporter on the Fed at the time, was pointing out how”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Again, when you push this much money into the banking system, you are stoking asset prices. You are creating asset bubbles. And that would be absolutely fine if you could live in that condition forever. But unfortunately, asset prices almost always converge again with the value of the asset. These bubbles crash. And Jay Powell, when he got to the Fed in 2012, was saying we have got to draw down these excess cash levels. We've got to raise interest rates or we are going to see a quote large and dynamic event. Economists talk for a major crash that we're not going to be able to control. The Fed had been trying to do this. They'd been trying to normalize. Honestly, since about 2010, when you look at the transcripts, but in a very public way since 2014, and they were not able to do it, the Fed said that during 2016 it was going to raise rates from zero to 1.375.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Happened. It's such a fascinating history of the Fed trying and failing to normalize between 2015 and 2019 and then leading into the COVID crash. I think it's a myth that Jake Powell stood up to Donald Trump or in any way defended the, you know, I mean, that was a political theater. The whole thing was political theater. In fact, the Fed had been trying to, quote, normalize. And what that means is they wanted to raise interest rates back up to a historically normal level of, let's say, 3%. When you look back over the last 60 years, three to four percent was seen as sort of a normal interest rate. And at the same time, the Fed was trying to draw down the trillions of dollars in cash, in excess cash that it had injected into the financial system. There was a lot of pressure on the Fed to do this. Incidentally, not coincidentally, a lot of this pressure came from Jay Powell, who argued vehemently when he became governor in 2012 that the Fed needed to pull back. And the reasons are clear.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Well, in my view, okay, having reported this, Donald Trump is uncouth, rude, doesn't play by the rules, says whatever he wants, tweets like crazy, goes on TV and says all kinds of crazy things. And people talk about how he bullies officials, like poor Jeff Sessions, the former Attorney General, was just bullied out of a job. Jay Powell wasn't being bullied by Donald Trump. Jay Powell was being bullied by asset prices. That's what mattered to Jowell. That's what got his attention. And that's what ultimately caused him to do exactly what Trump wanted, which was to pivot on tightening, to stop trying to normalize the financial markets, to stop pulling back the Fed's extraordinary stimulus, and to simply cut rates and resume the printing of money through quantitative easing. If you really walk through what”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“To slash interest rates, to peg interest rates at zero. The problem is when the asset bubbles you've created inevitably crash, that's where things get heated and hectic and there's a lot of criticism. But amazingly during crash moments like that, everybody turns to the Fed for yet more easy money policies to help bail everybody out. The Fed is seen as a hero and the situation repeats again. So, you know, I actually think that there are systemic pressures that push the Fed toward easy money policies. A key, you know, the one time you saw somebody break from this was in the early 1980s when Paul Volcker, who was a Wall Street guy, came in and was chairman of the Fed, hiked interest rates from about 10% to 19%, and killed inflation, destroyed an asset bubble. Of re rationalize the monetary system. No one has done that since.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“I think essentially all pursuing the same philosophy of monetary policy. And when we saw this supposed debate recently about whom Joe Biden ought to appoint to be chairman of the Fed. I think the best assessment is that easy money policies do not antagonize the most powerful institutions in the United States. And that would be the very, very large hedge funds, the very, very large private equity firms, the biggest of the big banks. If you're keeping rates low and you're stimulating financial speculation and debt accrual and the sale of debt, you know, the people who you are not going to make mad are Jamie Diamond, you know, the head of Carlisle group, Larry Fink, people like this are not going to take to the airwaves at CNBC and criticize you. So there's this sort of movement in that direction, I think. It makes it a lot easier.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Not able to take huge action to stimulate economic growth from either a conservative angle of slashing government, slashing entitlement, slashing regulations, or from a liberal perspective of a kind of new deal where you're directly hiring workers, you're breaking up the big banks. Fiscal authorities have not been able to do anything big on either front, and that leaves the monetary authorities to kind of step in and act. So yes, this institution is driven by humans. And I think they, well, I know they acutely feel the pressure to do something because they're human beings too. So you've got a political bias, I'd say, toward intervention or toward exerting pressure. But then, you know, you talk about the higher power. It's very interesting that you've got Bernanke yelling and Powell.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Okay, I think there are a couple things going on. Let's look back again to that sort of instructive example of the 1960s. When you go back and look at why the Fed kept money too easy for too long in the 60s, it was because, you know, leaders at the Federal Reserve are humans just like the rest of us. They're reading the newspapers. And when unemployment is low, citizens look to their government to do something. And we've got two engines of action on economic affairs. We've got our fiscal authorities, which would be Congress, the White House, the Department of Treasury, fiscal authorities. And then you got your monetary authorities at the Fed. You know, this is a big story to unpack, but definitely since 2009, our fiscal authorities have been on the sidelines, more or less paralyzed by dysfunction.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“And the Fed did a great job of stepping in to stop the bleeding during the financial crisis, which everyone would want to do. It's what came next. It's what the Fed did during the recovery, during the decade of the 2010s that I argue broke the U.S. economy.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“It coincided with a very interesting period in history when we really didn't see price inflation during the 90s, during the 2000s. The Fed, if we're being honest, the Fed has no clue why we haven't seen a strong price inflation. Everybody's got their good guess as to why it never happened. But the key is the price inflation is the one thing that could have put the brakes on the Fed's easy money policies. And so you saw Greenspan keep rates too low for too long. It led to the stock market asset bubble, which crashed. The Fed responded with more low rates in the 2000s. It kept rates too low, too long in the 2000s, which created the housing asset bubble, which crashed. And that brings us to 09, kind of in the shadow of that massive financial crisis, huge, huge global crisis.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“In my mind, one of the most important policy frameworks that happened during the Greenspan era, this decision to focus only on price inflation. And what I'm saying here is the Fed felt that it could keep rates low as long as it desired to stoke more lending and hopefully more growth. As long as it never saw consumer prices rise too fast or too hard. And consumer prices, that's everything, you know, bread, gasoline, television sets. At the same time, the Fed and the leadership made a very concentrated, a very concerted decision that they would not worry about asset price inflation or asset bubbles. And if assets were roiling and frothing and there was this irrational exuberance we've heard about, the Fed was not going to step in and try to stop that. This was a really important policy decision.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“No, I think you've really put your finger on a very important historical moment with the Greenspan era. I do want to point out that in the book, I talk about the great inflation of the 1970s and lots of lessons we can draw from that. And that happened. There's this fantastic history, 2,000-page history behind me, like by Alan Meltzer about the Fed, and he just walks through in granular detail how during the 1960s, the Fed knew it was keeping rates too low and it would try to raise rates a little bit to slow down inflation, but then it would face political pressure because economy was hitting a rocky road. So it would lower interest rates again and put more money into the system. And that's what led to the great inflation in the 1970s. The greenspan era is critical. It is the foundation of where we are today.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“And so the governors would come into the meeting knowing how they were going to vote. And so at most, you might have one cantankerous regional bank president vote no, but they're always isolated, they're always marginalized. And that's how consensus gets built at the Fed. And frankly, that's why the consequences were so significant for Tom Honnick to vote no so many times. I think it's safe to say, you know, I have come to the conclusion that Tom Hunig was right and that he made a principled informed argument in his dissent. But it's also fair to say he largely threw away his reputation through this string of no vote. He certainly could kiss any job consulting for citadel or blackstone goodbye. I mean, he trashed his reputation in certain circles on Wall Street, but he felt it was really important to vote no on this and to break the consensus.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“To four, six to three, you name it. At the Fed, it's almost always 12, 11, 1, 11, 10, 2, and wild outlier. This is very much done on purpose. You know, one of the most interesting interviews I did for the book was with a former Fed governor named Betsy Duke, who's a former Wells Fargo banker, who's a Fed governor for many years. And I mean, she just talked very candidly about how those board of governors would meet before the meeting and decide what the vote was going to be, all orchestrated by the chairman at the time, Ben Bernanke. And this is key because the governors always hold seven seats on the voting committee of the FOMC. They always have a majority. You can't vote. You can't beat the governor.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“The greenspan mystique that I talk about in the book or the Fed speak phenomenon, as they call it. And Fed speak is just to make everything sound so impossibly complicated that anybody hearing it must instantly assume I could never understand monetary policy. Thank God we've got someone like Greenspan, Bernanke, Yellen, or Jay Powell in charge who can understand this. A key part of enforcing this view that the Fed is an Olympian group of brilliant technocrats is to have consensus and unanimity. It's very important that the votes on that committee I mentioned, the FOMC, the votes are almost always unanimous. I mean, it's a big deal when one or two people vote no on the FOMC committee. I mean, we see Supreme Court decisions all the time that are”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“away from the public and put in it into the hands of a very small group of technocrats inside the Fed. And, you know, the thinking behind that wasn't like entirely crazy. The thought was the power of managing currency is so important. We can't leave it in the hands of grubby, corrupt politicians. It must be left in the hands of an institution that is insulated from the passions of politics. That was the idea. But what we've really seen definitely accelerated since the Greenspan era began in 1986 was that the Fed started to present itself as this sort of Olympian group, this Olympian committee of brilliant PhD economists who are not really even making policy decisions, but who are just solving math equations. That's the sort of”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Got it exactly right. You could say cult, you could say extreme groupthink. This really does tell a much bigger story. You know, that period I talked about in the 1800s, early 1900s, the politics of money and how to manage our currency was a retail political issue. It's stuff people cared about. When Williams Jennings Bryan ran for president, he had this famous quote up on the campaign stump where he talked about, you know, you shall not crucify mankind on a cross of gold. It was this line that just drew the huge applause. That was a line about money policy. He was talking about monetary policy. That all changed, to be honest, when the Fed was created. This started this slow evolution of taking the politics of currency.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Made again and again and again. And you can see in terms of his descent, he'd been at the Fed longer than anybody else during this critical period of 2010. He'd been there for 32 years, was never a dissenter. He'd cast two no votes in his entire career. And then in 2010, he casts an unbroken string of eight no votes. Well, that tells you something. He threw his entire career on the line to try to stop this policy. And he failed entirely, but he knew he was going to fail, I think, toward the end, but he wanted to send a message to the American public to at least let them know that there had been a debate about this. And some people had tried to say no.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Driving economic growth in America, and we decide to do it by keeping interest rates pegged at zero while pumping 3.5 trillion dollars into the Wall Street system, we're going to do create a lot of bad side effects. We're going to create asset bubbles just like the dot-com or housing bubble that'll make Wall Street very vulnerable to shocks and crashes. We're going to find it impossible to stop printing the money once we start. We're not going to be able to get back out of this plan. And we're going to essentially enrich the very richest of Americans because the primary way these policies work is by stoking asset prices. And, you know, the top 1% of Americans own 30% of the assets. He called it an allocative effect. We're going to allocate money in America toward the biggest of the big banks and the richest of the rich Americans while creating a lot of instability. And this is an argument he made.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“This sort of Old Testament monetary policy guy who's a quote ultra hawk who is against government intervention and who voted no for the sake of voting no and who critically was most worried at all about inflation and hyperinflation. And he was proven wrong because we never had price inflation until the year 2021. All of that is wrong. That's what shocked me. When you go back and read the actual historical record, It tells a very different story. And luckily we have access to the internal debates, you know, transcripts of the internal Fed debates are released after a five-year delay. So we can go back and see what people said at the time, both inside and outside the Fed. And Tom Honig was making a very specific argument that takes some time to unpack, but what he was saying in 2010 was if we go down this path, if we decide to become the central force,”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“This guy named Thomas Honig, who was president of the Kansas City Federal Reserve Bank. And when I got obsessed with quantitative easing, I started researching it and saw that the really pivotal vote that started all of this on November 3rd, 2010, was the vote to unleash a new and unprecedented round of money printing or quantitative easing. And the vote was 11 to 1. And so as a reporter, you're just sort of like, well, that's an interesting number. It's not six to five or three to eight. It's 11 to 1. Who was the one? Why would someone be the sole person who voted against it? And that's sort of what led me to Thomas Honig, who was the one no vote. And that's really what began the core of this book, because Thomas Honick has been misremembered by history. He's seen as this sort of cranky dissenter.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Let me please hasten to say lest your listeners think I'm bomb thrower. When I say broke the American economy, I believe the evidence is overwhelming. The Fed has dramatically widened the gap between the very richest of the rich and everybody else, which destabilizes society. The Fed's actions over the last decade have created a lot of fragility and instability in our financial system by stoking asset bubbles in corporate debt, commercial real estate bonds, stock market, you name it. We're in a real predicament because of that today. And then finally, it has simply encouraged immense amounts of indebtedness in households, corporations, and government. So we have a lot of bills that have yet to be paid because of what's happened over the last decade. So I think a great place to start and talk.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Has really consolidated away from the regional banks and into the Eccles building where you've got seven governors who are selected by the president and approved by Congress who really make these key decisions about how our currency is managed. And now way more than that. I mean, what the book is talking about is how the Fed has become incalculably more interventionist than it ever has been in its history and is now doing way more than just setting interest rates. But anyway, those decisions are confined now to the Board of Governors largely in DC. And the last thing I'll say is that these governors sit on a very important committee called the Federal Open Market Committee, the FOMC. It's probably the most powerful body on economic affairs in the United States.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“Around the central bank are built into the Fed. I mean, it's really a network of 12 regional banks. There's no one federal reserve bank. There are these 12 banks around the country clustered in a map that really reflects what the world looked like in 1913. There are two banks in Missouri, for example, and only one really out on the West Coast in San Francisco. And the governing structure was supposed to be decentralized, like, you know, to reflect the federalist model of the United States, the regional bank presidents had authority. But then the Fed created this governing body in DC, okay? This is the key headquarters of the Fed. It's in a building on the National Mall called the Eccles Building. The Eccles Building's not a bank. It's this home of a board of governors. And what we've seen over the decades is that power.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“I would present a banknote from Ohio, and we would have to argue about the soundness of that currency. This led to an era of financial instability. We had long periods of deflation. We had regular bank panics. And finally, in 1913, we established a central bank with two key jobs. One was to create a national currency called the Federal Reserve Note, otherwise known as the dollar. The second thing the Fed did was it took the role of being the lender of last resort. So if there was a bank panic, the Fed could create new money, lend it to banks that were otherwise sound that would have been hurt by the panic, and stop the panic. That's what the Fed was created to do. And it actually did a pretty exceptional job along those lines over the next century, which we can talk about. But, you know, to your point of who owns it, who runs it, the tension...”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“The Fed is the result of a bizarre experiment of genetic engineering and government. It's part private enterprise. It's part bank. It's part government agency. And I try to walk through this history really briefly in the book, but up until 1913, we really experimented a lot with money. The United States was very resistant to creating a central bank. If you could have a modern industrial capitalist society without a central bank, we would have done it. There's always been this reticence in the US to create something that could be so powerful. As a government-run central bank, the worry was that it would displace the private market. The problem is we had this sort of wild west of currencies. I mean, literally in the late 1800s, there were hundreds of currencies in the United States. So if I went to Oregon and stayed in a hotel,”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“So that's what this book is about. It starts when this era, in my estimation, really started, which was November 3rd, 2010, and then it takes us up through the present day after the COVID crash. And what you see is a system totally re-engineered by the Federal Reserve.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“What we're talking about now is a step change, a breaking of the graph, a new era in history. And this has had really dramatic side effects in our economy, in our financial system, in our banking system. I mean, this money wasn't a neutral force. It really did change the shape of the American economy. And that's what got me obsessed with the Fed in 2016. I mean, I had read a lot about the Fed and its emergency rescue efforts during the crash of 08, but it's what came next. It's what came during the decade of the 2010s that I felt was not written deeply enough about. Okay. There wasn't a book about quantitative easing or seven years of zero percent interest rates. And that's the era that really fascinated me.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“What he told me is that, you know, in the first century of its existence, the Federal Reserve printed about a trillion dollars. And specifically what we're talking about is it increased the monetary base to about $900 billion. The Fed as an institution has one superpower. It can create new dollars out of thin air. And no one else can do that. And that's why the Fed is one of the most powerful institutions in the world. And these dollars it creates are new money, high-powered money, foundational money that we call the monetary base. So over a century, the Fed boosts the monetary base slowly and incrementally to $900 billion. And then in about three and a half years after the crash of 09, the Fed prints $3.5 trillion. In other words, it does three and a half centuries worth of money creation in about three years. So wow.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“This is how these two things bleed together. One of the things I love about being a reporter is you get to meet all kinds of people. I mean, I just love it. I have talked to folks totally across the political spectrum in all walks of life. And reporting Cokeland put me into contact with some extremely interesting people. And there's this one guy I talked to who talked to me on background. So I can't say his name. I'm not trying to be Coy or anything. Super brilliant guy. And we talked for 11 hours during our first interview. And, you know, to talk about asset markets. And this was back in the year 2016. And I think that this guy didn't have people to talk to about this and was just sort of happy to have an open ear. And he laid out for me what he was seeing in markets. And it blew my mind. And one headline I'll take from.”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT
“It for like $15,000 of campaign money. They've been very smart in taking this kind of 360 degree approach to influencing politics. And, you know, I mean, you asked about a specific story. They pushed very, very hard against the cap and trade bill to control climate emissions back in 2010. And they've got an extraordinarily sophisticated network to do that. I mean, they would. You know, I show in the book how they pay someone to do a study without having Coke's name on it. And then they pay their think tanks to amplify that study and go testify in front of Congress about it. And then they use material from those congressional hearings to make political ads to target vulnerable senators who are in the way of their agenda. It's a pretty complicated machine that all works together and COAT can keep its fingerprints off of it. And”
2022-01-07 · We Study Billionaires · TIP411: How the Federal Reserve Broke the American Economy w/ Christopher Leonard · IDENTIFIED FROM THE TRANSCRIPT