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In this episode of Bitcoin MagazineIn the “Fed Watch” podcast, presenters Christian Keroles and Ansel Lindner welcomed the show Jeff Snider, Head of Global Research at Alhambra Partners. Snider writes a great blog at the Alhambra, is syndicated elsewhere, and is creating a thought-provoking podcast with Emil Kalinowski called “Making Sense: Eurodollar University”.
Snider is the leading expert on the Eurodollar system, the great global financial system based on the offshore dollar. The history and data he collects to aid his analysis of the monetary system is second to none. There is no other guest with his extensive and accessible knowledge of the Federal Reserve, so he’s the perfect guest for Fed Watch.
That being said, in this episode we initially received an update on the world of powerful money installations, in particular we wanted to know if we were in a reflation cycle. Other macro experts use terms such as “K-shaped” or “L-shaped recovery” when talking about a reflation cycle. Some things look K-shaped, which means that certain populations have recovered while for others, namely the poorest among us, they remain very bad. An L-shaped recovery means that no jump was noticeable during the recovery. Snider navigates through these distinctions and gives a good overview of the situation out there.
Next, we went straight to a discussion on Central Bank Digital Currencies (CBDCs). These are new forms of digital currency provided by the domestic central regulator of each currency, the central bank. Snider has recently covered these developments in more detail in his content. It’s a big issue and here we’ve just scratched the surface. One aspect I am specifically addressing is the fact that the dollar has brisk private issuance of a stable digital dollar while other currencies cannot claim that. It is the other central banks, particularly the ECB and the euro, that are most aggressively pursuing a CBDC. The market provides around 100 billion US dollars in “digital dollars”. Nobody seems to want digital euros urgently enough to be privately produced. We get Snider’s opinion that the central banks most fearful of losing market share of their currency to a private digital dollar in the next five to ten years are the central banks that are most aggressively pursuing CBDCs.
As we continued our long conversation, we looked at the interest rate error, which is very important to understanding the monetary system, and we tried to analyze “asset price inflation”. Currently, any rise in prices is referred to as inflation by the inflationists, while all hidden destruction and deflation of wealth are ignored. You really have to listen to it. It’s short but very dense.
The common theme of much of Snider’s content emphasizes how little we know about how the dollar system works, and claims of inflation versus deflation often gloss over the obvious reality that growth is nowhere to be found. We are in a low-growth environment with further slowdowns under pressure. Don’t confuse high prices due to a shrinking economy with the inflationary effects of money pressures.