The David McWilliams Podcast Can the New Fed Boss Shrink QE Without Crashing Everything?
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Feb 12, 2026 They unpack who truly controls money: central banks, commercial banks, or markets. The split between currency and finance gets teased out. How banks create money through lending and why Treasuries sit at the center are explored. The risks and politics of shrinking the Fed balance sheet and unwinding QE are debated in short, lively segments.
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Treasuries Are Banking System Collateral
- Banks hold deposits at central banks and use government bonds as collateral for that access.
- Treasury yields therefore sit at the centre of the banking plumbing and set funding prices across the system.
Central Bank Independence Is An Imperfect Fix
- Central bank independence aimed to stop governments from monetising deficits but didn't prevent rising debts.
- The institutional fix became a shibboleth that failed to deliver intended fiscal discipline.
Anglo-Irish's Desperate Short-Term Borrowing
- Anglo-Irish ran out of deposits and borrowed at very high short-term rates before collapse.
- That 12% short-term paper was a clear sign of bankruptcy, McWilliams notes from the crisis.
