Gold Goats 'n Guns Podcast Episode #192 - Bob Murphy and the Real Problem with Interest Rates
Sep 5, 2024
Bob Murphy, a Senior Mises Fellow and Chief Economist at Infineo, dives deep into the complexities of interest rates and the precarious nature of monetary policy as the election approaches. He critiques the Federal Reserve's actions, emphasizing the implications of an inverted yield curve and potential economic recession. The discussion touches on the geopolitical landscape, the rise of alternative financial frameworks, and the shifting power dynamics influenced by social media. Murphy also reflects on the intertwined nature of government control and individual freedoms.
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Long Inversions Predict Harsher Recessions
- Longer, deeper yield-curve inversions tend to presage worse recessions.
- Murphy and Tom expect this prolonged inversion to foreshadow a particularly nasty downturn.
Assess Fed Moves By Constraints, Not Labels
- Evaluate Fed actions by institutional constraints and goals, not just ideology.
- Treat Powell's moves as attempts to restore credibility and deter expectation of constant bailouts.
IOER Blocked Money Transmission
- Interest on excess reserves (IOER) let the Fed pay banks to hold liquidity instead of lending it out.
- That mechanism explains weak inflation despite large post‑COVID money creation.