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Jeff Snider, Head of Global Investment Research for Alhambra Investments with Emil Kalinowski, falling out of balance, splitting his differential and tipping the h— over. Artwork by David Parkins.


31.1 Fed is Only a Bank Regulator – NOT a Central Bank
Central banks regulate money supply – the Federal Reserve does not. The Fed does not control US dollars. Consider what came of Fed research Marvin Goodfriend’s writings in the 1980s and 90s the eurodollar system and its enormous, ocean of offshore dollars? Nothing.

[Emil’s Summary] American economist and New York Times columnist, Paul Krugman entered the economics profession to follow in the footsteps of Hari Seldon, a psychohistorian living on Trantor, approximately 10,000 years into the future. Seldon, psychohistory and Trantor are all from Isaac Assimov’s Foundation series published between 1951 to ’53. Seldon used, “the mathematics of human behaviour to save civilisation,” as Krugman put it. Admittedly, “economics is a pretty poor substitute”, muses Krugman, “[b]ut I tried,” he says. Many would say he’s done so very successfully having been awarded the Nobel Memorial Prize in Economic Sciences for his contributions to New Trade Theory and New Economic Geography.

Is he the best psychohistorian alive? Your podcaster does not think so – they hand out those Nobels like candy. No, the best is Hungarian-American George Friedman, the geopolitical strategist. As proof this podcaster offers his 2009 book titled: “The Next 100 Years”. Sure, Seldon forecasted the next 1,000 for the galaxy, but still, who on Earth is offering an outlook for the next century?

In Friedman’s book, Japan plays a very prominent role, second only to the United States. In macroeconomics and monetary policy Japan plays a central role too. It is the scout. Recon as the Americans call it; recee to the Commonwealth. The Bank of Japan is about seven years ahead of the main central banking force. And it’s waving back at everyone to, ‘Stay back! Don’t come this way!’ Is the warning lost in translation? Is it ignored?

Spanish essayist George Santayana famously noted, “Those who cannot remember the past are condemned to repeat it.” But your podcaster prefers Friedman’s quip that, “Studying history has little practical utility in averting past outcomes. We are doomed to repeat history whether we know it or not.”


00:05 What is the Fed? A domestic bank regulator or a central bank in charge dollar supply?
00:42 Who was Marvin Goodfriend?
02:14 Goodfriend was held to account for “wrong predictions” during his nomination process.
05:24 Goodfriend identified the staggering size of the eurodollar system but then IGNORED IT.
12:54 The eurdollar system was growing 2.5-times faster than official money in the late 1970s.
14:30 Al Broaddus and Goodfriend suggest that calm monetary eras might merely be good luck.
16:51 “Good Luck” was an answer in a 2003 study as to what was behind the Great Moderation.
22:15 Vice Chair for Supervision Randal Quarles says the lack of a bank bust is an ‘All Clear!’.  


Bond Yields Are Really Quite Easy to Understand: https://bit.ly/2T3rQNT
Marvin Goodfriend’s 1981 “Eurodollars” article : https://bit.ly/2HgoRyL
J. Alfred Broaddus Jr.’s 1993 ‘Good Luck’ article: https://bit.ly/2SYebHM
Randal K. Quarles’ 2020 ‘All Clear’ speech: https://bit.ly/319RuVF
Alhambra Investments Blog: https://bit.ly/2VIC2wW
RealClear Markets Essays: https://bit.ly/38tL5a7