Palisades Gold Radio, Released on 4/24/21

0:00​ – Introduction
0:34​ – Bond Yields
1:45​ – Inflation & Wages
8:44​ – CPI Metrics
10:23​ – Inflation Hedges
13:10​ – General Risks
15:17​ – Alternate Paths?
17:39​ – Wealth Inequality
19:16​ – Digital Dollar
23:05​ – Janet Yellen
26:52​ – Capital Gains Taxes
28:50​ – Historical Wisdom
29:52​ – Wrap Up

Talking Points From This Episode
– Debt, Leverage, and Bond Yields.
– Stimulus and Employment Problems.
– Price to Earnings and Systemic Risk.
– Central Bank Digital Currencies and Dollar Concerns.

Tom welcomes back Danielle DiMartino Booth, CEO and Chief Strategist for Quill Intelligence, a research, and analytics firm.

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America is a very indebted country, including American households, corporations, and the national debt itself. Servicing all this debt is only possible because the Fed has been able to keep bond yields near zero.

She outlines some of the inflation and trade problems last year combined with the massive amounts of stimulus. Stimulus programs and extended unemployment benefits have resulted in rising home prices, vehicle prices, and a considerable spike in revolving credit card debt.

A year ago, we had millions of hospitality jobs lost, and she believes there will be other adverse effects on wages. People are staying out of the workforce because of various unemployment benefits, resulting in unintended consequences for businesses.

Danielle discusses some of the systemic issues with the CPI. Certain hedonic adjustments may be valid, but they are under-reporting health and housing expenses.

Solving debt with more debt is probably not the optimal strategy. The Fed could have taken advantage of the pandemic to use QE; instead, they bailed out the bond markets. They should have used the crisis to purge inefficient and over-leveraged zombie corporations.

Monetary policy widens the inequality in the system, and the Fed’s tools are too broad. These policies only exacerbate the problem by flooding wealth into the top percentile.

Danielle outlines possible negative effects of central bank digital currencies and why the Fed is reluctant due to dollar risks. Globally, there has been a slow move away from the dollar, but it still the leading trade currency.

Janet Yellen, as Treasury head, is a problem because she is inadvertently helping Wall Street. Janet believes in trickle-down economics, and if he decides to deploy direct helicopter money, this could be very inflationary. Further stimulus programs this year will result in political blowback.

Lastly, Danielle is concerned with the Biden administration’s lack of communication skills. Insider selling is through the roof over concerns about higher taxes. What happens if everyone tries to head for an exit.

Danielle DiMartino Booth is CEO & Chief Strategist for Quill Intelligence LLC, a research and analytics firm. She spent nine years as an advisor to Richard W. Fisher at the Federal Reserve Bank of Dallas. Danielle left the Fed in 2015 to found Money Strong, LLC, an economic consulting firm and launched a weekly economic newsletter She is the author of Fed Up: An Insider’s Take on Why the Federal Reserve is Bad for America. DiMartino Booth began her career in New York at Donaldson, Lufkin & Jenrette and Credit Suisse, where she worked fixed income and the public and private equity markets. Danielle earned her BBA as a College of Business Scholar at the University of Texas at San Antonio. She holds an MBA in Finance and International Business from the University of Texas at Austin and an MS in Journalism from Columbia University.

  bond market, economy, inflation, interest rates, markets, stocks