Future Growth Will Be Driven By Banks, Not the Fed | Andy Constan
Episode publishedPodcast: Forward GuidanceForward Guidance
Transcript preview
Preview only
So I look at all of the spending, the budget, the AI, the onshoring as all a set of promises that are largely in excess of what you would normally need to have a stable economy. And so my question goes to who's creating the credit? How are these promises going to get funded? The Fed or commercial banks?
This episode is brought to you by Grayscale, your trusted gateway to more than 30 different crypto investment products. You'll hear more about them later in the episode. Nothing said on Ford Guidance is a recommendation to buy or sell any investments or products. This podcast is for informational purposes only, and the views expressed by anyone on the show are solely their opinions, not financial advice, or necessarily the views of Blockworks. Our hosts, guests, and the Blockworks team may hold positions in the company's funds or projects discussed. Alright, everybody. Welcome back to another
Hey, man. Good to see you.
Good to see you as well. I wanna start with something that we've been going on back and forth about for the last couple months, and I think it's it's it's really important, and I think a lot of people are missing it. And you actually wrote in a recent report about how saying that going forward, central bank money creation will largely be a non factor. And what matters going forward is credit creation and private sector bank money creation. So this is really interesting because I feel like over the past ten years or so, there's been this cottage industry basically developed that is obsessing ov
I think the big thing to think about is that for the moment, and I think only unless there's a real economic crisis, which isn't in the car doesn't seem to be in the cards. The Activities of the central bank and to some extent the the the fiscal, system like the treasury departments of Treasury departments of various countries have really, which had dominated, certainly since COVID, but even obviously in 2008 to the 2014 period, maybe even through 2018, where those where those actions were really impactful on on at a minimum, the securities markets, but more so on the broad economy. We're now
Yeah, absolutely. Yeah, we'll get in there in a sec. I do wanna just contrast a little bit between this decade and the previous decade because in in that last decade of where I mentioned, you know, people would say the Fed is the only game in town because that idea of promise is being created, I e credit, was pretty lackluster in the twenty tens. Commercial banks, no matter how many rounds of Kiwi like, the the the thought was, we'll throw a bunch of Kiwi. We'll we'll stuff the banks with reserves, and eventually, they'll be able to create loans that are that are backed by those reserves. But
Right. So, I mean, I think the big thing you're describing is push versus pull demand for credit. When you fill the bank with reserves and they don't need them, it doesn't change their behavior. In 2008 to twenty thirteen ish and to a small extent during the, post COVID, you know, the large 2020 type stimuluses, banks were struggling to make credit, to create credit because they themselves were impaired. And so when you take away an impairment, that does unlock credit creation. But when a bank is able, already able to create money, to loan, to create loans, to create credit, to print money, th
If you're thinking about crypto investing but don't wanna open a new account or manage keys and wallets, check out Grayscale. Grayscale has been offering trusted crypto investment products for over a decade with 30 plus counting, including single asset funds like Bitcoi
Keep exploring with a free account.
A free account preserves the short preview. Upgrade to Pro for the full transcript and episode chat.