The Breakdown

Today’s episode of The Breakdown looks at the stories the stock market is trying to tell, including:

• New all time high in total market capitalization to GDP ratio (higher than dotcom bubble) 
• “No precedent for how high” valuations can go 
• Fed denies asset bubble; intimates it wouldn’t care about asset bubbles if full unemployment comes with it
• Bezos at $200,000,000,000
• Percentage of stocks traded by individuals reaches all time high of 20%
• Robinhood leads in FTX complaints
• Buffett’s Japan trading firm bet

This week’s episode of Long Reads Sunday is a reading of the latest essay from Tyler and Cameron Winklevoss.

The essay looks systematically at the problems of the slate of current store-of-value assets, including the U.S. dollar, oil and gold. 

The brothers argue why those assets have, or are starting to have, value in their safe haven function, while bitcoin is on the rise.

On The Breakdown’s Weekly Recap, NLW looks at the shifting sands of the global economy. He says Federal Reserve Chair Jerome Powell’s speech at Jackson Hole this week was an argument that an era that began in the 1970s is now closing. 

At the same time, he argues Powell did very little to provide a vision for what comes next. Instead, it is the alternative economic philosophies – Modern Monetary Theory on the one side, bitcoin on the other – that are attracting people for a different vision of the future.

Today on the Brief:

• Skepticism around Powell’s inflation prognostications
• The Tesla Stock Split Game
• China’s COVID-19 vaccine maker presses countries for early adoption

Our main discussion: The Anxiety Index

We live in an economy organized around consumption and perpetual growth. In that context, factors that cause consumers to be fearful, reduce spending, increase savings, move less and generally slow down can wreak havoc. 

In this episode, NLW discusses four factors shaping and driving consumer anxiety, including:

• COVID-19 related concerns, both health and economic
• Monetary policy questions 
• U.S.-China tensions 
• Election insecurity 

Federal Reserve Chair Jerome Powell spoke Thursday at the annual Jackson Hole conference convened by the Kansas City Fed, which was virtual this year due to COVID-19. 

In the highly anticipated speech, Powell laid out a number of key changes to how the Fed approaches unemployment and inflation. 

In this recap, NLW looks at how people reacted to the speech. On the one hand, there is disagreement between those who anticipate out of control inflation and those who think the Fed’s track record on achieving even modest inflation is abysmal. On the other, almost everyone seems to think the Fed appears run down, out of tools and increasingly looking to support from Congress. 

Today on the Brief 

• The SEC changes accredited investor rules 
• Fintech and crypto investor Ribbit Capital starts $350 million SPAC
• Previewing Federal Reserve Chair Jerome Powell’s Jackson Hole speech

Our main conversation is with Ruben Galindo, CEO and co-founder of Airtm.

Airtm is a global dollar account that lets users anywhere access U.S. dollars, powered by cryptocurrency infrastructure and a P2P network. 

The company is currently working with Juan Guaido’s opposition government in Venezeula to attempt to distribute $18 million in funds the U.S. seized from the Maduro dictatorship. 

In this conversation, he and NLW discuss:

• How Airtm works outside of the traditional banking system
• Why people around the world are hungry for access to dollars 
• What the Health Heroes campaign is trying to achieve 
• How Guaido and Airtm are trying to work around the Maduro government’s attempt to suppress them

Find our guest online:Website: airtm.comTwitter: @theairtm

Today’s episode of The Breakdown is an extended edition of the Brief.

NLW discusses:

• The “COVID-19 vaccine trade” on Wall Street kicks markets higher
• The latest on TikTok vs. the U.S. and what it means for the U.S.-China relationship
• More companies move reserves from cash to bitcoin

The final topic today looks at news that some large money market funds are shifting fees from users and taking the financial hit themselves. This creates a dynamic where only the largest companies can survive long term, and reflects a key unintended consequence of low interest rates.

Our guest today is Adam Tooze. Adam holds the Shelby Cullom Davis Chair of History at Columbia University and serves as director of its European Institute. He is known for his books “The Deluge: The Great War, America and the Remaking of the Global Order” and “Crashed: How a Decade of Financial Crises Changed the World.” 

In this conversation, he and NLW discuss:

• Historical analogies for our present moment 
• Federal Reserve policy and independence 
• How much we should fear debt and inflation post-coronavirus 
• How the economic and political crisis of 2020 has changed or reinforced the trajectory of the U.S., China and Europe
• Why there is no such thing as the post-American era  

Find our guest online:

Website: Adamtooze.com

Twitter: @adam_tooze

On today’s edition of The Breakdown’s Long Reads Sunday, our selections have to do with one of the hottest topics in central banking: yield curve control. 

“What Is Yield Curve Control?”

The first piece is from the St. Louis Federal Reserve and is a primer on YCC, including past U.S. implementations as well as versions from Japan and Australia. 

“Market Jitters Show How Much Fed Medicine Matters”

Our second piece is an op-ed about how dramatically markets reacted to this small detail from the Federal Open Market Committee minutes, and what it suggests for their desires involving YCC.

Today on The Breakdown’s Weekly Recap:

• People aren’t buying “the Great American Recovery”
• Let’s stop considering the economy as one thing
• Dave Portnoy doesn’t care about your principles
• DeFi is the Wild West and saved only by the fact that no normie understands what the hell is going on
• Bitcoin is being compared to the dollar not stocks and that’s serious progress