Eurodollar & The Money Printer with Lyn Alden - WBD535

Lyn Alden is a macroeconomist and investment strategist. In this
interview, we discuss the fundamentals of the current global
economy: the Eurodollar system, central banks, money printing,
debt, inflation and deflation.


- - - -


WBD528, “Everything You Know About the Economy is Wrong with Jeff
Snider”, was very popular with listeners. It raised the concept
of the global economy being controlled by the Eurodollar system,
an esoteric and opaque financial market outside of the control of
the United States. The issues emanating from this theory are
manifold, not least that central banks aren’t in control.


A common request was to have us discuss the issues arising from
Jeff Snider’s arguments with Lyn Alden. Lyn has written
extensively about these issues: her November 2020 paper “Banks,
QE, and Money-Printing” is a peer-leading explanation of QE. It
clarified why, up to the end of 2020, QE hadn’t led to the
inflation that many commentators had been warning of since 2007.


Jeff and Lyn are aligned on the theory that the Eurodollar system
is a critical driver of the global economy, and that the risk of
deflation is of concern. The differences in opinion center on the
importance of sovereign debt. Jeff thinks we need more debt to
unlock liquidity and combat recessionary forces. Lyn’s concern is
that unprecedented levels of indebtedness, in the context of
recessionary forces, are an existential threat.


Could the Ponzi scheme fall apart? The warning signs are there:
the issues in the repo market in 2019; the breaking of the US
treasury market in 2020; numerous currency crises around the
world, which include developed economies.


If the situation is at risk of collapse, what are the
mitigations? There seems to be no official alternative to the
central banks' plan to continue printing money to resolve
economic problems. But, as Japan may be finding, that approach
may have its natural limits. The risks are apparent, whilst the
solutions are limited. Maybe we need to have Jeff and Lyn debate
in person.