The U.S. Financial Crisis Explained Simply In An Hour

By the end of this hour, you'll understand all the jargon-y bullshit levers at work setting Scott Besset and the Fed up for what could be an unprecedented rocky financial road.

Central banking often confounds everyday people due to the complex interplay between economics, politics, and human psychology. Even the Central Bankers and economists don’t understand what in the everloving f*ck is going on all the time.

Don’t believe me? Check out this “math is hard” style face Janet Yellen, who in my opinion will be looked at as one of the most irresponsible financial decision makers in our country’s entire history, is making in front of Congress.

Janet Yellen, thinking about MMT’s solution for paying off debt without actually having to pay off debt.

At its core, central banking involves manipulating monetary policy, interest rates, and money supply—variables influenced as much by market forces as by policymakers' subjective decisions — or maybe even how many S&P futures or shares of Tesla Fed Governor Robert Kaplan is long or short at the time he sets policy.

And nowadays, crackpot (in my opinion) modern monetary theorists posit that governments with sovereign currencies can essentially create unlimited money without immediate fiscal constraint, a concept counterintuitive to traditional economic thinking (also known as ‘horse shit’).

This challenges conventional wisdom on debt, inflation, and fiscal responsibility, making it difficult for the public and even policymakers to fully grasp.

As I usually do each day, I spent my run this morning listening to a podcast — specifically looking for a new interview with one of my favorite investors, James Lavish. I found it, on a recent episode of the What Bitcoin Did podcast.

But this interview is only barely about bitcoin. While it touches on it, instead what it really becomes is 1 hour and 15 minute long explanation of exactly the rock and hard place the Fed and the Treasury find themselves stuck between heading into mid 2025.

One concept at a time, Lavish — with charts — runs down the basics of QE vs. QT, explaining things like the Reverse Repo Facility and giving an overall look at how liquidity effects the economy and the market. He paints a dire picture of where things stand for both the Fed and the Treasury heading into the middle of this year — mostly as a result of mistakes during Janet Yellen’s tenure as Treasury Secretary and Fed Chair. And he does it using the absolute maximum amount of complexity possible for the everyday person to understand. You may have to pay close attention, but it’s not so hard that you won’t be able to understand.

And all roads leading out of this monetary and fiscal shit sandwich lead to just one terminus: more money printing.

If you’re really interested in the state of macro and where both the economy and markets find themselves right now, this is the 1 hour 15 minutes you need to watch to get caught up to speed.

Vaya con dios, my kind subscribers. Catch you Monday.

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author.

This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. If I’m long I could quickly be short and vice versa. I won’t update my positions. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. Assume any and all numbers in this piece are wrong and make sure you check them yourself. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.