Ritik Goyal @rpgoyal_ Twitter profile

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Ritik Goyal

3 months

Been getting some DMs so just wanted to let folks know I recently started a job that doesn’t allow any public stuff. So I’ll be dark on X for now, but my DMs are open! Enjoyed exploring the macroeconomy with y’all 🏦 Below are some folks I have to thank for greatly influencing

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Ritik Goyal

@rpgoyal_

8 months

Unintentional endorsement of running a budget deficit

Geiger Capital

@Geiger_Capital

8 months

When people say that the economy is super strong, please understand… We are running a HISTORIC deficit. 6.2% of GDP. Never seen before outside of WW2, the GFC or Covid. If we weren’t running this deficit and balanced the budget, or even got close, GDP would collapse.

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Ritik Goyal

@rpgoyal_

7 months

Since Q4 2022, corporate profits have risen every quarter. At some point this will be understood as a case of rate hikes supporting the private sector, not the private sector overcoming rate hikes.

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Ritik Goyal

@rpgoyal_

7 months

2020-24 was a validation of MMT's claims: - The government had no issues spending trillions of dollars in a month - That spending was able to get inflation up to target (unlike the 2010s) - That spending helped Real GDP print higher than the IMF's 5yr forecast from 2019 for the

Marc Goldwein

@MarcGoldwein

7 months

People who believe in the infinite money tree fascinate me. If I had such a heterodox and counterintuitive view of the world and just witnessed a major case study counter to my view, I might be a bit less condescending to those with a more mainstream view.

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Ritik Goyal

@rpgoyal_

7 months

Those million simulations also all forecasted a recession in 2023.

Bloomberg

@business

7 months

The US debt outlook is fragile. Bloomberg Economics ran a million forecast simulations. Results for 88% of them show borrowing on an unsustainable path

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Ritik Goyal

@rpgoyal_

9 months

Deficits never need to be "plugged". The spending itself "plugs" the deficit.

Markets & Mayhem

@Mayhem4Markets

9 months

Should be a blast

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Ritik Goyal

@rpgoyal_

6 months

Bob is just making stuff up. Inflation falls when money creation falls. Money creation falls when gov spending or bank lending falls. The Fed has little ability to constrain these flows (and often unintentionally accelerates them). And the bond market is an indicator, not a

Bob Elliott

@BobEUnlimited

6 months

If the Fed won't do what is necessary to bring inflation back to target, the bond market will just do it on its own.

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Ritik Goyal

@rpgoyal_

5 months

@charliebilello So you want a Great Depression style deflation?

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Ritik Goyal

@rpgoyal_

7 months

Previewing a tool I built for visualizing balance sheet operations. Should have utility in working through questions like this. @JackFarley96 @maggielake

CrossBorder Capital

@crossbordercap

7 months

@BickerinBrattle need to ask how the fiscal spend is being funded? Latest data reveal growing monetisation... I think we can agree that fiscal policy is directing flows towards real economy. No surprise there

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Ritik Goyal

@rpgoyal_

6 months

Here is the problem with "QT destroys money, deficit spending adds money, so they're offsetting". One person’s debt is another’s asset. In deficit spending, new assets are created for the private sector. In QT, old assets (cash) are replaced with new assets (Treasuries). It’s

Daniel Lacalle

@dlacalle_IA

6 months

@rpgoyal_ Deficit spending -new money- offsets the reduction in the quantity of money that the Fed does through QT. Money is not an asset or a liability. All fiat money is debt.

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Ritik Goyal

@rpgoyal_

8 months

Bloomberg asking this question is an existential threat for the Fed. Without a supportive media apparatus, there is no Fed

Lisa Abramowicz

@lisaabramowicz1

8 months

What if Fed policy didn’t matter that much to markets? It seems like that’s where we are at the moment. Instead, traders are focused on fiscal stimulus still pumping into the economy and the potential deficit issues that will likely emerge down the line.

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Ritik Goyal

@rpgoyal_

10 months

Inflation was always transitory UNTIL the Fed started hiking. There's never been a self-reinforcing/spiraling inflation in history that wasn't also accompanied by rising rates. Rates are just a price. Raise that price, and you raise the income of every seller

Warren B. Mosler

@wbmosler

10 months

If the Fed had left the fed funds rate at 0, the COVID thing would have been largely transitory. But it didn't and now CPI growth will gravitate towards the current fed funds rate that's supporting deficit spending/agg demand/employment/costs/forward prices/etc.

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Ritik Goyal

@rpgoyal_

5 months

All government spending is debt monetization, QE or not. Pre-QE, the government would fund its spending by printing new securities out of thin air. Post-QE, same thing. QE is completely separate and mostly irrelevant.

Joseph Wang

@FedGuy12

5 months

QE is debt monetization. It is the Fed printing money and financing the government. Don't fall for gaslighting.

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Ritik Goyal

@rpgoyal_

7 months

Had a great time discussing monetary and balance sheet operations with Nik Bhatia ( @timevalueofbtc ) at The Bitcoin Layer. Check it out!

The Bitcoin Layer

@TheBitcoinLayer

7 months

🚨NEW VIDEO🚨 How The US Treasury Creates Money Monetary researcher Ritik Goyal ( @rpgoyal_ ) gives a masterclass on monetary mechanics, including how the Treasury creates money when it spends instead of borrows.

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Ritik Goyal

@rpgoyal_

6 months

Thanks @StephanieKelton

Stephanie Kelton

@StephanieKelton

6 months

Highly recommend this (high-level) conversation on where ⁦ @rpgoyal_ ⁩ thinks markets and the economy are headed and why. ⁦

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Ritik Goyal

@rpgoyal_

6 months

High bond yields don't cause recessions, it's recessions that cause bond yields to stop being high.

Bob Elliott

@BobEUnlimited

6 months

The biggest challenge for asset holders right now is bond yields are high and rising enough to create a drag on asset prices but not yet high enough to create the economic slowdown required for the Fed to ease.

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Ritik Goyal

@rpgoyal_

8 months

Not just spurious, there is no correlation between stocks and bank reserves. Liquidity isn't a useful concept @BickerinBrattle

Mike Singleton, CFA

@InvictusMacro

8 months

Correlation between bank reserves and stock prices has been *very high* for several years now... What do we think? Spurious correlation? Or a reflection of important policy/liquidity dynamics?

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Ritik Goyal

@rpgoyal_

8 months

Ah yes QE, the “free” money that you only get if you give up an asset of equivalent worth first

Brent aka Blacklion

@BlacklionCTA

8 months

Bloomberg US Financial Conditions trending quickly toward the July 2021 summer of free money (ZIRP, QE, Stimmie, etc.) high.

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Ritik Goyal

@rpgoyal_

5 months

A very Howell-ian treatment of liquidity. Which is to say, wrong imo. Thread.

Prometheus Research

@prometheusmacro

5 months

On Liquidity Dynamics🧵 1. Liquidity is the flow of cash-like assets that potentiate spending in the real and financial economy. Liquidity potentiates returns across assets, while the nominal growth environment determines the distribution of returns within assets.

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Ritik Goyal

@rpgoyal_

8 months

2020-21: Massive QE, ZIRP, and massive fiscal, stocks/crypto break to new ATHs 2023-24: QT, 5IRP, and massive fiscal, stocks/crypto break to new ATHs (or close) Process of elimination

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Ritik Goyal

@rpgoyal_

5 months

R2K being -16% from its 2021 high is the bull case, not the bear case. Most US companies are still deeply undervalued relative to current corp profitability and nominal growth. The mid-2000s style boom in cyclical risk (banks, commods, industrials) is still ahead of us.

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Ritik Goyal

@rpgoyal_

7 months

There’s no evidence that this is true. Rates reflect conditions, they don’t cause conditions.

Bob Elliott

@BobEUnlimited

7 months

Much higher long-end rates are pretty much the only thing that has a chance to slow down the income driven economic momentum in the US.

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Ritik Goyal

@rpgoyal_

6 months

So many unrelated concepts being conflated here. Have to think of money as dual-sided asset and liability. Deficit spending does not "offset" anything the Fed does. QT only converts money from one form to another; deficit spending creates new money. Categorically different.

Daniel Lacalle

@dlacalle_IA

6 months

Persistent inflation is not a coincidence. The money supply (M2) has bounced above March 2023 levels, while deficit spending offsets any Fed balance sheet reduction. Table via Federal Reserve

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Ritik Goyal

@rpgoyal_

9 months

Except rate cuts are anti-labor

Joseph Wang

@FedGuy12

9 months

@BobEUnlimited You can easily get cuts without any political motivation. Fed officials have already spent time explaining they view the world through real rates, so cuts can come from slowing inflation. It's also easy to see that new Fed leadership tends to be more pro labor.

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Ritik Goyal

@rpgoyal_

8 months

ZIRP fueling an “everything bubble” is one of the biggest myths in macro

Tom McClellan

@McClellanOsc

8 months

One can follow the Taylor Rule, which is mathematically complex with several inputs. Or one can just listen to the 2-year T-Note yield, which knows better than the Fed's 400 PhDs do about what the FOMC is going to do.

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Ritik Goyal

@rpgoyal_

6 months

The privately held supply of Treasury debt.

DCP

@Dcpcooks

6 months

Question for the masses What is the best measure of liquidity in the markets?

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Ritik Goyal

@rpgoyal_

6 months

To steal from @wbmosler , the CB policy error discussion is like worrying that the kid in the back seat is going to crash the car

CrossBorder Capital

@crossbordercap

6 months

Michael Howell: Central Banks Are About To Make A Major Error

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Ritik Goyal

@rpgoyal_

5 months

The weird thing about "we're repeating the 1970s stagflation" is that the 1970s actually had some of the best real GDP growth of any decade in recent history.

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Ritik Goyal

@rpgoyal_

5 months

In other words, the demand for safe US assets exploded (via China), and at the same time, the supply of those safe assets fell. The only solution was for private safe assets to make up that shortfall. The lesson is to never let true safe assets ever become too scarce.

Bill

@wabuffo

5 months

Disagree. The fiscal surpluses of 1998-2001 + the entry of China into the WTO in 2001 that exploded the US trade deficit. Both factors forced US domestic households into debt to maintain consumption. Caused an inevitable debt crisis.

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Ritik Goyal

@rpgoyal_

6 months

This is like asking how NGDP growth can keep expanding when the supply of physical paper cash is falling. Everyone knows it's not literal paper money that matters, it's total purchasing power, and converting paper money to a bank deposit doesn't change that. But Bob has to fall

Bob Elliott

@BobEUnlimited

6 months

How can nominal growth keep expanding when major DW central banks keep contracting the money supply? The answer is simple - rising velocity facilitated by strong nominal income growth.

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Ritik Goyal

@rpgoyal_

6 months

Treasuries are more money-like than reserves.

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Ritik Goyal

@rpgoyal_

9 months

@TaviCosta What is this ethical framework that makes you avoid Chinese companies but be okay with any other country's equity market?

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Ritik Goyal

@rpgoyal_

9 months

After 550bps of “tightening”…

Evan

@StockMKTNewz

9 months

The Atlanta Fed's 🇺🇸 Q1 GDPNow forecast is now at +4.2% up from +3%

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Ritik Goyal

@rpgoyal_

11 months

Inflation and rates are one and the same. Set rates somewhere, and that's where inflation will eventually go. Pulling on each other like a pair of black holes.

Warren B. Mosler

@wbmosler

11 months

@Econ_Parker What do you think his counterfactual is? If they had left rates at 0 (like Japan) where do their models say GDP/unemployment/inflation would be today? ;)

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Ritik Goyal

@rpgoyal_

7 months

@RebelACole

8-myth-of-volcker.pdf

drive.google.com

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Ritik Goyal

@rpgoyal_

4 years

@CNN Just a few more years and they'll all realize Kamala is part of the same pro-corporate establishment as all the old white dudes :)

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Ritik Goyal

@rpgoyal_

8 months

MMT is a lot like monetarism, except “base money” is the supply of government debt, not the supply of bank reserves.

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Ritik Goyal

@rpgoyal_

11 months

Moved to Tuesday. Talking Fed and the business cycle with @BickerinBrattle

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Ritik Goyal

@rpgoyal_

7 months

@JackFarley96 Bond yields can also be quoted on a discount basis, which uses the bonds face value as denominator to calculate interest rates, whereas the investment basis used the current bond price. FRED also has discount basis quotes for some of the Treasury yields

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Ritik Goyal

@rpgoyal_

7 months

Fiscal spending on interest payments is what QE wishes it was

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Ritik Goyal

@rpgoyal_

5 months

That’s why the 2010s had no inflation despite the massive expansion in liquidity. Every attempt at measuring any sort of “total assets” shows the same picture: steady growth and then a dramatic, permanent, plateau.

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Ritik Goyal

@rpgoyal_

9 months

Everybody realized rate hikes are inflationary

Dr_Gingerballs

@Dr_Gingerballs

9 months

Anyone want to take a stab at explaining why Fed Funds Futures show an increase in probability for a March cut today after a hot CPI print?

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Ritik Goyal

@rpgoyal_

6 months

Quarterly Refunding Astrology

Steve Donzé

@steve_donze

6 months

Evaluate QRAs, make sure @dampedspring concurs, and trade accordingly

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Ritik Goyal

@rpgoyal_

7 months

Great discussion of business cycle dynamics by the folks at @AppliedMMT It's the combination of fiscal and bank money growth that dictates the cycle, and the Fed's rate policy only matters insofar as it affects those things

🔴 Understand MMT & the Business Cycle

Join Douglas, Adam, & Ryan as we discuss bitcoin from an MMT perspective, as well as discuss markets and other market news.Visit https://appliedmmt.com/ for ...

www.youtube.com

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Ritik Goyal

@rpgoyal_

10 months

Big Fiscal + Rate Cuts is how you keep inflation transitory while spending. As long as the fiscal itself isn’t continuous, the funds just shift the price level higher. Big Fiscal + High Rates is how you entrench inflation; it means the money that’s spent is paying its own money.

Stephen Miran

@SteveMiran

10 months

The problem with letting the transitorist victory-lappers off the hook is that they are already calling for renewed Big Fiscal and sharp Fed cuts (when output is not significantly below potential) and seem to want to entrench significantly higher long-term inflation

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Ritik Goyal

@rpgoyal_

10 months

Thanks for having me on! Talking Fed, interest rates, the economy, and why everything isn’t as it seems

AppliedMMT

@AppliedMMT

10 months

🎙 NEW EPISODE with special guest @rpgoyal_ is live! 🦉 The value of the MMT framework 🏦 Ritik's "The Fed Does Not Exist" 💸Monetary policy & inflation 📈Our outlook going forward 🎧Listen here:

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Ritik Goyal

@rpgoyal_

4 years

@ajlidbeck @FoxNews @newsmax Lol newsmax literally had to provide a 3 minute disclaimer video that all the claims they made were false in order to avoid getting sued. You're running out of places to get your propaganda :(

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Ritik Goyal

@rpgoyal_

7 months

Wrong monetary base. QE’s increase in supply of reserves can’t stop a recession because a recession is a private sector BS contraction and QE isn’t a private sector BS expansion

Otavio (Tavi) Costa

@TaviCosta

7 months

If the monetary base is increasing despite one of the most restrictive monetary policies in history, what should one expect in a recession? We probably all know the answer for that. It’s imperative to own hard assets in my view.

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Ritik Goyal

@rpgoyal_

1 year

@stevehouf @wabuffo In aggregate, the dollars that the Tsy spent into the private sector bought the new Treasuries

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Ritik Goyal

@rpgoyal_

3 years

Duke is an awfully coached basketball team. 75% of their points come from offensive boards/transition or big mistakes by the other team which is why every game still feels like a toss-up. Almost no offensive design, screens, pnr, whatsoever.

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Ritik Goyal

@rpgoyal_

7 months

Government spending crowds in private activity.

Claudia Sahm

@Claudia_Sahm

8 months

Truly remarkable, especially that it's continuing. h/t @SamRo , who connects it with higher productivity.

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Ritik Goyal

@rpgoyal_

6 months

@timpierotti1 Disagree. High interest rates are associated with high velocity and high private credit creation. Empirically that's the case, and logically, existing money must change hands faster when rates are high in order to satisfy larger obligations (velocity) and the incentive and

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Ritik Goyal

@rpgoyal_

10 months

Great pod. “The economy has 3 months to prove to the fed it deserves higher rates.” It’s like having to prove you’re not high-risk to be able to buy insurance, even though it’s those who are high risk who need it. Completely backwards, but it’s the world we live in

AppliedMMT

@AppliedMMT

10 months

🎙 NEW EPISODE is live! Our 2023 wrap-up covers: ✅ What we got right ❌ What we got wrong 🏦 Where does the Fed go from here? 🔮 Predictions for 2024 🎧Listen here:

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Ritik Goyal

@rpgoyal_

7 months

No it wasn't

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Ritik Goyal

@rpgoyal_

11 months

Higher for shorter is much more deflationary than higher for longer. With higher for longer, you give the system time to adapt to the new rate paradigm and iron out any balance sheet frictions. Once everyone is earning more on their assets and paying more on their liabilities,

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Ritik Goyal

@rpgoyal_

10 months

Re: all the talk of "easing financial conditions". The real concern with yields falling enough is not a reignition of inflation, it's recession. I.e. why every time the Fed "pivoted" we got a recession. Discussed this with @AppliedMMT around 30-45:00

#19 - Ritik Goyal of The Monetary Frontier - AppliedMMT Podcast

In this episode, Ritik Goyal joins Adam, Ryan, and Douglas to discuss:Ritik's journey from working at Bridgewater to co-founding

www.buzzsprout.com

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Ritik Goyal

@rpgoyal_

8 months

Rate hikes + big fiscal = economic outperformance

Gregory Daco

@GregDaco

8 months

🇺🇸The US #economy is in a league of its own

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Ritik Goyal

@rpgoyal_

5 months

In fact, more of “liquid assets” has been a reliable indicator that the supply of “total assets” is falling, not rising. Liquidity tends to rise in deflation, because liquidity is a placebo tactic designed by CBs to obfuscate the real problem, a shortage of total assets.

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Ritik Goyal

@rpgoyal_

9 months

Rising prices pulls consumption forward to avoid future higher prices. Rising rates pulls borrowing forward to avoid future higher rates?

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Ritik Goyal

@rpgoyal_

8 months

Fiscal spending is only a redistribution through inflation. Making money less scarce makes assets less scarce which hurts those with assets. But no one directly gets their money taken when the government spends.

Joseph Wang

@FedGuy12

8 months

Fiscal spending redistributes income from those who spend less to those who spend more. The effect may be particularly strong when spending is financed by debt than taxes. This suggests continued strong growth in nominal GDP and is supportive of credit.

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Ritik Goyal

@rpgoyal_

7 months

After 550bps of rate hikes, Solana #SOL is up from $176 to $206 a coin.

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Ritik Goyal

@rpgoyal_

6 months

Had a great discussion with Daniel on the interplay of business cycles and monetary/fiscal policy!

Daniel Baeza

@dbaeza13

6 months

Thought provoking convo with @rpgoyal_ , we discussed: 1. Fed lags (not leads) business cycle 2. High rates = high inflation and growth, all good 3. Risk free yield curve isn't inverted 4. ZIRP shrinks bank credit creation 5. QE portfolio rebalance = myth

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Ritik Goyal

@rpgoyal_

5 months

Focusing on cash-like assets as drivers of nominal growth or asset returns is a fallacy of composition. It’s not the supply of cash-like assets, but the total supply of all assets, that determines outcomes. Net worth drives decisions, not how much of that net worth is held in

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Ritik Goyal

@rpgoyal_

9 months

Each day that we don't get a recession, the "economy holding up despite rate hikes" case becomes worse compared to "because of rate hikes".

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Ritik Goyal

@rpgoyal_

7 months

Like any impressionist painting, meant to convey a feeling or emotion rather than the pursuit of realism

CrossBorder Capital

@crossbordercap

7 months

Impressionist 'Sunrise'?? Central Bank heatmap with red hues showing maximum tightness of #liquidity From our latest GLI data release

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Ritik Goyal

@rpgoyal_

8 months

Those dang rate hikes

Mike Zaccardi, CFA, CMT 🍖

@MikeZaccardi

8 months

Underlying inflation momentum is rising again. @soberlook

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Ritik Goyal

@rpgoyal_

10 months

Phenomenal interview on the costs of low rates and the importance of the bank loan as the primary engine for economic growth

Jack Farley

@JackFarley96

10 months

Out now- @FedGuy12 & @csissoko on: - Fed Pivot - CLOs & Private Equity - The Rise of "Too Big to Fail" - ZIRP & misallocation of capital - Central Bank Digital Currencies (CBDCs) - Line b/w lending & money markets has been "obliterated" Merry Christmas and happy holidays

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Ritik Goyal

@rpgoyal_

4 years

Nothing ruins your confidence like trying to sign an online document with your mouse

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Ritik Goyal

@rpgoyal_

11 months

Rate cuts create a shortage of safe assets. A shortage of safe assets causes risk-taking to be less insured. Less insured risk-taking makes that risk-taking occur in a safer manner. Safer risk-taking is equivalent to less risk-taking. Less risk-taking means less growth.

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Ritik Goyal

@rpgoyal_

5 months

The narrow focus on liquidity is like weighing a car’s engine to try to understand the car’s weight. Sure, a heavier engine means the car could be heavier, but it doesn’t have to be. More of “liquid assets” doesn’t mean there are necessarily more assets in total.

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Ritik Goyal

@rpgoyal_

8 months

Since 2022, we’ve been living in the first case study of the Fed raising rates following a contraction instead of cutting them.

Fallacy Alarm

@fallacyalarm

8 months

The recession you are still waiting for happened in 1H22.

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Ritik Goyal

@rpgoyal_

6 months

Just have to bring back Fisher, and things become a bit clearer. High rates = high nominal growth Low rates = low nominal growth At turning points, both change direction together.

Cullen Roche

@cullenroche

6 months

Remember, higher inflation means higher rates for longer which means higher economic risk for longer which means higher risk of lower rates. See, investing is easy.

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Ritik Goyal

@rpgoyal_

10 months

After 550 bps of hikes, long-duration assets Bitcoin and Ethereum are unchanged vs their Jan 2022 levels. Rate hikes are income.

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Ritik Goyal

@rpgoyal_

5 months

Whether an asset has 0 duration or some duration is insignificant vs. the fact that the net worth exists. If the Treasury decided to hand every American a 30-year Treasury bond certificate worth $1000, liquidity would be unchanged, but net worth would be radically different. And

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Ritik Goyal

@rpgoyal_

10 months

A Fed pivot has never once translated to a sustained equity bull market, because a Fed pivot has never once translated to stronger earnings. Economies usually survive hiking cycles; it's pauses and pivots they don't survive. Writing a piece on this soon @ The Monetary Frontier

Jurrien Timmer

@TimmerFidelity

10 months

Outlook for 2024: I expect a broadening bull market as the Fed pivots (at least initially) and the bond market finds a new range, while earnings advance and the economy survives the great hiking cycle of 2022-23. Two caveats: 1. The Fed might pivot prematurely, forcing it to

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Ritik Goyal

@rpgoyal_

8 months

He did not just associate the RRP drawdown with the price of bitcoin

Steve Donzé

@steve_donze

8 months

Yet another year of central bank-spurred market fireworks!

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Ritik Goyal

@rpgoyal_

10 months

It's the stimulative effects of rate hikes in action*. One person's loss is someone else's gain. Doomers gonna doom

E.J. Antoni, Ph.D.

@RealEJAntoni

10 months

This isn't a meme stock, some third world country's currency, or the balance sheet of a failed regional bank - it's the losses at the Fed, and it just exceeded $130 billion:

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Ritik Goyal

@rpgoyal_

1 year

@dampedspring @JeffSnider_AIP Jeff is making a structural argument about the system's ability to produce cyclicality, which he thinks has been kneecapped since 2008, with swap spreads and other prices indicative of that. In such a state there are no "sudden catastrophes" because to get such an event there has

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Ritik Goyal

@rpgoyal_

10 months

Today is an example of policy-market reflexivity. Market thinks one thing, policy confirms it and makes the market think more of that thing. If that feedback loop gains traction, next thing you know we'll be back in a low rate, low NGDP environment.

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Ritik Goyal

@rpgoyal_

9 months

"It would have been better to get the recession, then use deficit spending to boost growth"... That's exactly what's happened since 2022.

DerekV

@Derek19603617

9 months

@EconguyRosie ~25% of jobs created last year were government. Deficit spending is delaying the inevitable, meanwhile the lower class has been crushed by inflation. it would have been better to get the recession, then use deficit spending to boost economic growth. Instead, they used

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Ritik Goyal

@rpgoyal_

6 months

@dlacalle_IA All deficit spending is new money. Full stop. The government prints money, and it prints Treasuries.

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Ritik Goyal

@rpgoyal_

10 months

The RRP rundown moves reserves around while QE creates reserves

Gordon Johnson

@GordonJohnson19

10 months

But the RRP rundown isn’t QE, right… right @Stimpyz1 ? Ha. You literally have them confirming it here. The @federalreserve is reckless and wants to literally destroy the poor via inflation to pay for a fake economy where govt spending is EVEYTHING.

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Ritik Goyal

@rpgoyal_

9 months

ICYMI: I compare our framework at The Monetary Frontier to @JeffSnider_EDU 's. We agree on what markets are pricing in, but not whether they're right.

Comparing our framework to Jeff Snider's

Jeff thinks markets don’t believe in the Fed’s ability to avoid a recession. We think markets believe way too much in the Fed’s ability to produce a recession.

themonetaryfrontier.substack.com

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Ritik Goyal

@rpgoyal_

6 months

A couple months ago, @BickerinBrattle and I put out some materials comparing our framework to the liquidity-based approach. Tldr: what matters is how many new asset-liability pairs are being produced every day, not how many of those pairs are cash assets. Links below

Jack Farley

@JackFarley96

6 months

What is the impact of "Central Bank Liquidity" on markets? Today I'm interviewing @crossbordercap & @BickerinBrattle , who have very different views on the subject Let me know if there's anything in particular you think I should ask them... 👇

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Ritik Goyal

@rpgoyal_

7 months

Would hardly call RRP depletion “Fed counter-injections” and would really hardly attribute equity returns to either RRP depletion more a function of availability of T-bills, and equity returns more a function of creation of new A-L pairs, not composition of existing pairs

Steve Donzé

@steve_donze

7 months

Fed counter-injections (via RRP depletion) to keep equities afloat for the remainder of 1Q24 before reversing in 2Q24.

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Ritik Goyal

@rpgoyal_

11 months

Inflation was always transitory; a one-shot injection of fiscal cannot produce spiraling prices. Then the Fed started hiking…

Where Inflation Comes From

Why inflation is exclusively a monetary phenomenon.

www.youtube.com

Deer Point Macro

@deerpointmacro

11 months

Disinflation has been rapid throughout the past year as supply chain bottlenecks have largely faded. Demand inflation has started to come down on the back of a falling output gap (demand following relative to domestic output). With current trend we could see core PCE below 3%

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Ritik Goyal

@rpgoyal_

8 months

@gctradingES @BickerinBrattle The flow of new bank and fiscal money into the economy. That's it. "Liquidity" just describes the nature of money, not the amount of money.

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Ritik Goyal

@rpgoyal_

10 months

QE works when the Fed buys assets the market is running away from. When the Fed buys assets the market is running towards, you get the opposite effect -> QE of Treasuries becomes a tightening

Stimpyz

@Stimpyz1

10 months

@dbaeza13 @BartsQuandry @dampedspring @countdraghula @DiMartinoBooth QE worked because the Fed bought MBS. It was the only stimulus injection Wall Street couldn't absorb whole. Because you couldn't fail to the Fed, VERY low coupons got created that needed to be loaned up, so homeowners got rich FAST. Then rest is noise.

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Ritik Goyal

@rpgoyal_

9 months

Neither M2 nor velocity are particularly relevant to understanding the US economy.

Count Draghula

@countdraghula

9 months

M2 was only ever a proxy to measure private credit growth, a shortcut way to summarise the risk appetite of the private economy which a lack of is what ultimately defines recessionary periods. It isn't a very good measure, so they made up a term "velocity" to make up for it's

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Ritik Goyal

@rpgoyal_

8 months

@DzambhalaHODL @BickerinBrattle He’s doing a level to level comparison, which is basically useless. Have to look at the change in one thing versus the change in the other.

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Ritik Goyal

@rpgoyal_

11 months

The Fed didn't come close to monetizing the debt. The debt was issued at the short end, the Fed bought the long end. If the Fed bought the short end, the Covid panic would've been 10x worse - the system needs bills, not reserves. (Why is why the Fed stopped buying bills in 2020)

Forward Guidance

@ForwardGuidance

1 year

@LynAldenContact We're so glad you noticed that. Here is Robert Kaplan (former President of the Dallas Fed) saying that the Fed "monetized the debt" in March 2020 to fund the U.S. government's vast fiscal support: (1/2) @JackFarley96 's follow-up question in part 2/2

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Ritik Goyal

@rpgoyal_

7 months

CPI printing slightly over consensus is medium-term better for the S&P than CPI printing below. Keep rates high and stable and the economy will be fine.

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Ritik Goyal

@rpgoyal_

6 months

@SteveMiran @wbmosler has repeatedly called for a permanent ZIRP policy as he did in the first 10 minutes of his debate with Murphy. What are you talking about?

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Ritik Goyal

@rpgoyal_

7 months

@stevehouf You’re wrong. Compare real growth and productivity growth in the 2010s to any previous decade, it’s not even close. Innovation comes from bank lending, of which there was almost none in the 2010s. A few innovative startups doesn’t negate gingers broader point

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Ritik Goyal

@rpgoyal_

2 years

@TaviCosta So one of the most important assets in finance, driven by cycles in Eurozone economic growth and inflation, ECB reaction functions, and hitting new lows for 30 years is supposed to break higher simply by crossing an imaginary line?

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Ritik Goyal

@rpgoyal_

11 months

@wbmosler Inflation adjusted it's just normalizing to pre-pandemic, in line with what the banks have been saying

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Ritik Goyal

@rpgoyal_

9 months

@Celso34651221 @TaviCosta That's not compelling as an ethical concern. The large Chinese firms are state-owned or state-adjacent which can be seen as an expression of a hyper-efficient capitalism, or it can be seen as not much different than the corporate oligopoly of the US. It's communism in name only

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