Steven Van Metre: Fed is Running out of Tools to Save the Market
Tom welcomes macro money manager, bond king, and financial planner Steven Van Metre back to the show. Steven answers several listener questions later on in the show.
Steven discusses his latest video on why Q.E. does not mean money creation. The Fed is just swapping assets and forcing money into the commercial banking system. Two main banks are absorbing most of the stimulus money. Most money is stored in the banking system and is not moving. They want to suppress and lower interest rates while pushing the dollar higher. The bond market doesn’t work the way most people think. Investors need to understand this system because it will explain most things.
The pandemic created many supply issues and caused a lot of money to flow back to the United States. This is now impacting foreign countries which are dollar starved.
Steven is concerned that most investors are in the wrong asset classes and don’t understand how bonds work. We’re going to see interest rates move lower and the economy will likely head down.
Q.E. traps dollars thus causing a shortage which drives the price for dollars higher on a global level. By trapping money in the commercial banking sector it reduces monetary velocity. They want to get the global economy moving again and therefore they want to export as many dollars as possible.
Consumers are now returning to their normal needs for money by borrowing from credit cards. He explains the effects of the dollar rising and how this could play out like the 2007 crisis. A rising dollar indicates tightening and that means prices for everything else will move lower.
Steven discusses the actions the Fed will take when equities sell-off. In the past they would do more Q.E. but this time they may have a hard time deciding what to do. The Fed is being blamed for inflation and they aren’t responsible. The Fed may have a hard time doing Q.E. next time around for political reasons and he believes the Fed put is now completely out of the question.
0:00 – Introduction
0:36 – His Recent Video
4:54 – Two Main Banks
8:10 – Bank Reserves
10:10 – Q.E. Suppresses Rates
11:35 – Presentation
15:04 – Money Markets
16:55 – Q.E. Traps Dollars
22:55 – Dollar Ceiling?
24:50 – Inflation & Base Money
33:39 – Listener Questions
40:09 – Bond Vigilantes
47:26 – Fed, Q.E. & Housing
50:28 – Gold, Dollar & Markets
56:13 – Fed Tools & Equities
1:00:10 – Gov’t Spending & Debt
1:04:20 – Debt Monetization
1:06:02 – Cause of M2 Growth
1:09:10 – Wrap Up
Talking Points From This Episode:
- His contrarian macro thesis.
- Fed actions, rates, and inflation.
- Coming liquidity crunch and opportunity.
Steven Van Metre is a Certified Financial Planner™ Professional and an Investment Advisory Representative with the registered firm Atlas Financial Advisors, Inc. He is also a financial planner and portfolio manager of President of Steven Van Metre Financial, specializing in retirement income strategies and the direct management of client assets.
Steven designed a planning process to help clients understand, prepare, and become active participants in creating their retirement plan. His method helps people understand what their retirement will look like, and what they need to do to make their retirement goals come true. Over the past 15 years, Steven has coached many people through to an entirely successful retirement.
Steven creates and actively manages several risked based asset allocation portfolios. He uses a strategic asset allocation philosophy with a tactical focus to pick funds weighted towards the economy’s expected growth sectors. These portfolios are regularly rebalanced to ensure optimal sector position. Investors in these portfolios can expect long term returns consistent with their risk tolerance.
Steven is sought by peers for advice and conducts webinars to educate other advisors on annuities and real-world expectations from them. He regularly follows a variety of economists to keep pace with changes in the marketplace. His insightful advice has been featured in print and on local radio and television.
A resident of Bakersfield for over 25 years, Steven graduated from National University with B.A. in Business Administration. He earned the Highest Award for Achievement from the Dale Carnegie Course.