Is the Federal Reserve a godlike Zeus able to control our money and the economy, preserve financial stability and keep a lid on inflation?

Or is it like the Wizard of Oz? A little man behind the curtain pulling levers to create smoke and noise to terrify and control people, but in the end only one market participant among many worldwide.

If you're a bond trader in New York, trying to predict minute day to day changes in interest rates, it's more like Zeus. For the rest of us, I believe, it's like Oz.

Trying to figure out the Fed is a complicated business and I'm delighted to be joined again on this episode by one of my favorite guests and good friend Norbert Michel, who's vice president and director of Cato Institute's Center for Monetary and Financial Alternatives.

"The Fed does set an interest rate target," says Norbert, "and they do administratively set a policy rate that they pay on reserves. But the idea that the Fed is sitting down in a basement and turning some dials and cranking up unemployment or cranking down inflation or cranking up GDP, it's just not true."

In this episode we delve into this, and a lot of other news in the headlines about our money. Like whether the United States dollar is likely to lose its status as the world's reserve currency.

The United States enjoys an enormous gift which is also a curse: with the world's reserve currency, it can run massive federal budget and trade deficits as long as other countries want to hold dollars. That's not likely to change in the near future.

"The US economy is still about a quarter of the global economy. And then almost another quarter of the global economy is China. Well, who on Earth wants to hold Chinese currency when it's controlled by the Chinese Communist Party? And so you're really left with no place else to go."

Norbert is also one of true experts in the very real threat to our liberty that the Biden Administration (along with many other governments worldwide) is cooking up: a central bank digital currency.

"Our paper dollars today are technically liabilities of the Federal Reserve; but with a CBDC, your checking account is with the Fed, giving it potential control of every transaction."

"On Cato's website we have direct quotes from international government officials talking about how great it is going to be to control what everybody does with their money. So this is real. This is coming."

Given how complicated all this stuff is, Norbert and I try to keep the conversation from getting too dense. Listen in. These are important matters that do concern you and your money.

Episode 222: "What You Need to Know About Your Money and the Federal Reserve" with Cato's Norbert Michel

The Bill Walton Show

Episode 222: "What You Need to Know About Your Money and the Federal Reserve" with Cato's Norbert Michel