You are a free subscriber to Me and the Money Printer. To upgrade to paid and receive the daily Capital Wave Report - which features our Red-Green market signals, subscribe here. Revisiting 1979 For Fun and Profit...Shakedown. Nineteen. Seven. Nine. Cool kids never have the time.
Dear Fellow Traveler… Over the weekend, I sat down and read a speech I haven’t seen in years. I want to tell you about it. Before I do, put on the Smashing Pumpkins’ “1979” before you read this. Let Billy Corgan’s distorted nostalgia wash over you for four minutes while you contemplate what I’m about to tell you… Go ahead. I’ll wait…  Today’s story is about the man who admitted the Fed could have stopped inflation at any point… and didn’t. He explained exactly why in a speech nobody remembers. But you’ll never forget it after today’s conversation… The ConfessionIn September 1979, Arthur Burns traveled to Belgrade, Yugoslavia. Burns had served as Federal Reserve Chairman from 1970 to 1978. He’d been replaced by G. William Miller, who lasted barely 17 months. After that, Jimmy Carter had to bring in Paul Volcker to clean up the mess. Burns stood before an audience of global economists, almost 5,000 miles from Washington, D.C. He then delivered a speech called “The Anguish of Central Banking.” It was, in every sense, a confession. At the onset asked a devastating question… why had central bankers, armed with the tools and the knowledge to stop inflation, failed so completely? His answer should be required reading for every investor alive today.
The Fed Chairman is saying… we could have stopped this at any point. We had the tools… but chose accommodation over restraint. Why?
Simply put, it was politically convenient to do what they did… rather than economically necessary. The Playbook That Never ChangesHere’s what Burns was really telling the truth about… Between the early 1960s and his speech in Belgrade, the federal government had dramatically expanded its role in the economy. New entitlement programs, new welfare commitments, a war in Southeast Asia that nobody could afford… The spending kept growing, and nobody wanted to be the person who said no. That’s not how you win elections. The Fed’s job was supposed to be independent. They were supposed to raise rates when things got hot. They were supposed to cool down the economy before inflation took hold. But every time the central bank moved to tighten, the political pressure was enormous. Programs needed funding… and deficits needed accommodating. The people in charge of monetary policy discovered that doing the right thing was career suicide. So they printed money… Burns knew it was wrong…. and he admitted this in Belgrade. He showed how the Employment Act of 1946 made “maximum employment” the government’s explicit responsibility, and how every new social program created a “constituency” that demanded continued funding. Constituents… what a term. The budget became a one-way ratchet… It only went up. And people wondered how we got into the position where skimming and fraud got so rampant… decades later. But there’s one more point… the thing that really set all of this up… In August 1971, the last remaining constraint on the system was removed when gold convertibility ended. After that, there was nothing stopping the expansion of money and credit except the willingness of the people running the system to say “enough.” And as Burns admitted in Belgrade… they never said it. No one has said it… We just go… BRRRRRRRRR. By 1979, inflation was running above 11%. The dollar had lost more than half its purchasing power in under a decade. And this former Fed Chairman stood there in Yugoslavia telling everyone why he and his colleagues couldn’t bring themselves to do what they knew was right. Nothing has changed… has it? Sound Familiar?Here’s why this speech is so important right now. Today, roughly 75% of federal spending is either mandated by law or consumed by interest before Congress debates a single new dollar. Social Security alone eats 22%, Medicare takes 16%, and net interest on the debt consumes another 14%… and it’s all going up… In what world do you think we’re magically going to stop printing and spending? The government spent $2.5 trillion in just the first four months of fiscal year 2026, with Social Security, Medicare, and interest costs all rising faster than everything else. This isn’t a budget. It’s an inherited credit card bill from previous generations. Discretionary spending… the part Congress votes on each year… is a shrinking sliver of the financial pie. The rest is locked in by prior law, promises, and political decisions that no elected official wants to reverse. Doing so will get them tossed out of office. Burns described this exact dynamic 46 years ago. He talked about how “the profession of economics” had created views that made government intervention seem not just acceptable but mandatory. The public expected Washington to fix unemployment, guarantee incomes, and manage prices. And our younger populace is going to demand even more… especially as the road continues to point to even greater government intervention and spending. The Fed’s job became accommodating those expectations, even when accommodation meant debasing the currency. Burns’ conclusion was the most honest thing a central banker has ever said publicly…
He was right then… and he’s right now. The person sitting in that chair… whether it’s Kevin Warsh or anyone who follows… will face the same impossible math that Burns described in Belgrade. There is $346 trillion in global debt, 75% of the budget locked in, and a system that requires inflation to keep functioning. The anguish of central banking hasn’t changed since 1979. It’s just gotten louder. And when the anguish becomes unbearable, the response is always the same. Print. Stay positive, Garrett Baldwin About Me and the Money Printer Me and the Money Printer is a daily publication covering the financial markets through three critical equations. We track liquidity (money in the financial system), momentum (where money is moving in the system), and insider buying (where Smart Money at companies is moving their money). Combining these elements with a deep understanding of central banking and how the global system works has allowed us to navigate financial cycles and boost our probability of success as investors and traders. This insight is based on roughly 17 years of intensive academic work at four universities, extensive collaboration with market experts, and the joy of trial and error in research. You can take a free look at our worldview and thesis right here. Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. The communication in this letter is for information and educational purposes unless otherwise strictly worded as a recommendation. Model portfolios are tracked to showcase a variety of academic, fundamental, and technical tools, and insight is provided to help readers gain knowledge and experience. Readers should not trade if they cannot handle a loss and should not trade more than they can afford to lose. There are large amounts of risk in the equity markets. Consider consulting with a professional before making decisions with your money.
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