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November 15, 2019

The Repo Crisis and The Fed: Part 2

Monetary Policy is the government’s most important economic policy tool.  If you really want to understand how the Fed conducts Monetary Policy, you must understand the Fed’s weekly report on the “Factors Affecting Reserve Balances”. The previous Macro Watch video began analyzing the “Factors Affecting Reserve Balances” in order to show, in detail, how the Fed…
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November 13, 2019

The Repo Crisis and The Fed

On September 16th, the interest rate in the overnight Repo Market shot up to nearly 10%.  It should have been below 2.25%. There was no shortage of Reserves to lend.  There were nearly $1.4 trillion of Reserve Balances that day.  Therefore, there was an unwillingness to lend among the institutions holding the Reserves.  The Fed had to step in…
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October 12, 2019

Quantitative Easing Round Four

A new round of Quantitative Easing began yesterday when the Fed announced that it would create $60 billion a month to buy US government securities. Although I have long expected the resumption of QE, I find the suddenness and size of QE4 startling.  It could signify the Fed is aware of a grave problem somewhere in…
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September 29, 2019

Expect More Rate Cuts

Credit Growth in the United States has been the most important driver of economic growth for decades, so it is important to monitor it closely.  If it expands by less than 2% a year (adjusted for inflation), the economy goes into recession.  Therefore, when credit growth is weak, the Fed is forced to loosen monetary policy to…
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September 19, 2019

Interview: The Future Of Monetary Policy

I recently discussed the future of Monetary Policy with Hunter Thompson, the host of the Cash Flow Connections podcast.  It was an interesting and timely conversation. This week, the Fed injected more than $125 billion of liquidity into the financial markets and cut the Federal Funds Rate by an additional 25 basis points. Last week, the European…
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September 6, 2019

Dalio vs. Mauldin: The Great Debate – Part 3

Ray Dalio is the founder of Bridgewater Associates, the world’s largest and most successful hedge fund.  In May, he published a paper called “It’s Time to Look More Carefully at “Monetary Policy 3 (MP3)” and “Modern Monetary Theory (MMT)”.   In that paper Dalio defined MP3 as “fiscal and monetary policy working together, with fiscal policy producing…
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August 22, 2019

Dalio vs. Mauldin: The Great Debate – Part 2

A debate that could determine whether our economic future is prosperous or impoverished has taken place between Ray Dalio and John Mauldin, two of the world’s most influential economic thinkers.  The debate can be summarized as:  MP3 vs. VAT. Ray Dalio, the founder of the legendary hedge fund Bridgewater Associates, published two articles in which…
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August 13, 2019

How The US Can Win The Currency War

On August 5th, the Chinese Yuan fell below Yuan 7 per Dollar for the first time in eleven years.  Later that day the US Treasury Department designated China a currency manipulator.   Financial journalists around the world concluded that these developments signaled that the US-China Trade War had expanded into a Currency War.   Some journalists argued that…
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August 9, 2019

Financial Sense Interview: Highly Recommended

Capitalism didn’t exactly die.  It just evolved into a very different kind of economic system: Creditism. I discussed the evolution of Capitalism into Creditism recently with Cris Sheridan for the Financial Sense Newshour podcast.     In fact, the first half of our conversation could be called Creditism 101.  I highly recommend it because it is impossible to…
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August 3, 2019

Ray Dalio vs. John Mauldin: The Great Debate

An extraordinarily important debate has taken place between two of the world’s most influential economic thinkers: Ray Dalio, the founder of the legendary hedge fund, Bridgewater Associates, and John Mauldin, the publisher of “Thoughts From The Frontline”, one of the world’s most widely read financial newsletters. This debate can be described as:  MP3 vs. VAT…
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July 11, 2019

America Can Invest Or Surrender To China

China’s lead in 5G Technology is the United States’ new Sputnik moment.  There is no mystery as to why China will soon overtake the US as the world’s leading technological, economic and military superpower if current trends continue.  It is very simple: China invests much more than the United States does. There is only one way…
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July 5, 2019

Robert Kiyosaki Interview

Robert Kiyosaki is one of the best-selling authors of all time.  His first book, Rich Dad Poor Dad, has sold more than 32 million copies.  I recently had an interesting conversation with Robert for Rich Dad Radio.  We discussed the following topics: The US-China Cold War and the impact it could have on the global…
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June 24, 2019

The Fed Is A Hostage Of The S&P 500

The S&P 500 closed at a record high last week, while Gold hit a five-year high.  Stocks and gold spiked because a very rapid slowdown in the world economy has forced a globally coordinated loosening of Monetary Policy.  The new Macro Watch video explains the reasons behind the sudden U-Turn in global Monetary Policy and discusses…
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June 5, 2019

The Yield Crash Signals Pain Ahead

The collapse in Government Bond Yields during May was a clear signal that investors are afraid the stock market may be headed significantly lower.  The flight to quality out of stocks and into bonds occurred because the outlook for corporate earnings is deteriorating rapidly due to the US-China trade war. The earnings outlook is deteriorating for…
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May 23, 2019

What Are Bank Reserves?

When the crisis of 2008 began, the Reserves that commercial banks hold in their accounts at the Fed soared from $21 billion in 2007 to $2.4 trillion in 2014.  Many commentators concluded that the Fed’s policies and Quantitative Easing, in particular, were not working because the QE money was just piling up in the commercial banks’…
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May 15, 2019

The US-China Trade War Heats Up

With the US-China trade war heating up, it is important to understand what is at stake. This blog post provides a list of the most important Macro Watch videos on this subject. Macro Watch subscribers can log in and watch them all now. Click on the “Video Index” Tab in the menu bar, then “Videos…
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May 9, 2019

Seigniorage: Simple, Short and $1.7 Trillion Sweet

The new Macro Watch video describes the enormous windfall profits the US Government and, therefore, US taxpayers earn as the result of Seigniorage every year. Seigniorage is the profit a government makes by issuing currency.  In the United States, the Fed issues the currency in the form of Federal Reserve Notes.  As it does, it is required…
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April 25, 2019

Looser Monetary Policy Will Be Required

As recently as 1969, US savings were sufficient to fund all US debt.  How things have changed.  Last year, the US had only enough savings to finance 22% of all its debt.  During the years between 1969 and 2018, the rest of the debt had to be financed through credit creation and money creation.   This year, total US…
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April 11, 2019

Expect Fed Rate Cuts This Year

Credit Growth drives Economic Growth.  But the United States doesn’t save enough to finance all that it borrows. It hasn’t for a very long time. To finance the credit growth that drives the economy, the US must rely on: Credit creation by the private sector,  Money creation by Fed, and  Capital inflows from abroad. Rising interest rates…
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March 28, 2019

Credit Growth, Asset Prices and The Fed

Between 1980 and 2008, Credit Growth drove Economic Growth.  The ratio of Total Credit to GDP soared from 170% in 1980 to 370% in 2008.   Since 2008, however, Credit Growth has been too weak to make the economy expand.  Rising asset prices have taken over as the new growth driver. The new Macro Watch video forecasts US credit…
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