Blog

March 27, 2020

Life During Wartime Part Two

The Senate passed a $2 trillion stimulus bill this week.   That is not going to be enough. The new Macro Watch video, uploaded today, considers two scenarios of how much fiscal stimulus will be required this year to prevent the economy from collapsing: Scenario One assumes $2.5 trillion of fiscal stimulus will be required.  This is…
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March 25, 2020

Life During Wartime

A wartime effort will be required to defeat the Coronavirus and prevent the US economy from collapsing into a Depression.  But this war is very different from any we have fought before. The new Macro Watch video contrasts the war we are fighting today with World War II.   During World War II: US government debt jumped by…
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March 19, 2020

Interview: How To Prevent A Depression

This is the most important interview I have ever given.  Listen to it now. The global economy is being crushed by the Coronavirus.  Chaos reigns in the financial markets.  In this Financial Sense interview with Cris Sheridan, I lay out what must be done to prevent the United States economy from collapsing into a Depression. …
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March 15, 2020

Recession or Depression?

The United States economy will almost certainly fall into Recession this year because of the Coronavirus.  The outcome, however, could be very much worse than that.  Whether the US economy spirals into a Depression or merely a Recession will be determined by the size and the speed of the fiscal and monetary policy response to the…
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March 7, 2020

The Fed Considers Buying A Wider Range Of Assets

On March 1st, Macro Watch uploaded a video entitled “Thoughts On The Coronavirus”.  That video warned Macro Watch subscribers to be prepared for the Fed to take drastic measures to prevent a stock market crash.  It raised the possibility that the Fed may even begin to buy stocks directly to push stock prices higher. Today,…
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March 1, 2020

Thoughts On The Coronavirus

In the Macro Watch video uploaded today, I share my thoughts on the Coronavirus. How long it is likely to last. How it has impacted the global economy to date. How it is likely to impact corporate earnings, asset prices and the global economy during the weeks ahead. This video also discusses the drastic measures…
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February 18, 2020

America’s National Emergency: Part 3

China surpassed the United States in R&D investment last year.  It will soon become much stronger than the US – technologically, economically and militarily – if the US doesn’t radically expand its investment in R&D.  This is a national emergency that requires an immediate and aggressive response by the US government. Senate Minority Leader, Charles Schumer recently…
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February 4, 2020

America’s National Emergency: Part 2

China overtook the United States in Research and Development (R&D) investment last year.  Moreover, its lead over the US will widen rapidly during the years immediately ahead if current trends continue.  China’s lead in R&D spending represents a nation emergency and, potentially, an existential threat to the United States. Macro Watch has begun a three-part series that…
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January 21, 2020

America’s National Emergency

China surpassed the United States in Research and Development (R&D) investment last year.  This constitutes a national emergency for the United States on par with, or greater than, the Soviet Union’s launch of Sputnik in 1957.  If China continues to invest more in R&D than the United States does, it will soon become the world’s…
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January 7, 2020

Corporate Sector Concerns

The new Macro Watch video examines the balance sheet and the earnings of the US Corporate Sector.  They reveal a number of reasons to be concerned about the Sector’s health. Corporate debt to GDP is at a record high.  The previous three peaks in corporate debt to GDP were followed by recessions. The increase in Corporate Sector…
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December 24, 2019

Recommended Interview: How Much Will The Fed Print This Time?

I recently had a particularly interesting conversation with Cris Sheridan of Financial Sense Newshour.  I highly recommend it.  The topic?    The most extraordinary Monetary Policy U-Turn in the Fed’s 105-year history; and its implications for investors and for government policy. One year ago, the Fed was hiking interest rates and destroying $50 billion a…
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December 19, 2019

Household Wealth and Fed Policy

Business Investment is weak in the United States despite the recent large corporate tax cuts. Household Consumption, however, is holding up. Relatively strong Consumption has enabled the economy to grow by an average of 2.4% during the first three quarters of this year. Asset price inflation has played an important role in supporting consumption.  The new…
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November 22, 2019

The Repo Crisis and The Fed: Part 4

Quantitative Easing has resumed.   On September 17th, overnight interest rates in the Repo Market shot up to 10%, four times higher than they should have been.  Problems there infected the Federal Funds Market, causing the Federal Funds Rate to move up to 2.3%, above the Fed’s target range of 2.0% to 2.25%.  This means the Fed temporarily…
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November 20, 2019

The Repo Crisis and The Fed: Part 3

The Fed is once again creating very large amounts of money and pumping it into the financial markets. So, it is not surprising that all the major US stock market indices have recently set new record highs. What we don’t know, however, is how long the Fed is going to continue “printing” and how much money…
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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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