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June 28, 2018

QE In Europe Is Ending – Beware

The ECB has announced that it plans to reduce its Quantitative Easing program from €30 billion per month now to €15 billion per month in October; and then to end QE altogether in December.  That is important because the ECB’s aggressive asset purchase program (which peaked at €80 billion per month) has pushed down interest…
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June 23, 2018

The Bank Of Japan Goes Ballistic

Ballistic is not a word normally associated with Monetary Policy. However, it is the ideal adjective to describe the conduct of Japanese Monetary Policy over the last five years. Japan’s monetary base has expanded three and a half times during that period.  The Bank Of Japan now owns 40% of all Japanese Government Debt. Its…
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June 2, 2018

The BOJ’s Radical Experiment

Monetary Policy in Japan is RADICALLY AGGRESSIVE.  Over the last five year, Japan’s Monetary Base has expanded by three and a half times.  The Bank Of Japan now owns 40% of all Japanese Government Debt.  The Bank’s total assets have reached 100% of Japan’s GDP. In a new two-part series, Macro Watch considers all aspects…
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May 3, 2018

Less Savings, More Debt, Increasing Vulnerabilities

Total debt in the United States increased by $2.6 trillion last year.   This year it will increase by roughly $2.9 trillion.  For every debtor, there is a lender.  The new Macro Watch video shows who acquired the new debt that was sold in 2017 and who is likely to acquire the new debt that will be…
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April 18, 2018

Weak Credit Growth Leaves The Economy Vulnerable

When credit growth is weak, the United States falls into recession. Between 1952 and 2008, there were only nine years when total credit (adjusted for inflation) grew by less than 2%. Each time, there was a recession. In 2017, total credit grew by just 1.9%. This was the first time credit growth has fallen below the 2% recession threshold…
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March 28, 2018

A 100 Year History Of Inflation Points To Trade War Calamity

Milton Friedman once famously said, “Inflation is always and everywhere a monetary phenomenon”.  It’s not.  The history of Inflation in the United States over the past century demonstrates that Inflation is not ALWAYS a monetary phenomenon.  Demand Shocks and Supply Shocks have frequently had an even greater impact on price movements than those caused by…
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March 14, 2018

The Money Revolution

In order to understand how the economy and the financial markets really work today, it is necessary to understand Money.  Not many people do.  In large part, that’s because Money today is not the same thing that it was 100 years ago – or even 50 years ago.   The new Macro Watch video explains…
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March 1, 2018

QT: The Pain Is Just Beginning

The Fed is running behind schedule. According to the Quantitative Tightening (QT) schedule it published last year, the Fed had intended to destroy $50 billion between October, when QT started, and the end of January.  It didn’t.  As of mid-February, the Fed has only destroyed $21 billion.  In fact, the Fed actually reversed course and…
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February 12, 2018

The Government-Induced Liquidity Crisis Could Crush The Markets

The combination of tax cuts and increased government spending – on top of Quantitative Tightening – is set to drain $3 trillion out of the financial markets over the next three years.  The United States has never had to endure a Liquidity Drain anywhere near that size before.  It is likely to drive interest rates…
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January 31, 2018

Rate Hikes, Quantitative Tightening and Their Consequences

The previous Macro Watch video explained the evolution of US Monetary Policy over the last century by analyzing changes in the composition of the Fed’s assets and liabilities between 1914 and 2016.   Today’s video examines how the Fed is conducting Monetary Policy now.  It also considers the impact that current Monetary Policy is likely…
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January 25, 2018

The Investors Podcast Interview – Highly Recommended

I recently spoke with Preston Psyh and Stig Brodersen for The Investors Podcast.  The feedback from this interview has been fantastic.  Preston and Stig ask excellent questions and allow plenty of time for meaningful answers. It is easy to understand why The Investors Podcast has developed such an enormous and devoted worldwide following. I strongly suggest…
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January 14, 2018

The History Of US Monetary Policy – Highly Recommended

It is not possible to understand how the economy and the financial markets work in the 21st Century without understanding how the government conducts Monetary Policy.  The first Macro Watch video of 2018 explains the past century of US Monetary Policy by analyzing the evolution of the Fed’s balance sheets between 1914 and 2016. The…
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December 14, 2017

Inflation Would Crush The Global Economy

The new Macro Watch video looks at the Credit to GDP ratio for each of the world’s twenty largest economies.  We find that credit has been growing faster than the economy for all of these countries for decades.  In other words, Credit Growth has been driving Economic Growth – not only in the United States,…
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November 30, 2017

The Stock Market: Worry Now, Sell Later?

The S&P 500 Index is now 66% above its 2007 pre-crisis peak and 250% above the low it reached in 2009.  The market’s cyclically adjusted price-to-earnings ratio is 31 times.  That ratio has been higher only twice: in 1929 and in 1999.  Both earlier peaks were followed by violent crashes.  So, should investors panic?  Is…
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November 16, 2017

When Stocks Fall, Expect A Recession

As a rule, Credit Growth drives Economic Growth. But that is not the case now. Credit growth is very weak, but the economy grew by 3% during each of the last two quarters. Q: What then is driving the economy? A: Asset price inflation. Household Sector Net Worth jumped by $8.2 trillion between mid-2016 and…
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November 2, 2017

Japan’s Extraordinary Experiment

The Bank of Japan is creating money and buying up Japanese Government Debt on an unprecedented scale. Thus far, the BOJ has bought up 40% of all Japanese Government Debt – and that percentage is increasing with every month that passes. This is a truly extraordinary experiment in monetary policy. So far, the results of…
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October 19, 2017

China vs. The US: Whose Century Will It Be?

Last year, Macro Watch published a five-video series on China’s economy.  It explained that China’s export-led, investment-driven and debt-fueled economic growth model is in crisis because global income is insufficient to absorb all of China’s current industrial production.  Therefore, any additional investment would only result in greater losses, higher non-performing loans and the destruction of…
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October 5, 2017

China’s Credit Tsunami May Capsize The World

The IMF expects China’s Total Debt to double from US$27 trillion in 2016 to US$54 trillion in 2022.  That would be a five-fold increase in total debt just since 2009. I’m not convinced that will happen.  But, if it does, the creation and deployment of US$27 trillion of Credit by China over the next 5…
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