My Warning To Some Of The World’s Largest Investment Managers
Posted February 12, 2017
I’ve just returned from a couple of very interesting weeks in the United States. In mid-January, I had the opportunity to meet Alan Greenspan and to ask him a question that I believe is of historic importance. That was the subject of the Macro Watch video uploaded on January 25th.
Two weeks later, I was taken on a roadshow by CLSA to meet with institutional investors in New York, Boston, San Francisco and Los Angeles. I made presentations to roughly two dozen investment firms. Collectively they manage well over US$100 billion. The topic of my presentation was Trump’s Recipe For Disaster.
If President Trump really does carry out his campaign promises to cut taxes, increase government spending and eliminate the US trade deficit, interest rates will spike, causing credit to contract, asset prices to crash and the economy to collapse back into a 2008-stlye recession – or worse.
In the new Macro Watch video uploaded today, I use one chart, the US Balance Of Payments, to explain why. Macro Watch subscribers can log in now to download my roadshow presentation and watch the new video.
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Big fan of your work. Are you assuming that Bannon doesn’t want another, deeper financial collapse? I think he does want it. His Bible is Strauss and Howe’s Fourth Turning, which he views as a Machiavellian how-to guide. He believes that a hard crisis is necessary as a crucible for major foundation change. From Bannon’s perspective, Bernanke successfully neutered the predicted the 2008 crisis and that was a bad thing. He thinks it left the savior millennials in temporary limbo. He’s gunning for round two.
BTW, are you writing any more books soon?
Hi Richard, I follow the logic of your presentation. I suppose one tactic would be for Trump to ignore the trade deficit while pursuing the rest of his economic agenda.
My question to you is what did the managers say or what questions or concerns did they raise in response to your talk to them? I am most interested in how that debate\discussion went..Looking forward to your response.
Sincerely, Jack from Toronto.
Hello, Richard. First, thank you for your work. Now, I understand your basic premise that credit growth is economic growth; and the consequences of Trump’s–so far inchoate–economic policies could cause severe inflation, rising interest rates, and therefore less credit, reversing economic growth to the point where we could find the global economy on the brink of oblivion yet again. Which brings me to my question: Is this where Reserve Banks step in, yet again, to print trillions of dollars of fiat currencies and prop up the world? Is that scenario possible a second time? Would Trump’s team act swiftly and decisively to allow our Fed to save the economy again? (As everyone knows he has been disparaging of Fed policy and Chair Yellen for some time.)
Thank you for the courtesy of your reply, Richard.