Category Archives: Economics in the Age of Fiat Money

Yellen’s Dilemma: Global Growth or US Growth

May 8, 2015

The Fed faces a difficult choice. It must decide between boosting global economic growth or boosting US economic growth. If the Fed increases US interest rates, the Dollar will strengthen further. That would cause US exports to fall and imports into the US to increase. As a result, the US Current Account deficit would expand  Continue Reading »

Liquidity Gauge Warning: After mid-year, Look Out!

April 25, 2015

Liquidity determines which way asset prices move. When there is excess liquidity, the price of stocks, bonds and property tends to rise. When liquidity is negative, the price of those assets tends to fall. After two years of excess liquidity – and rapidly appreciating asset prices – liquidity will turn negative in the second half  Continue Reading »

Watch Free Video: QE Is Debt Cancellation

April 16, 2015

Yesterday, I send a blog with a link to a new CNBC interview and a second link to a free video explaining the details of how central banks have effectively cancelled trillions of dollars of government debt and are in the process of cancelling trillions more. The link to the second video did not work,  Continue Reading »

Don’t Miss This One! The Chris Martenson Interview

April 6, 2015

This is one of the very best interviews I have ever participated in. Chris Martenson did a brilliant job, asking all the right questions. This podcast was posted on the PeakProsperity website today under the eye-catching (or even heart-stopping) headline, The Real Risk Of A Coming Multi-Decade Global Depression. We do discuss that risk. But  Continue Reading »

I Strongly Recommend You Listen To This Interview

March 8, 2015

The Financial Sense Newshour Interview Cris Sheridan was my host on The Financial Sense Newshour last week. We had a real go at solving the world’s problems. Among the topics discussed: 1. Why Quantitative Easing is effectively debt cancellation. (When a central bank buys a government bond, it is effectively the same thing as cancelling  Continue Reading »

How The Fed Intends To Hike Interest Rates

March 3, 2015

The consensus view is that the Federal Reserve will begin increasing interest rates later this year. I believe the consensus view is wrong. The Fed hikes rates to fight inflation. Higher interest rates reduce spending and investment, push up unemployment and cause wages to fall. Median income in the United States is little changed from  Continue Reading »

QE Is Debt Cancellation

February 17, 2015

When a central bank prints money and buys a government bond, it is the same thing as cancelling that bond (so long as the central bank does not sell the bond back to the public). That means governments have far less debt than is generally understood. It also has very important policy implications. The new  Continue Reading »

Why ECB QE Will Drive European Stock Markets Higher

February 4, 2015

The European Central Bank has announced a massive Quantitative Easing program that is very likely to push European stock prices significantly higher. The new Macro Watch video, ECB QE, explains everything you need to know about the ECB’s plans to create and invest Euro 60 billion a month to defeat deflation in Europe. Here are  Continue Reading »

If Interest Rates Rise, Wealth Will Fall

January 3, 2015

There is a broad consensus among financial market participants that interest rates will rise in 2015. If they do, the stock market and the economy are likely to suffer a severe blow. The Macro Watch video uploaded today, Finance Capital, explains why. In the previous two videos, “Capital: A Crash Course” and “How Capital Grows”,  Continue Reading »

How Capital Grows

December 27, 2014

Over the past 250 years, the growth of Capital has completely transformed the world. The next time you fly, look out the window. Most of the cities, highways, canals and power grids that you see below weren’t there just a few generations ago. In the latest Macro Watch video, How Capital Grows (uploaded today), we  Continue Reading »

CAPITAL: A Crash Course

December 6, 2014

It’s impossible to understand Capitalism without understanding Capital. In the new Macro Watch video, uploaded today, we look at Capital and the Capital Structure of the United States. Capital generates Income. Therefore, the Capital Stock we have inherited and built, when combined with labor and natural resources, is the source of all of our income.  Continue Reading »

Japan’s Crisis & The BOJ’s Solution

November 24, 2014

In the latest Macro Watch video (uploaded today) we look at Japan and the very serious challenges it faces. These include a demographic crisis, a sharp deterioration in its trade balance, deflationary pressures and a dangerously high level of government debt relative to GDP. We also consider how the Japanese government is responding to those  Continue Reading »

FX Reserve Accumulation Is Quantitative Easing

November 10, 2014

The accumulation of Foreign Exchange Reserves has a profound impact on global asset prices – just as Quantitative Easing does. That makes Foreign Exchange Reserves (which now amount to $12 trillion) one of the most important, but least understood, aspects of how the global economy works now, in this post-Bretton Woods era. In FX Reserves,  Continue Reading »

Analyzing The Five Largest Central Banks

October 28, 2014

The latest Macro Watch video (uploaded today) analyzes the strategies and compares the balance sheets of the world’s five largest central banks: The People’s Bank of China, The Federal Reserve, The European Central Bank, The Bank of Japan and The Bank of England. Central banks print money for one of three reasons: 1) To end  Continue Reading »

Slowing Global Liquidity Points To Deflation Ahead

October 12, 2014

The Fed is about to end its third round of Quantitative Easing, but the Bank of Japan is printing Yen faster than ever before and the European Central Bank intends to reaccelerate its creation of Euros. So, THE question is: Will the increase in new Yen and Euros be enough to compensate for the end  Continue Reading »

The Prospects For Asset Prices

October 2, 2014

Prepare for a stock market sell-off. A new Macro Watch video has been uploaded. In it, I discuss the outlook for stocks, bonds/interest rates, property, commodities and currencies. Topics include: Where will the S&P Index be at the end of next year? Why the Fed won’t begin to increase interest rates any time soon. Will  Continue Reading »

Why The Fed Will Launch Another Round Of Quantitative Easing

September 26, 2014

In November 2002, Fed Governor Ben Bernanke introduced the concept of Quantitative Easing to the world. In a speech entitled “Deflation: Making Sure It Doesn’t Happen Here”, he explained that the Fed could prevent deflation from taking hold in the United States by creating money and using it to acquire government and agency (i.e. Fannie  Continue Reading »

Dissecting The Fed’s Balance Sheet

July 21, 2014

The third video for Macro Watch Third Quarter 2014 has been uploaded and is now ready to watch. In this video, we dissect the Fed’s balance sheet. On the asset side, we see which assets the Fed has acquired with the $3.5 trillion it has created since 2009; and we discuss the impact those asset  Continue Reading »

The Fed’s New Magic Trick

July 7, 2014

The Fed has pulled a new rabbit out of its hat: Reverse Repos. By using reverse repos, the Fed has found a way to deal with its two most pressing challenges of 2014: 1) preventing the high levels of excess liquidity during the second quarter from creating a stock market boom and bubble, and 2)  Continue Reading »

Credit: How Much Does It Take?

July 2, 2014

I’ve begun to roll out Macro Watch: Third Quarter 2014. The first video, Credit: How Much Does It Take?, has been uploaded and is ready to watch. In this video, we consider how much credit growth it would take to restore solid economic growth in the United States. Looking at this sector by sector, it  Continue Reading »

Watch Q2 Macro Watch Preview: Treacherous Markets Ahead!

April 12, 2014

To watch a 6-minute overview of Macro Watch: Second Quarter 2014, click on the link at the bottom of this blog. But first, an announcement: Today I am offering the followers of this blog a 33% discount on an annual subscription to Macro Watch. If you are interested, click on this link: and use  Continue Reading »

Macro Watch Q2 2014 Is Ready To Watch

March 29, 2014

Macro Watch: Second Quarter 2014 has been uploaded and is now ready to watch. This quarter, there are seven videos, beginning with one warning investors that the stock market may be particularly treacherous over the rest of this year. Here’s what you can expect: Contents: 1. Treacherous Markets Ahead A warning to investors: Shifting Liquidity  Continue Reading »

The Liquidity Gauge

March 21, 2014

Central bank forward guidance and communication are all fine and good, but it is liquidity that moves the markets. When liquidity is plentiful asset prices tend to rise and when it is scarce asset prices tend to fall. What investors require, therefore, is a simple way to measure and forecast liquidity, a liquidity gauge. A  Continue Reading »

CNBC Asia Squawk Box Interview

March 3, 2014

This morning I spoke with Martin Soong on CNBC Asia Squawk Box. We discussed the fundamental weakness of the US economy, the approaching shift in liquidity, the prospects for assets prices and the risk of a US recession in 2014 – all in less than 4 minutes. To get the facts behind the bullet points,  Continue Reading »

The CNBC India Interview: Why QE Won’t End in 2014

January 24, 2014

I was in Mumbai to speak at the CFA Institute’s India Investment Conference last week. While there, I was interviewed by CNBC India. I explained why I believe that Quantitative Easing will not end this year and what the continuation of QE on into 2015 will mean for Emerging Market economies and global asset prices.  Continue Reading »

Watch MACRO WATCH on YouTube

January 9, 2014

Macro Watch First Quarter 2014 is now uploaded and ready to watch. It explains how the Fed’s new “Taper Schedule” is likely to impact Liquidity and Asset Prices on a quarter by quarter basis in 2014 and on into 2015. To watch the 4-minute introduction video on YouTube, click on the following link: This  Continue Reading »

Macro Watch First Quarter 2014 Has Been Uploaded

January 6, 2014

The new issue of Macro Watch is ready to watch. Its theme is that Quantitative Easing is unlikely to end in 2014. Contents: 1. Introduction 2. Economic Overview, With a Focus on Net Worth 3. Credit: Will Credit Growth Accelerate? 4. The Fed & Liquidity 5. Liquidity Conditions in 2014 and The Prospects for Asset  Continue Reading »

The McAlvany Weekly Commentary Interview

December 29, 2013

I had a very interesting conversation with David McAlvany for The McAlvany Weekly Commentary recently. We discussed: • The Fed’s serial bubble blowing strategy • The role liquidity plays in driving asset prices • How much the Fed is likely to taper • The possibility of much lower interest rates • The limits of asset  Continue Reading »

THE TAPER: Recalibrating Liquidity

December 20, 2013

The “Taper” has begun. It’s important to understand why. On December 18th, the Fed announced that it will begin to taper the amount of fiat money it creates each month from $85 billion to $75 billion starting in January. Chairman Bernanke also indicated that the Fed is likely to continue reducing the monthly amount of  Continue Reading »

The Squawk Box Asia Interview

November 20, 2013

This morning I spoke with the CNBC Asia Squawk Box team in their Singapore studio. We discussed Fed Chairman Bernanke’s speech (which was taking place at that time) and what it suggests about when the Fed will begin to taper QE. I hope you’ll check out this conversation by clicking on the link at the  Continue Reading »

The Macro Analytics Interview on YouTube

November 8, 2013

I had an interesting conversation with Gordon T. Long of Macro Analytics recently. We discussed our economic future and what investors must monitor in this new age of fiat money. I introduce “The Liquidity Gauge” here for the first time. Gord did a great job of weaving charts into the interview and posting it on  Continue Reading »


October 29, 2013

I would like to sincerely thank all of you who have subscribed to Macro Watch over the past week. The strong take up has been very encouraging and very much appreciated. We’re off to a good start. For those of you who have not yet subscribed, please see the subscription details below. Macro Watch is  Continue Reading »

Announcing MACRO WATCH

October 20, 2013

With this blog, I am launching Macro Watch, a subscription-based video newsletter that analyzes trends in credit growth, liquidity and government policy in order to anticipate their impact on asset prices and economic growth. Macro Watch will be published quarterly. Each issue will be approximately one hour long and will be broken into a number  Continue Reading »

New Radio Interview: Why No Taper?

September 26, 2013

Last week I was in Kuala Lumpur.  There I had an interesting conversation with Julian Ng  of BFM radio.  We discussed: Why the Fed decided not to taper QE How the economy really works now The purpose and goal of Capitalism, and Why it is impossible to return to a Gold Standard. To listen to  Continue Reading »

Watch Richard Duncan’s New Course: How The Economy Really Works

August 15, 2013

My second video Course is now available on It’s called: How The Economy Really Works. This 2-hour Course deals with the present. It explains how our economic system works now. It’s divided into 11 lectures. Lecture 1: What’s Changed? Lecture 2: Don’t Call It Capitalism Lecture 3: Who’s In Charge? Lecture 4: GDP 101  Continue Reading »

How The Economy Really Works

May 10, 2013

So far, 450 of you have signed up for my on-line video course, Capitalism In Crisis: The Global Economic Crisis Explained. Thank you! I appreciate your interest and your support. As you know, Capitalism In Crisis focuses on the past, on the causes of the crisis. Today, I would like to let you all know  Continue Reading »

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