Category Archives: Economics in the Age of Fiat Money

July 24, 2015

GLOBAL RECESSION: Sudden and Severe

The global economy appears to be moving rapidly back into recession. Commodity prices have crashed to a 13-year low, world industrial production has begun to fall and world trade is contracting. In fact, measured in dollar terms, world trade is collapsing!  In the latest Macro Watch video, uploaded today, we take a close look at…
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July 10, 2015

Unsustainable Wealth

US Household Sector Net Worth has risen by a mind-boggling $30 trillion since the first quarter of 2009. At $85 trillion, it is now 55% higher than at the depth of the crisis – and 25% above its pre-crisis peak. This is how the Fed has made the economy grow: by inflating asset prices.   But…
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July 2, 2015

Credit Growth Slows, Vulnerabilities Increase

In the 21st Century, when there is no longer any difference between money and credit, Credit Growth drives Economic Growth. In the new Macro Watch video, we look at who has been lending the money to fund the credit growth and where their money comes from. We then look ahead to see who will have…
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June 9, 2015

Did You Know The Government Owns 60% Of All US Home Mortgages?

It’s true. The US mortgage market has effectively been nationalized. Here’s how it happened: The Government-Sponsored Enterprises, primarily Fannie Mae and Freddie Mac, issued $7 trillion worth of debt and bought up $7 trillion worth of mortgages and other debt securities between 1987 and 2007. They securitized most of the mortgages they acquired and sold…
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May 30, 2015

A Good Overview Of The Global Economic Crisis

Please find here a link to a YouTube video showing a recent conversation I had with my friend Gordon T. Long of Macro Analytics. It provides a very good overview of my views on the causes of the global economic crisis, Quantitative Easing, Credit and the outlook for the economy, asset prices and government policy….
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May 8, 2015

Yellen’s Dilemma: Global Growth or US Growth

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…
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April 25, 2015

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

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…
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April 16, 2015

Watch Free Video: QE Is Debt Cancellation

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,…
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April 6, 2015

Don’t Miss This One! The Chris Martenson Interview

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…
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March 8, 2015

I Strongly Recommend You Listen To This Interview

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…
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March 3, 2015

How The Fed Intends To Hike Interest Rates

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…
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February 17, 2015

QE Is Debt Cancellation

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…
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February 4, 2015

Why ECB QE Will Drive European Stock Markets Higher

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…
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January 3, 2015

If Interest Rates Rise, Wealth Will Fall

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”,…
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December 27, 2014

How Capital Grows

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…
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December 6, 2014

CAPITAL: A Crash Course

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….
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November 24, 2014

Japan’s Crisis & The BOJ’s Solution

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…
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November 10, 2014

FX Reserve Accumulation Is Quantitative Easing

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,…
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