Category Archives: Economics in the Age of Fiat Money

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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September 21, 2017

Watch Richard Duncan’s Speech For The CFA Institute in Brazil

Last month I had the great good fortune to go on a speaking tour around South America at the invitation of the CFA Institute. I spoke before the CFA Societies in Santiago, Montevideo, Buenos Aires, Sao Paulo and Miami (and managed to get in some glorious vacation time in Valparaiso and Rio along the way)….
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August 28, 2017

The Four Great Threats To Our Unstable Global Economy

The latest Macro Watch video describes the Four Great Threats facing the global economy: 1.  The Crisis In Creditism 2. President Trump’s Economic Policies 3. China’s Economic Crisis 4. Quantitative Tightening Any one of these threats could pop the global economic bubble and throw the world into a new Depression. Macro Watch subscribers can log…
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August 12, 2017

Who’s To Blame For The Global Economic Crisis?

There’s a great deal of confusion about what has gone wrong with the global economy. Everyone seems to have a favorite scapegoat to blame for the crisis. Richard Nixon, Alan Greenspan and Bill Clinton frequently top the list of alleged culprits. Many people point to financial sector deregulation beginning in the 1970s or to free…
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July 25, 2017

Bubble or Recession: The Fed Must Choose

Janet Yellen and her colleagues are facing a difficult predicament. If the Fed does not tighten monetary policy, then a destabilizing asset price bubble could run out of control and wreck the banking sector again. However, if the Fed does tighten monetary policy, then credit is likely to contract, in which case the economy would…
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July 11, 2017

Investors Should Be Terrified Of The Imminent Liquidity Shock

We are now entering a very dangerous period for asset prices and the global economy. The Fed plans to drain more than $1 trillion of liquidity from the financial markets by the end of 2019. That’s not just taking the punch bowl away. It’s more like pumping the stomach of a chronic alcoholic. The ECB…
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June 27, 2017

Monetary Revolution: No Constraints

A Monetary Revolution began when Money ceased to be backed by Gold in 1971. Since then, central banks have taken over the management of the global economy by creating more than $22 trillion, which they have used to manipulate currencies, interest rates and asset prices. To invest successfully, you must understand how central banks are…
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June 13, 2017

Monetary Revolution

Over the last nine years, since the crisis of 2008 began, a revolution has occurred in the way in which government policymakers manage the economy – both at the national level and the global level. It has been nothing short of a Monetary Revolution. No textbooks have yet been written that explain this radical departure…
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May 25, 2017

Quantitative Tightening: The Fed’s New Very Bad Idea

The Fed intends to reverse Quantitative Easing beginning later this year. That is a very bad idea that could inflict severe damage on the economy and destroy your wealth. The new Macro Watch video lays out everything you need to know about Quantitative Tightening. Quantitative Easing (QE) was perhaps the most important element in a…
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May 10, 2017

Can Global Economic Growth Continue?

“Globalization presumes sustained economic growth. Otherwise, the process loses its economic benefits and political support.” – Paul Samuelson Today, global economic growth is weak and globalization is under political siege. The new Macro Watch video presents a snapshot of the global economy in order to assess its growth prospects. We begin by looking at the…
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