Category Archives: Economics in the Age of Fiat Money

February 13, 2016

Death Spiral? Make That Plural

Last week Citi made headlines by publishing a report claiming the global economy is trapped in a “Death Spiral”. The timing of the report was perfect. Financial markets were in full PANIC! Oil fell to $26 per barrel, 10-year US government bond yields dropped to 1.52%, the MSCI World Equity Index fell into a bear…
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February 3, 2016

Negative Liquidity Will Drive Stocks Lower

Liquidity in the United States turned negative in the fourth quarter of 2015. I believe this played an important role in the severe stock market selloff that began around that time. If so, the outlook for stocks and other asset prices is disturbing since Liquidity appears likely to remain negative FOR THE NEXT FIVE YEARS….
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January 24, 2016

How My Career Shaped My Views On The Global Economy

In the new Macro Watch video uploaded today, I describe how my 30-year career in the investment industry has shaped my views on what drives the global economy and the financial markets. There have been several important “aha” moments: Soon after I began my career in Hong Kong in 1986, I realized that ultra-low wages…
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January 3, 2016

Weak Credit Growth Signals Recession Ahead

Between 1952 and 2008, every time US credit growth (adjusted for inflation) fell below 2%, the United States went into recession. During that period, the ratio of total credit to GDP rose from 150% to 380%. In other words, credit growth drove economic growth; and when credit did not grow, neither did the economy. In…
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December 19, 2015

Rate Hike: Trouble Ahead

On December 16th, the Fed hiked interest rates for the first time in nearly 10 years. The world did not come to an end, but there is clearly trouble ahead. In the latest Macro Watch video, we take a look at what the Fed has done and the reasons they gave for doing it. We…
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December 6, 2015

American Meltdown: The Crisis Of 2008

In 2008 the American Financial System failed. In this video, uploaded today, we take a look back at the systemic meltdown of the US financial sector and at the crisis measures the government adopted to reflate the system and keep the world from collapsing into a new Great Depression. It is an absolutely incredible story….
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November 20, 2015

Asia & The Slump In World Trade

Asia is being hit hard by the slump in world trade that has resulted from the sharp economic slowdown in China. In the latest Macro Watch video, uploaded today, we take a look at the impact this trade crash is having on seven Asian countries: Japan, South Korea, Taiwan, Singapore, Malaysia, Thailand and Vietnam. For…
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November 7, 2015

Interview: Yuan Devaluation Likely

An Interview published in Hankook Ilbo I have just returned from speaking at The Third China Forum in Seoul, an event hosted by the Korean conglomerate Hankook Ilbo. The theme of the conference was “The Shift In China’s Paradigm”.   Much of the discussion focused on the outlook for the Yuan. I came away with the…
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October 30, 2015

China’s Next Move: Further Devaluation?

The new Macro Watch video, uploaded today, addresses the following questions about China: Is China selling US government bonds? If so, what are the consequences? What is the significance of China’s attempts to “Internationalize” the Yuan? Why did China devalue the Yuan in August? And will it devalue again? How severe is China’s economic slowdown?…
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October 16, 2015

The Dollar Standard: No Replacement In Sight

There now seems to be a great deal of concern that the Dollar is about to lose its status as the main international reserve currency. That is very unlikely to happen. The latest Macro Watch video, uploaded today, explains why there is no replacement for the Dollar in sight – not the SDR, not the…
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October 2, 2015

Weak Credit Growth Means Recession Ahead

The first thing to understand about the global economy today is that CREDIT GRWOTH DRIVES ECONOMIC GROWTH. In the new Macro Watch video, uploaded today, we take a look at the latest Financial Accounts Of The United States to analyze recent trends in Credit and Debt. We also forecast credit growth out to the end…
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September 20, 2015

The Five Reasons The Fed Couldn’t (And Still Can’t) Hike Interest Rates

There are five reasons the Fed couldn’t (and still can’t) hike interest rates.   Here they are: The US Economy is too weak. Deflationary Pressures are increasing. The Global Economy is in Recession. Liquidity is already tightening. Chinese Blackmail We look at all these reasons in the new Macro Watch video uploaded today. The first four…
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September 14, 2015

New CNBC Squawk Box Interview

The two engines powering global economic growth, the United States and China, have broken down.  As a result the global economy is losing altitude fast.  This was the subject I discussed during an interview on CNBC Squawk Box this morning in Singapore. To watch this short interview, click on the link below. For all…
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September 7, 2015

Liquidity & Asset Prices: Make Sure You Understand The Connection

Suddenly, the investment world has woken up to the importance of LIQUIDITY and its role in driving asset prices. Over the past week, Liquidity has been in the financial media spotlight like never before. The catalyst for this great awakening seems to have been a research report published by Deutsche Bank on September 1st, The…
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September 4, 2015

Rapid Global Economic Deterioration

In the latest Macro Watch video, we look at the interim results announcement of Standard Chartered PLC to see what they tell us about the health of the global economy. What we find is evidence of rapid global economic deterioration and clues that things are going to become considerably worse before they get better. The…
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August 26, 2015

With Panic Spreading…. Watch Free Video

Panic is spreading through the financial markets and the global economy is rapidly sliding back into severe recession. This worsening crisis won’t come as a surprise to Macro Watch members, who have been warned that a new global slump was inevitable. (Please see the list of some recent Macro Watch videos below.)   For those…
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August 23, 2015

The Prospects For Asset Prices: A Very Dangerous Moment

Last week the global economic slump caught up with Wall Street. Global stocks joined global commodities in a broad-based selloff that took the Dow Jones Industrial Average – and many other indices around the world – into correction territory. By market close on Friday, investor sentiment was verging on panic. What should investors expect next…
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August 15, 2015

A New Interview On The Collapsing Global Economy

I recently spoke with Cris Sheridan, the Senior Editor of The Financial Sense Newshour. We discussed the reasons behind the global economy’s rapid slide back into severe recession, China’s economic breakdown and how we got into this mess in the first place. We also discussed what investors should anticipate next. I hope you’ll listen. Here’s…
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August 12, 2015

Monetary & Fiscal Austerity Explain The New Global Recession

In 2008, the global economic bubble came very close to collapsing into a new great depression. That didn’t happen because global policymakers responded to the crisis by injecting trillions of dollars of monetary and fiscal stimulus. That stimulus succeeded in keeping the global bubble inflated for seven years. Now, however, stimulus has given way to…
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August 3, 2015

China’s Economic Crisis: Watch Free Video

Sixteen months ago, I uploaded a Macro Watch video called “China’s Economic Crisis”. In 14 minutes and with 32 charts, it explained why China’s great economic boom was coming to an end and what that would mean for the rest of the world: Slowing global growth Weakening global corporate profits Falling commodity prices Less growth…
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