Macro Watch: A Synopsis of Recent Work
This week I would like to tell you about the work I have published recently in my video-newsletter Macro Watch.
I believe our economic system changed in a fundamental way when the world stopped backing money with gold four and a half decades ago. Now, credit growth drives economic growth and liquidity determines the direction in which asset prices move. To make sense of this new environment, Macro Watch employs a framework that analyzes credit growth, liquidity and government policy in order to anticipate how they will impact economic growth and asset prices.
The following paragraphs provide a description of the seven Macro Watch videos that have been uploaded during the last three months, along with a few tidbits summarizing their conclusions.
Has The Next Recession Begun? The US economy contracted by 0.2% during the first quarter. This video examines the startlingly weak first quarter economic data – and the fundamental factors behind that weakness.
A Liquidity Gauge Update. 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 of this year AND REMAIN NEGATIVE FOR THE NEXT FIVE YEARS! In this video we look at how the approaching liquidity drain will impact US asset prices during the quarters and years ahead.
Yellen’s (Triffin) Dilemma. The Fed faces a difficult choice. It must decide between boosting global economic growth or boosting US economic growth. Hiking US interest rates would benefit the global economy by strengthening the Dollar and causing the US Current Account deficit to widen. However, the US economy would pay a heavy price in terms of manufacturing competitiveness and jobs. Here we consider this latest manifestation of “the Triffin Dilemma”.
The Banks. This video provides a crash course (pun intended) on the six institutions that dominate American finance: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley.
How The Government Came To Own 60% of US Home Mortgages. The US mortgage market has effectively been nationalized. This video explains how this disaster came about by analyzing the Government Sponsored Enterprises, Fannie Mae and Freddie Mac.
Who’s Going to Lend The Money To Drive Economic Growth? Credit growth drives economic growth, but who is going to lend the money (credit) to drive the economy during the years ahead. What we find here suggests there is a growing risk of a new systemic banking sector crisis ahead.
Unsustainable Wealth. Quantitative Easing and 0% interest rates (on the Federal Funds rate) have pushed up US household sector net worth (i.e. Wealth) up by a mind-boggling $30 trillion – a 55% leap – over the past six years. This video explains why much of that wealth will disappear if the Fed now begins to hike interest rates – as they are signaling they intend to do later this year.
These are not short articles like those you find in newspapers and most magazines. These videos present detailed analysis that is designed to teach Macro Watch members to understand how the economy really works now and to interpret how breaking developments will impact their wealth. The videos are usually 20 minutes long; and each video contains 20 to 50 downloadable charts.
More than 16 hours of video content is available for Macro Watch members to watch immediately, including two video courses:
The Global Economic Crisis Explained, and
How The Economy Really Works
A new video is uploaded approximately every two weeks.
If you would like to become a Macro Watch member, click on the following link: http://www.richardduncaneconomics.com/product/macro-watch/
For a 50% subscription discount worth US$250 , hit the “Sign Up Now” tab and, when prompted, use the coupon code: richdad