Breaking Down Balance Sheet Recessions (RE-RELEASE)

Published on
October 17th, 2020
Duration
72 minutes


Breaking Down Balance Sheet Recessions (RE-RELEASE)

The Archives From Real Vision ·
Featuring Richard Koo

Published on: October 17th, 2020 • Duration: 72 minutes

Macroeconomist Richard Koo, author of 'The Escape from Balance Sheet Recession and the QE Trap', has been critical of the BoJ's inability to generate growth. The man from Nomura, uses Japan's experience to examine how to break global economic policy impasse.

Comments

Transcript

  • SD
    Sudipta D.
    27 October 2020 @ 10:30
    One of the best video to watch on RV. Thanks for reposting.
  • JM
    Jim M.
    21 October 2020 @ 12:58
    One of the most important real vision videos ever produced
  • BA
    Bruce A.
    19 October 2020 @ 23:18
    Why do we need to unwind QE when private sector borrowing returns (and thereby suffer rapidly rising interest rates and falling bond prices)? Couldn't the Fed just increase the minimum reserves requirement for banks by a factor of 'X' to constrain the use of those reserves for 'excessive' private money creation? Yes, the Fed would need to keep rolling its US treasury and agency security holdings as they mature but I think no one expects the Fed to ever normalize it's balance sheet from where we are today. Comments on this would be welcome.
    • BA
      Bruce A.
      19 October 2020 @ 23:32
      Could the problem with my suggestion of 'a higher minimum reserves requirement' be one of higher commercial lending rates? Private borrowing demand outstrips the supply of loans under the 'higher minimum reserves regime' and commercial rates climb, hindering the real economy?
  • HY
    H Y.
    19 October 2020 @ 19:00
    Great interview, would love to hear his views today. I second Koo and Werner debate/discussion.
  • MS
    Mark S.
    19 October 2020 @ 17:37
    Some good ideas to try, like the one suggested for European banks and Euro country sovereign debt issuance. But essentially this is still a Keynesian solution that does nothing to address excess leverage, zombified companies, mal-infestment, big government, onerous regulation, etc., etc.
  • JP
    John P.
    19 October 2020 @ 16:33
    great stuff
  • AC
    Alex C.
    19 October 2020 @ 10:18
    Excellent content
  • JL
    John L.
    19 October 2020 @ 02:24
    Just so well worth my time to revisit this gem of an interview. Bravo to Richard Koo, who couches his teaching in easy to understand language. And boy do I miss the greatest interviewer there is; Grant Williams. ( Actually he was the very reason I joined RV in 2016 )
  • BA
    Bruce A.
    19 October 2020 @ 00:59
    Max (and whoever else at RV), thank you for digging up these gems.
  • SM
    Stephen M.
    18 October 2020 @ 21:44
    My suggestion is Koo and Werner debate/discussion. One topic is QE potential effect on real lending in growing economy and money supply. Werner seemed convinced it has no effect at all in the princes of the yen Hendry interview. Second topic: how do we get out of this QE trap given coronavirus and what is the time horizon and likely outcomes given current state of Fed and private balance sheets.
  • AK
    Alex K.
    18 October 2020 @ 19:51
    More than four years later, he is more spot on than ever. And my god was some of this stuff terrifying. Or thrilling to the bone, if you are a true macro practitioner. Two of the most explosive reminders: -- All of the stagnant liquidity stored up in reserves via QE becomes an oh-my-god level problem when the private sector switches back to aggregate borrowing. It's like trillions in dry powder that was inert for years and years, and is suddenly ripe to ignite. -- The notion that a hugely expanded multi-trillion Fed balance sheet is a harmless inert object is false, because the Treasury still has to issue redemption bonds, which function like synthetic new issuance in terms of sucking up private sector capital, when Fed balance sheet assets mature. The big, big picture reminder from Koo is that the balance sheet really does "balance" in the end. Even if it takes 10 or 20 years sometimes, the paymaster still gets paid. And holy shnikes are the consequences going to be insane. And all of the stuff Koo talked about and warned of, virtualy all of it, was tripled down on and made worse by the pandemic. We are head into a golden age of macro -- golden, violent, and volatile as f--k -- that could last for decades.
  • JS
    John S.
    18 October 2020 @ 16:38
    Excellent. Please have him back soon. This is good setup for his assessment of what’s transpired since his last appearance. Let’s hear his take on the massive monetization of debt taking place now.
  • SC
    Sam C.
    18 October 2020 @ 10:20
    My Grandpa loved his book
  • VL
    Vesna L.
    17 October 2020 @ 16:22
    As an accountant I am perfectly in sync with this point of view, thank you
  • JF
    Joao F.
    17 October 2020 @ 13:03
    Time to invite Mr. Richard Koo back!
    • JF
      Jack F. | Real Vision
      17 October 2020 @ 14:39
      Noted
  • MD
    Matthew D.
    17 October 2020 @ 12:20
    Very Timely. Thank you.