The Macro “Endgame”: Growth, Gold, Deflation, and the Dollar

Published on
January 29th, 2021
66 minutes

The Macro “Endgame”: Growth, Gold, Deflation, and the Dollar

The Interview ·
Featuring Eric Basmajian and Lyn Alden

Published on: January 29th, 2021 • Duration: 66 minutes

Eric Basmajian, founder and editor at EPB Macro Research, joins Lyn Alden of Lyn Alden Investment Strategy to break down his near-term outlook on the global economy as well his longer-term framework for macro investing. Basmajian notes that the growth rate in industrial output, the pick-up in demand for commodities, and a steepening yield curve indicate a growth pick-up. Alden and Basmajian explore the significance of the underperformance of banks (particularly regional ones) and energy relative to the S&P 500 and then dive head-first into more macro issues on a longer-term time horizon such as the interplay of debt, inflation, the dollar, interest rates, and the velocity of money. Filmed on January 26, 2021.

Key learnings: The strength of cyclical economic momentum indicators, particularly in industrials, indicates growth will continue in the short-term. Within a longer-term time horizon, Basmajian believes that extreme debt levels incurred on corporate as well as government balance sheets will hamper growth, ultimately leading to deflation.



  • LP
    Louis P.
    23 February 2021 @ 23:19
    Wonderful interview! Thanks Lyn, Eric & RV!
  • AB
    Anthony B.
    22 February 2021 @ 17:44
    Really great interview, both Lyn & Eric providing incredible knowledge and analysis!
  • AR
    Anthony R.
    9 February 2021 @ 22:07
    A farmland reference, nice Lyn. Gold with a dividend.
    • GT
      Gerald T.
      16 February 2021 @ 18:04
      No doubt why Bill Gates just bought so much he is now the USA's largest private farmland owner.
  • JL
    J L.
    29 January 2021 @ 17:24
    A clear and rational framework, if perhaps a bit conventional. To play devil's advocate with some off-the-cuff thoughts, I see evidence that traditional macro frameworks are headed for a crisis. By that meaning, many standard assumptions about how things work in a macro sense could be turned upside down, blown sideways, or otherwise completely invalidated by new developments in the next few years. To possibly spur some conversation, here are a few hypotheticals as to what I mean: — Structural inflation destroying the all-weather approach. The whole concept of a 60/40 portfolio, and the risk parity / all-weather concept in general — where bonds provide ballast for risk assets — is dependent on a disinflationary environment (where inflation levels are falling). The whole risk parity approached worked because it was conceived and executed in a disinflationary, lowflation era; with inflation rising and yields rising, it doesn't work anymore as a concept because the bond component is no longer desirable. And so, if we enter a period where inflation levels and interest rates rise structurally over a period of years, the 60/40 portfolio concept will die, because 1) bonds and equities will start moving lower at the same time, rather than bonds moving inversely and 2) the bonds will provide downside risk, but not upside return (as inflation erodes their value with interest rates rising, not falling, in a multi-year or multi-decade trend). — The tech deflation thesis up-ending socio-economic stability assumptions. If Jeff Booth is right about the accelerating pace of technology in areas like renewable energy, machine-learning, automation and so on, we are going to start seeing mass job losses at the margins (including in white collar jobs, as the top quartile triples its productivity and the bottom half gets fired) in the next few years. The tech deflation thesis is also a huge driver of wide inequality, favoring capital (those invested in technology / shareholders with a piece of the digital machinery) versus labor (those without jobs or a invested savings). The tech deflation thesis is accelerating by nature as computation power increases at a geometric rate; that means it could start up-ending societal assumptions as we know them (via extreme inequality and job loss) in the next few years. This will also happen around the same time a multi-trillion pension fund crisis kicks in (likely in the next bear market) and with 50% or more of baby boomers heading into their retirement years with no money. Basically, due to the tech deflation thesis, imagine inequality levels so extreme (far moreso than today) that the societal structure as we know it from the 20th century no longer works — because too many people are unemployed and angry for society and democracy to function. Such a setup would demand an intervention for democracy to survive. Which leads to... — Forced MMT. I would argue we will enter a period of what one might call "forced MMT," in the sense that MMT will be coming whether we like it or not. This will happen because the tech deflation thesis will drive ever-greater levels of inequality to ever-greater extremes, and the millennial generation — which is basically broke — will increasingly vote for pro-MMT candidates and MMT-like policies. Indeed we are already seeing the early seeds of de facto UBI in repeat-structure fiscal stimulus packages. The people like $2,000 checks whether Democrat or Republican; they will want them on the regular; so the question then becomes what does MMT do to the macro when it gets here. The upside of this is that pro-MMT thinkers, if perhaps naive, are a lot smarter than most of their critics give them credit for. One could see a provocative marriage of pro-MMT policies and Central Bank Digital Currency (CBDC) innovations, for example, where the Treasury uses CBDCs not to just hand out money, but to, say, fund municipal programs where work programs are created at the local level, in response to local needs. The idea behind Forced MMT is less to endorse MMT than to say, "hypothetically assume this is coming no matter what; what would that mean and how to make the best of it?" — Structural inflation generated via policy reaction function to the tech deflation thesis (forced MMT). I am becoming increasingly convinced that the long-run forecasts for deflation are wrong because deflation will be too big a dragon not to slay, and governments will go overboard by necessity in slaying it. To put it another way, the deflationary impulse of the tech deflation thesis will be too big for governments to ignore; that in turn means that governments will overshoot the mark in fighting back, which means you get structural inflation as a result of their overshoot. To wit, if the tech deflation thesis and aging demographics creates nasty deflation, the government winds up fighting back with various forms of MMT, which becomes ever more politically popular as millennials replace boomers in the voter rolls; that in turn is a forecast for structural inflation, because the medicine ultimately becomes stronger than the malady. — Fiscal dominance for the next few decades. Fiscal dominance — the paradigm in which fiscal spending dominates everything else, and the job of the central bank is basically to manage the fallout from heavy fiscal spending as artfully as possible — could become a major theme for the next 10-20 years, for reasons just described. Forced MMT and prolonged fiscal dominance are basically the same thing; the tech deflation thesis could necessitate the arrival of both as a means of keeping society from tearing itself apart due to rampant inequality issues, as the haves see an ever-widening gulf with the have nots. — Monetary velocity becoming irrelevant. Oh, and last not but least, traditional measures of velocity could become useless very soon, if they are not useless already. This is due to the outsized influence of the shadow banking system (which traditional velocity measures do not track) and the added outside influence of a crypto-based decentralized finance system (which traditional velocity measures also would presumably not track). One could argue velocity as it stands is more of a red herring than a useful indicator, to the extent it doesn't even include really important activities like mortgage lending, and to the extent the shadow banking system may be adding cash to the system, suppressing traditional velocity measures even further; this gradual degradation of velocity as a measure might explain why M2 velocity has been falling since 1997 — it's broken as a measure and will only get more broken.
    • DS
      David S.
      29 January 2021 @ 18:47
      These are rapidly changing times. I agree the overall driver is tech deflation. The pandemic will pass; tech deflation is here to stay. DLS
    • JL
      Jonathan L.
      29 January 2021 @ 21:08
      Really appreciate your expositions recently - thanks JL
    • JL
      J L.
      29 January 2021 @ 23:34
      @ David S. As multiple others have said -- and I agree -- the pandemic is a hyper-accelerator for a whole suite of already-existing trends. We took nine years worth of e-commerce adoption; knowledge work adaptation; government debt accumulation; wealth gap divergence; biotech innovation; retail brick-and-mortar extinction; etcetera and so on and crammed it into nine months.
    • LS
      Lemony S.
      30 January 2021 @ 02:13
      Thankfully I can move to where capital is appreciated (thanks BTC) while the 3rd worlders can fight it out in your neighborhood, and/or you experience a major decrease in purchasing power. Yay diversity
    • JL
      J L.
      30 January 2021 @ 03:53
      @ Lemony S. Where would that be exactly? Which country? Galt's Gulch isn't a real place...
    • BA
      Bruce A.
      30 January 2021 @ 09:25
      JL, thanks for that very useful set of thoughts. I've also been thinking about the usefulness of the money velocity metric in era of shadow banking. Let's take Business Development Companies (BDC) that issue equity and borrow cheap to finance loans or in some cases equity stakes in the lower-middle enterprise sector. It's true that the loans extended by the BDC didn't create money like a private bank loan creates money. It's also true that the BDC shareholder equity doesn't represent new money (unless a shareholder borrowed money from a bank to invest in the BDC capital raising). However, if part of the BDC capital used to facilitate the loans came from the US govt or a private bank (as in a business loan to the BDC itself) then that part of their 'source of funds' does represent new money in the system. Same would apply to any private equity lending to the corporate sector. At the back end of it all, some private bank created money to lend to the private equity fund and that new money formed part of the finance package to the end target. Do you see it the same?
    • JL
      J L.
      30 January 2021 @ 15:22
      @ Bruce A. I think that is basically on point — though some things are tricky. My starting point is being skeptical of traditional velocity measures because all have been in long-term decline. M2 velocity has been falling since 1997. M1 velocity has been falling since 2007. MZM (aka M0) velocity has been falling since 1980! It has to be a transfer of activity to entities outside the traditional system. Either that, or a forty-year build-up of leverage and credit is just throwing off increasing amounts of cash that wind up sitting in a pile. Either way, the traditional assumptions about what velocity is supposed to measure seem less and less valid over time. The whole thing is weird, but fun to think through. I had some fun playing around with this so here we go (reply broken into multiple posts):
    • JL
      J L.
      30 January 2021 @ 15:22
      [Response Part 1 of 2] So another question is, where does velocity come from? Who can create it? Certainly not just banks. For example: — Alice offers Bob two thousand dollars in exchange for painting her house. — Alice says she will pay Bob after the job is completed. Bob agrees. — Bob immediately makes a two thousand dollar purchase he otherwise would have put off. In this example Bob extends credit to Alice, and immediately spends money in a way that creates velocity. Where did the new velocity come from? What originated it? A service agreed upon by two people (the painting of a house) that hasn't been rendered yet, to be delivered on future credit (payment post-completion), which will create a future debt (Alice will owe Bob $2K) that hasn't been paid yet. The implication here is that not only can BDCs create velocity, ordinary individuals can too, by predicating present actions on future events. Any transaction involving credit or debt can create velocity by pulling spending forward from a hypothetical future. If you skip a demand for collateral, velocity can be created with any forward transaction — Bob engaged in a kind of zero-reserve lending to Alice, and then spent currency he hasn't yet acquired in anticipation of receiving it. That increases turnover in the system, which increases GDP. So any two entities can engage in zero-collateral velocity creation, by pulling spending forward based on trust. One could say this is a kind of non-official zero-reserve lending. In doing a job on credit, the unofficial Bank of Bob lent $2,000 to unofficial Alice Corp. on a zero reserve requirement basis, and then deployed the anticipated payment funds before receiving them. So I'm fairly certain BDCs can create velocity, because anybody can create velocity. But what happens when collateral is involved? Maybe if collateral is involved, BDCs or whatever other shadow entity can create money too. I'm fairly sure it's accurate to say banks expand the money supply by drawing on collateral more than once. This is why the reserve requirement has a multiplier identity — a 10% reserve requirement means every dollar of deposits can create ten dollars of loans. This also means that, with the Fed reserve requirement at zero, banks could technically lend an infinite amount by relending without limit. (Though of course the Fed would reinstate the reserve requirement if lending picked up.) So what a bank does, really — I think — is add to the money supply by rehypothecating collateral (dollars) at some fixed number of turns, e.g. if the reserve requirement is 10%, that effectively means they can't lend the same dollar more than 10X; at a reserve requirement of 5% they couldn't relend it more than 20X, and so on. Let's say that Bob, as a popular handyman, does money jobs on credit, but he has a rule of thumb that says the amount of credit he extends to customers (like Alice) has to be some ratio of the money he has in his office safe. Now Bob has a personal reserve requirement. Citibank's lending capacity is tied to an official reserve requirement in the same way the unofficial Bank of Bob is ied to an unofficial one. If Bob's rule-of-thumb ratio is 10 to 1, meaning he can only extend $10,000 in credit to customers if he has $1,000 in his safe, the Bank of Bob is acting like a traditional bank in terms of operating off a reserve requirement. In the original example, Bob could extend Alice the $2,000 credit for the job even with no savings. This was a zero reserve requirement, giving Bob the abilty to extend an infinite amount of credit (in theory) for an infinite amount of jobs. Citibank, or whoever, could technically do the same thing now the Fed's reserve requirement at zero. (The point of this exercise is to try and normalize what's the same either in the traditional banking system or outside it.) Next Part 2 of 2
    • JL
      J L.
      30 January 2021 @ 15:31
      [Response Part 2 of 2] Which leads to the question: — If a shadow lender is lending off collateral, and rehypothecating, can't we say they are creating money? — Could a chain of shadow lender transactions based on collateral be the same as money creation? — What is private bank money creation other than the same lent-out dollar showing up in multiple accounts? — What is shadow lending based on rehypothecation or credit lines but the same thing unofficially? A BDC lends $100 million dollars to a mortgage lender (also a shadow bank entity). The mortgage lender uses the funds to purchase treasuries to hold as a form of collateral. The mortgage lender pledges the treasuries as collateral to some other entity in exchange for an even larger loan. The mortgage lender uses the larger loan proceeds to make loans to home buyers, and so on. That chain has to be expanding the money supply (I think) in the same manner the traditional banking system would expand it. These shadow entities are doing the same thing the banks do, just in a non-official capacity. When collateral is rehypothecated, it winds up having a multiplier effect. Another key to grasping all this might be short float and the way it can legally expand beyond 100% of initial share float. The percentage of short float for a shorted company can legally expand beyond 100 percent because the shares, as a form of collateral, can be rehypothecated more than once by the share lending entity. Alice is long XYZ shares. They are lent to Bob so he can short XYZ. Chuck goes long XYZ and buys the shares from Bob, not knowing nor caring Bob borrowed them first from Alice (all these people are at Schwab, the computer is making assignments). Dave then goes short by borrowing shares from Chuck, and Ed goes long via buying the shares from Dave. If XYZ distributes a dividend, the actual payment goes to Ed. Then Dave, who is short, has to pay the dividend amount to Chuck, and Bob, who is short, has to pay the dividend amount to Alice. Alice (long) → Bob (short) → Chuck (long) → Dave (short) → Ed (long) Company dividend goes to Ed → Dave pays dividend proxy to Chuck → Bob pays dividend proxy to Alice In the manner above, the synthetic float can expand beyond 100% via matched up demand from longs and shorts, with the whole thing starting via rehypothecation of Alice's shares. This is legal and different from naked shorting (which is starting a short transaction before the borrow is confirmed). Rehypothecation of shares can expand the share float beyond 100% in the same way rehypothetication expands the money supply beyond 100% — whether it's done by a traditional entity or a shadow entity (I think). So, yeah, I'm pretty sure shadow entities are creating a lot of activity that isn't counted in the traditional measure, and maybe even creating actual money via collateral lending too, perhaps comparable to how an expanded share float has real-world impacts that go beyond the official share float via synthetic longs and shorts born of rehypothecation. But it keeps getting weirder, because some of the cash created by these entities winds up in the traditional banking system. And if shadow entities can expand the money supply via rehypothecation of collateral and unofficial lending, that in turn means it is not just the Fed or the traditional banking system expanding the official money supply, it's the shadow banks too. Ah, one might counter, but in defense of velocity as a measure, isn't shadow bank activity reflected in GDP because GDP is supposed to reflect all activity in aggregate? Can't we lump shadow bank activity in the private sector component of GDP, which then means the dirt-simple velocity equation (GDP / M2 etc) still holds? My answer would be: "I don't know, can we even be sure what GDP fully reflects? Do private sector GDP calculations even CAPTURE shadow bank activity? Do they do it right, or are there gaping hole big enough to drive a truck through?" GDP is supposed to include all private sector components. But how do we know it actually does that? I mean, if traditional velocity measures are so goofy to leave out tens of trillions in shadow banking system holdings, including really big things like mortgage lending, how do we know the GDP calculation isn't equally blind to big components of shadow banking activity that the official academic formula… just…. misses completely?! This is why I circle back around to just being root-level skeptical of velocity measures. "Falling for decades at a time? Falling since 1980 even as leverage and credit expanded? Yeah no, that seems like a broken measure." Conclusion: Buy Bitcoin :p
    • JL
      J L.
      30 January 2021 @ 15:41
      p.s. Slight correction, MZM falling from 1981:
    • MC
      Mathew C.
      30 January 2021 @ 18:39
      How would it show up in the Velocity measure if 40 years of credit creation has created this huge pile of cash, 90% of which sits in a large pile owned by rich chaps who don’t spend it, and then the remaining 10% starting moving much more rapidly? Would the aggregate number be numbed by the big pile that does nothing?
    • JL
      J L.
      30 January 2021 @ 21:40
      @ Matthew C. Good question -- one could certainly argue the financialization of the U.S. economy is a key part of it, and financialization unquestionably benefits the top. The wealthiest 10% hold 84% of all the stocks owned by U.S. households. It also fits with a theory that Michael Pettis has: The idea that trade wars and class wars are part of the same phenomenon, because excess saving in the top quartile or decile fuels greater exports aboard, either as mercantilist trade policy or hot money capital flows. Per Pettis, a more balanced domestic economy would mean the lower half of the economy has more income and savings to spend on imports and to generate domestic velocity. But to the extent their consumption is suppressed by low wages and low savings, the capital tends to go up and out (and maybe sits inert in the traditional banking system, as the shadow banking system goes wild).
    • BA
      Bruce A.
      31 January 2021 @ 03:12
      JL, please have a look (toward top of comments) at my explanation of why money velocity is a seriously flawed concept. I worked from basic principles to show that falling money velocity is a mathematical inevitability when debt issuance ramps up radically................and that the falling GDP/Money Supply metric tells us nothing about the economy or economic activity or inflation/deflation forces. Would love your comments. Bruce
    • JL
      J L.
      31 January 2021 @ 14:53
      @ Bruce A. Saw your post and more or less agree. The pandemic response illustrates the concept. Velocity took an Acapulco cliff dive in Q1 2020. But that cliff dive happened primarily because the money supply increased suddenly and dramatically, via Fed and Treasury efforts unleashing so much liquidity and spending it was akin to blowing up the Hoover Dam. Nine months after the biblical liquidity flood that sent velocity straight down, Goldman Sachs and Morgan Stanley and JP Morgan are trading at record-busting all-time highs. That alone suggests the velocity measure is a red herring. On its own the equation is too simplistic to give insight into a complex system. Big doses of fiscal also seem counterintuitive to what velocity is saying. What matters is what happens after the dose, and why the dose was delivered in the first place. It's easy to see a scenario like this: -- heavy dose of fiscal comes in -- fiscal increases the denominator -- velocity falls vertically, oh no! -- fiscal kicks off heavy spending -- economy runs hot eight months later -- the velocity warning was ass-backwards Another way to illustrate the problem is by looking at private companies. Imagine calculating the velocity of, say, Apple by comparing revenue growth to cash flow growth. Apple is sitting on something like $200 billion in cash now, so Apple's velocity (as defined by Apple Revenue / Apple Cash and Cash Equivalents) probably looks like it is in terminal decline. A company sitting on lots of cash is a problem though? Really? The deeper level problem is that overly simplistic measures can obfuscate more than they clarify when used to analyze a complex system. Any time you are dealing with a complex system, there are probably multiple possibilities in terms of explaining why something is happening. For example, crude oil prices have risen substantially in recent months. Why? Maybe because of global recovery optimism as a result of the vaccines. Or because the US dollar is at multi-year lows and looks set to fall much further on U.S. fiscal divergence and global rebalancing. Or because the Saudis did a big surprise cut in January. Or because the new administration is blocking oil and gas access on federal land. On an on. And so, because there are almost always multiple factors at work — because the given behavioral output of a complex system is almost always multi-factor in its causal explanation — relying on a single dirt-simple measure (like velocity) to make sweeping pronouncements is probably a really bad idea. Einstein once said "Things should be made as simple as possible, but not simpler." Way too many things in conventional macro violate that principle. Like don't get me started on Reinhart Rogoff for example, which is basically GIGO: Garbage In, Garbage Out. In fact, come to think of it, GIGO might be a good way to classify a lot of analysis based on blanket assumptions drawn from overly crude indicators or questionable landscapes and data sets.
    • LJ
      Lynn J.
      1 February 2021 @ 03:02
      My thinking is very simple. Majority of the money supply via fiscal stimulus and QE is not running in the production loop. it either sits in the bank reserve account or flows into bond/equity market. The consumption increase does not as much as money printing/debt increase.
    • AK
      Andrew K.
      4 February 2021 @ 01:27
      J.L., this is very insightful. If you listen to Lacy Hunt's latest MacroVoices interview, he doesn't disagree. It does seem like society is headed toward MMT, but is it this year, next year, or 20 years from now? No one knows. I prefer to work within our current system until there's a clear warning sign, e.g. Federal Reserve Act reopened to debate.
    • JL
      J L.
      4 February 2021 @ 17:37
      @ Andrew K. "Until there's a clear warning sign?" Take a look around: In the past year we saw a $2.2 trillion fiscal response. Then we saw a $900 million fiscal response. Now we are working on a $1.9 trillion fiscal response — that will probably get rammed through via budget reconciliation — and there are probably more fiscal response impulses coming after that, even as Americans, both Democrat and Republican, start the process of getting addicted to literally free money in the form of stimulus checks. Meanwhile, the new U.S. Treasury Secretary says this in her first open letter to Treasury's 84,000 employees: "...economics isn’t just something you find in textbook. Nor is it simply a collection of theories. Indeed, the reason I went from academia to government is because I believe economic policy can be a potent tool to improve society. We can – and should – use it to address inequality, racism, and climate change." As for waiting for the Federal Reserve act to be "opened to be debate." Hahahaha. You really think they are going to wait for senators to grandstand? The Fed started buying junk bonds in 2020. Junk bonds! And in March they cut the reserve requirement to zero. And then they left it there. With respect to violating the Federal Reserve Act, the operating stance will be -- and in fact already is, and has been for nearly a year now -- "forgiveness is better than permission." They will artfully ignore the act, or even shred it if need be, and push the envelope as far as they can until someone stops them. With the U.S. Treasury on board, it will be full-on Calvinball, where the rules can change any second and the score is an imaginary number. And who in legislative power would stop them now?
    • AK
      Andrew K.
      4 February 2021 @ 20:33
      I don't disagree with you in principle, but there is precedent for this. See Lacy Hunt's interviews. There is well-established legal precedent that the Fed simply cannot pay the Treasuries bills until the Federal Reserve Act is re-written. That will open the door to a debate process which will give savvy investors some heads up.
    • AK
      Andrew K.
      4 February 2021 @ 20:33
      Very curious how you're investing.
  • BA
    Bruce A.
    31 January 2021 @ 02:54
    What if someone told you that money velocity (i.e. GDP/money supply) should naturally fall over time as money supply is increased drastically? If true, that assertion would reveal just how flawed money velocity is as a measure of economic activity or of inflationary forces vs deflationary forces. Consider the following simplistic ratio: Economic Engine/ Money Supply. Now lets use conventional economic factors of production to approximate the numerator, Economic Engine (E): E = (Land + Labour + Capital) x Technology Innovation Factor. Of these factors, the one that can be most quickly and directly increased is of course Capital (debt + equity). If you need to see how quickly the capital factor can be increased, just look at some of Lyn Alden's charts of how quickly govt and corporate debt has increased of late. Well, with that increase in debt (to finance Covid assistance programs and deal with what is hoped to be short term liquidity issues), the money supply has also sky rocketed (see Lyn's charts again). The result is that only 1 factor (capital) of the 4 factors of the Economic Engine has been immediately and significantly increased. That is only 1 of the 4 parts of the numerator in our equation has increased: E= (land + labour + CAPITAL) x tech innovation factor. By extension, the productive capacity of the Economic Engine has only been 'fractionally' increased with the instantaneous injection of capital. Thus GDP will have only 'fractionally increased' with the injection of 'Covid Capital'. At the same time, the denominator (i.e. MONEY SUPPLY) in our money velocity equation has increased much more in percentage terms than the numerator (GDP). The result is falling money velocity. So in a time of rapidly expanding debt and money supply it is a mathematical truism that money velocity should fall. Money velocity is a flawed concept: it doesn't say a damn thing about whether the new debt is used productively or not and whether price inflation occurs or not. All it tells us in a time of rapidly rising debt and money creation is that the economic engine and economic production capacity of that engine is smaller relative to the supply of money.
    • AK
      Andrew K.
      4 February 2021 @ 20:31
      I think the only point you end up making here is that there's a lag to see how the marginal productivity of the debt plays out
  • AK
    Andrew K.
    4 February 2021 @ 02:14
    Goodness gracious. This interview is SO GOOD! Eric is going on my radar right along with Lacy Hunt and Lyn Alden.
  • CM
    Costa M.
    4 February 2021 @ 00:11
    This interview is wicked smart. Lyn and Eric are both such good communicators. Eloquence, man. It's real.
  • JS
    John S.
    3 February 2021 @ 22:19
    I need Raoul interviewing Lyn or vice versa! Lyn has became my fave! Thanks
  • JT
    Joseph T.
    1 February 2021 @ 15:49
    Two of my favorite young, very bright and energetic people. Lyn is great on either side of the interview.
  • DP
    Divyesh P.
    1 February 2021 @ 02:47
  • JH
    Jesse H.
    31 January 2021 @ 01:17
    Lyn - would love to hear you talk to Russell Napier. He did an excellent MacroVoices interview last week. I think the two of you would have a fascinating conversation, particularly as it concerns inflation. Would be very illuminating for all of us here on RV, I suspect. Thanks & Best, Jesse.
    • GA
      Gerald A.
      31 January 2021 @ 05:38
      FYI Brett Johnson did an interview with Russell Napier for Real Vision a month or two ago.
    • JF
      Jack F. | Real Vision
      31 January 2021 @ 22:42
      I agree that Lyn and Russell would make an excellent combo. Russell is coming back to Real Vision in a a few weeks to talk to Steve Clapham
  • JH
    Jesse H.
    31 January 2021 @ 01:13
    Very interesting point on farmland prices, and their correlation to the broad money supply. Thanks, Lyn.
  • JH
    Jesse H.
    31 January 2021 @ 01:05
    Good conversation, and interesting thinker / analyst, but many theoretical assumptions being made here which do not correspond to the real world of human behaviour and economic history. One case in point: to say that an investment is "productive" if it has a good money multiplier and generates an uptick in velocity is an oversimplification, I think, as it does not account for periods of economic history where systems are chaotic, dysfunctional and cronyist (like today), where e.g. storing one's wealth in precious metals is wise, despite generating probably a low money-multiplier and relatively little velocity. There are those funny times in history, and we are IN one, where seemingly "unproductive" investments like precious metals, land, food, etc., with zero or low yield but greater security, independence and value, are actually productive in nature in the long run. This is by no means a criticism of the guest, just a statement that one has to be very mindful of the limitations of economic modelling and metrics. I know this first-hand, given my own career background as an engineer. Thanks again, Lyn and Eric. Best regards, JH.
    • JH
      Jesse H.
      31 January 2021 @ 01:11
      The decline in the standard of living you mention has been ongoing in America for the last 21 years, at least, as per the decline in real median income across the US (see David Stockton's article here, from about 5 years ago, but I imagine this trend has been exacerbated in recent years:
  • GA
    Gerald A.
    30 January 2021 @ 18:02
    All signal. No noise. No hat. All cattle.
  • SN
    Srinivas N.
    30 January 2021 @ 17:24
    Great interview. One question on the End Game. What is the end game? Will the same thing that happened to Europe happen in US, more taxes, more social programs and wealth gap narrowing. I feel that seems to be the end game . It might take 20-30 years for that to happen though
  • SM
    Stephen M.
    30 January 2021 @ 17:15
    Tremendous! Emerging human talent treasures for your generation!
  • RM
    Russell M.
    30 January 2021 @ 16:17
    Brilliant discussion!!!!
  • BA
    Bruce A.
    30 January 2021 @ 10:14
    With about 49:30 left: 'If US ran less of a trade deficit, or foreigners bought less of our debt, that would need to come out of our GDP equation and I believe it would come out of our private domestic investment'. This is straight out of conventional economic theory's "National Saving and Investment Identity". Seems harmless enough to use this identity because we've been trained to believe that money for investment comes from saving (like a household). And over a long time it sure seems to make sense even for a govt to adhere to that kind of discipline.......... But money is created out of nothing by private banks, who are being incentivized to make loans by new and inventive govt guarantee programs. Or the govt gets involved directly through special lending vehicles with equity from the Treasury, juiced by FED loans to the SPP. And then there is good old fashioned Fed monetisation of Treasury deficits to fund unemployment benefits or a big infrastructure package, etc etc. I don't think the text book "National Saving and Investment Identity" limitations can hold up in the short term to the new world of govt directed loans and Fed facilitated govt spending. I'd guess that Real Gross Private Domestic Investment could hold up for quite a while if the 'new paradigm' money creation continues.
  • MO
    Master O.
    30 January 2021 @ 06:02
    I always read Eric's article's on seeking alpha on a regular basis and I encourage people to do so. He provides lots of excellent information and research. Please bring back Eric to RV. Make him a regular guest on the platform. Maybe we can ask him to contribute to "the exchange" if he is willing.
  • mb
    michael b.
    30 January 2021 @ 05:12
    Really surprisingly excellent interview. No fluff, no ego, no unsubstantiated statements. Just really targeted questions followed by well informed answers. This guy has such a solid understanding of economics, markets, and human behavior. I never comment but this one merited it. I need to subscribe to whatever he is putting out. Lyn also does a great job bringing the best performance out of her guests and stepping out of the way so they can shine. Two very gifted people here.
  • NL
    Nikola L.
    30 January 2021 @ 02:54
    Lyn and Eric, thank you both for the great discussion.
  • LS
    Lemony S.
    30 January 2021 @ 02:22
    There will be forced austerity ahead. Eric and Lyn do a great job in this interview, though. I can absolutely see upwards of 40T debt for the US ... but then currency crisis is in full play. Fortunately, BTC will be worth towards a half a million by that time, and people are still sleeping ...
  • DS
    David S.
    29 January 2021 @ 22:33
    During a pandemic/economic crisis the main goals are to end the emergencies while keeping citizens alive through to recovery. Populist on the Left and the Right will not succeed. If we cannot govern from the middle, we will fail. DLS
    • LS
      Lemony S.
      30 January 2021 @ 02:10
      0.3% IFR, lol, stop with the lies. This thing doesn't do anything and the policies crushed the economy, period. But we know why.
  • AC
    Alvaro C.
    30 January 2021 @ 02:06
    Outstanding interview and interaction !!
  • DF
    David F.
    30 January 2021 @ 01:42
    Thank you. A very smart interviewer and a very smart interviewee (sp?) led to a 1 and 1 =3 outcome. One of the best. Did you notice they never mentioned bitcoin?
  • DS
    David S.
    30 January 2021 @ 00:32
    Well done. Strong analysis. Thanks. DLS
  • OF
    Ofer F.
    30 January 2021 @ 00:19
    Great interview. Bring Eric Basmajian more often, he explain his view very clearly. Thank you Lyn for this interesting interview.
  • RP
    Ryan P.
    30 January 2021 @ 00:17
    Sounds like a Hedgeye subscriber. GIP!
  • JU
    J U.
    30 January 2021 @ 00:10
    This pretty much aligns with Hedgeye quads framework
  • GH
    George H.
    30 January 2021 @ 00:01
    Excellent interview! Great macro pairing
  • JC
    Joseph C.
    29 January 2021 @ 23:41
    2 of my favorite people to listen to! Thanks realvision!!!!
  • dw
    douglas w.
    29 January 2021 @ 21:43
    One of the best interviews recently, thanks Lyn for bringing Eric into the fold. Be great to see a real time breakdown of how Eric is using economic data and his models to construct a high conviction longterm trade.
  • TP
    Timothy P.
    29 January 2021 @ 18:50
    Lyn knows her stuff, and I found this interview to be illuminating particularly the part that butressess a longer-term thesis of mine regarding cities and how demand in housing is being pulled forward. I'd love to see Lyn do more in the crypto channel - they need her kind of analysis, its a bit of a dog's breakfast in there.
  • DS
    David S.
    29 January 2021 @ 18:38
    The velocity of money is just nominal GDP divided by a money supply. Dr. Friedman agreed it is interesting - maybe Oedipal economist; the game is afoot. It is funny how anecdotal economist choose thesis confirming statistics. Thanks for sticking up for the velocity of money. It is just one of many things to look at. DLS.
  • DS
    David S.
    29 January 2021 @ 17:44
    I would suggest that total debt during a pandemic needs to be adjusted for all debtors trying to remain solvent for the expected length of the pandemic. This is especially attractive at very low interest rate on long term borrowing. A simple example would be a corporate treasurer cutting expenses and borrowing on the B/S to remain solvent for at least three years with ten year loans. Any excess after the pandemic will be paid back to more operational debt level. If the GDP is falling the debt/GDP ratio is affected even more. I cannot quantify, but this should be part of the thinking. DLS
    • JL
      J L.
      29 January 2021 @ 17:58
      That sounds like an argument for the Treasury issuing 50-100 year bonds and then using them to fund some kind of asset-backed program for the Fed to buy moderately distressed private sector debt issues in a targeted manner. Not that it's a bad idea -- Jim Bianco said something to that effect (arguing the Treasury should issue a 100-year to lock in low yields).
    • DS
      David S.
      29 January 2021 @ 18:18
      J L. - I was not heading there. We do need a lot of clear thinking in this area. Interesting idea as part of many approaches. 30 to 50 years may be more sound. DLS
  • RM
    Ritwik M.
    29 January 2021 @ 16:42
    Excellent Interview!
  • RM
    Richard M.
    29 January 2021 @ 15:32
    Excellent interview - jam packed full of actual data and analysis! Please have this pair (specifically this pair as they go so well together (they both have an excellent handle on specific data)) back on RV on a quarterly basis for timely updates. Thanks!
  • JG
    J G.
    29 January 2021 @ 13:32
    Wow. Concise, linear and full of insights.
  • DO
    DIOGO O.
    29 January 2021 @ 12:21