Interesting interview, but unfortunately Kiril is wasted here. Anyone could have read those questions of the script, missing push-back and detailed questions.

Why is Fed not monetising government debt (MMT) when it buys treasury bills although not directly from issuances but indirectly from primary dealers? Government issues treasury bills to pay for fiscal spending and the FED is the ultimate buyer of those debts, isn’t it?

Excellent. Loved the both of them.

Very eloquent interview but not convincing. House prices have nearly doubled in many parts of Europe in the past 5 years and kept rising even as GDP contracted 20%. Health, food, and education prices have risen. Equity indices can't stop rising on what is primarily multiple expansion. None of this can occur in a deflationary environment. Central banks can create money supply much quicker than demographics can age.

I was looking forward to finding out how the secret that the world's greatest monetary economist was a lady was kept so quiet all these days. Alas, the name Lacy misled me! Nevermind, I have a question that I would have loved to ask someone of his intelligence and knowledge (that maybe someone from the community or RV can help answer): if your native currency is Singapore Dollars, a country that has to have a budget surplus by law, and uses its accumulated reserves only for emergency purposes (such as today), would you hold SGD over USD? A complicating factor I feel is that Singapore does not have a central bank that sets interest rates but a currency board that manages the exchange rate against a basket (but essentially the USD) and doesn't like for the currency to appreciate for maintaining trade competitiveness. Also, I assume the national reserves are mostly invested in things like Treasuries so maybe no way around the fact that Singapore's thrift will also be punished? Apologies if I am spouting nonsense as I my understanding of these complex topics is poor.

Dr. Hunt doesn‘t present a convincing case. He plays with semantics. He says QE is not monetary printing, though he says at several junctures that QE increases the money supply but it remains a first round effect, then peters out. That‘s semantics. His contention that money printing only seriously starts when Central Banks directly finance government spending, without a middle man, is also unconvincing. The primary dealers (Goldman, JP Morgan, etc.) take a cut of every $ of government debt that is issued and it‘s riskless free money for them. When the government issues a $ of bonds on Monday, a primary dealer buys it and sells it to the Central Bank on Tuesday. Neither is there a limit to the bonds the primary dealers can buy. Commmercial banks will be happy to lend them unlimited amounts on a credit line to buy those bonds, hold them for a day, take their cut, and pay the commercial banks back. I do understand and acknowledge that Dr. Hunt is smarter than I and has the experience and also that he might be right. But the argument he presented in that video does not make the case.

Everyone can't implement austerity at the same time. Your spending is my income. The idea that you can cut public spending when private spending is also contracting is what brings about pretty much every prolonged recession. I agree that the money spent hasn't gone to growth, and it has been mismanaged. But the idea that austerity alone is going to fix this is a fallacy. We need to stop promoting the wholesale raiding of our Treasury through bailouts and buybacks. But if you want to see a bunch of people shot in this country, try to cut social security in the next few years as we face a global depression. All you will accomplish is getting AOC elected president, or worse. I'd like to see Lacy Hunt have a conversation with Mark Blythe.

Listen this guy is a little to f ing cute for my taste. The balance sheet is up 3-4 trillion in a few weeks. QE is not MMT simply because we are pretending that it will actually be paid back. Well I call BS on the pretending part, and what are we left with then? Hard core MMT. The mere fact that the MMT goes directly to banks, completely lacks relevance. It terrifies me to the core to see how many people have swallowed the cool aid on state money theory. People like Lacy literally carry the argumentation point that it is not money printing because it goes to the banks reserves, listen Sherlock either you are increasing the balance sheet or not, saying yes they are but...... just makes you a snake oil salesmen, with all due respect.

What does deflation mean for gold?

Dr. Hunt is probably the best who explained why the Fed is not "printing money". Bank reserve doesn't go to the economy when there's nothing good to invest in. Bank creates money through credit insurance. Now with banks put massive loan loss reserves, why would they lend out more if any. On top of that, the flattened yield curve just prohibits banks to take on that kind of risk.

Regarding Lacy's insistence that for a new technology to overcome the low velocity of money caused by net dissavings it must be transformational (internal combust. displacing horse) rather than evolutionary (better horses replacing worse horses). Does this mean that the tech needs to be disruptive across all major sectors with energy being the ONLY essential sector?

So basically this is the case against gold? QE does not create (print) money and over-indebted countries will turn to austerity rather than borrow their way out of debt. Japan and Europe have been in an ultra-low interest rate environment for decades, and have experienced deflation and tried to devalue their currencies to increase exports. What is Dr. Hunt's take is on gold vs. the USD?

Many thanks to RP and the RV team for bringing together two of the finest minds and people in finance. One theme that I've picked up on over the last several rounds of interviews with Tom Kaplan, Kiril Sokoloff, Lacy Hunt, Raoul Pal, Hugh Hendry, Chris Cole, Tony Deden, Stanley Druckenmiller, and many others is that history books are at least as important as financial reports to intelligibly invest today. I can't say how thankful I am for this platform and what the RV team has accomplished. Many viewers seem (rightfully and understandably) confused why QE has tended, at least until now, to produce medium and long term deflationary impacts. Based on the comments below, I'd offer that you have to start with the initial auction of government securities. When the government issues debt, someone or some entity must purchase it. Many of these buyers are purchasing out of their savings, e.g. pension funds, corporations, and individual savers, but primary dealers also bid (and in some cases must). By virtue of the transaction, the Treasury drained a pool of capital to finance government operations. In Macro 101, this is the government "crowding out" private investment. The Fed noted this phenomenon, for example, in its annual report last year regarding repo market problems (see page 1, https://www.newyorkfed.org/medialibrary/media/markets/omo/omo2019-pdf.pdf) When the Fed purchases these treasury securities back through its permanent open market operations, it does so through the primary dealers (https://www.newyorkfed.org/markets/treasury-reinvestments-purchases-faq.html). When primary dealers sell to the Fed, the Fed credits their reserve accounts held with the Fed. Consequently, the Fed has effectively pulled a yielding (at least until now) security out of circulation and replaced it with zero yielding reserves. Dr. Hunt's point, if i understand him correctly, is that while the Fed has effectively "replaced" the capital that the Treasury initially drained when it issued the bonds, the reserves are idle until the primary dealers actually find attractive lending to engage in. As Dr. Hunt mentioned in the interview, this is by design, because the Fed can only lend, not spend, at least as the law is currently understood and implemented. Bear in mind that regardless of what's happening with the primary dealers, to the extent real economy buyers have used their savings to purchase treasury securities, these buyers have done so at the expense of any other private or public investment opportunity. Thus, my understanding of Dr. Hunt's other key point is that if the government spending doesn't pay for itself, i.e. doesn't generate returns at least equal to the cost, then the multiplier on the money is less than one. This ultimately results in a less productive economy. Dr. Hunt cites the Rogoff and Reinhart work in support of this, which shows that eventually government debt tends to choke off productivity, and therefore growth, in the economy, with the most deleterious results occurring when a country passes about the 90% debt/GDP threshold. In other interviews and quarterly letters Dr. Hunt has cited at length the studies that have shown the multiplier on government spending is less than one. In my mind this is the fatal flaw behind central planning generally and its off shoot keynesian economics. It just doesn't work once you get to a financial crisis in an over-indebted economy, even if it shows some efficacy coming out of a garden variety recession in a vigorous economy. Many of the those commenting negatively on Dr. Hunt seem to be knocking his economic observations, as if he's an armchair economist, tenured professor, or Twitter personality that doesn't understand finance. In reality, he runs a treasury fund (as he mentioned), with a real mandate, to make real money. And make money he has. If you invested in the fund when he became a manager, you made 7x your investment . . . in a government bond fund. And yes, he's trounced his index and peers the last ten years. He doesn't have to hold maximum duration. But in his quarterly letters for the last several years he's laid out why he has and why he would continue to do so. Could he be lucky and right for the wrong reasons? Sure. He's just been lucky for almost 25 years now.

Lacy, you are so good!

We need to see Lacy Hunt vs. Stephanie Kelton. If anyone can get this done it's Real Vision!

Dr. Hunt keeps insisting that the Fed does not create money, despite the explicit statement of Powell (and a prior statement by Bernanke) that this is exactly what is happening. Hunt seems to be saying that when the Fed buys a bond, it is only creating bank reserves, not real money (see 15:00 and 19:28). But that is not correct. If a pension fund sells a Treasury bond to the Fed, the Fed essentially writes a check to the pension fund, which then deposits the check with its bank. The bank then presents the check to the Fed for payment and receives "bank reserves," i.e., a deposit at the Fed. (It's all done electronically, but it is the same process.) So under QE both new money (M1, which is of course included in M2) AND reserves are added to the system. This new money is not "transitory." It will remain as money (on the liability side of the banking system as a deposit) until that bond is sold or matures out of the Fed's balance sheet. This makes total sense because one of the major objectives of QE is to bolster the money supply when money-creation from bank lending is drying up. I understand Dr. Hunt's point about velocity - It is low and declining, which will put downward pressure on price inflation, but it is still a fact that the Fed is creating new money when it buys a security from a non-bank. In our system, nearly all money is loaned or purchased into existence by a bank. Either a commercial bank or a central bank can do the job. Dr. Hunt also implies bank reserves play an important role in commercial bank lending. They do not, other than the regulatory requirements set by the Fed. Banks do not lend their reserves. They create new money (deposits) by the act of lending. "Required reserve" levels are now zero and have been irrelevant to bank lending for years. Hunt has been correct about falling bond yields for years, so I would like to believe in him, but if he cannot clearly and correctly explain how money is created and destroyed, how can he be considered a credible economist? Contrast Dr. Hunt's confusing interview with the clarity of Richard Werner, who understands and clearly explains money and banking. Read his essay, "A lost century in economics," and watch his videos. https://www.sciencedirect.com/science/article/pii/S1057521915001477

Cut government spending and eliminate half of today’s government like after the 1918 pandemic! Not likely today!

This age's combustible engine is blockchain.

Outstanding

Dr Lacy Hunt is a wealth of information and knowledge! Wow. Thanks RV for this interview.

watch this as a great overview and prediction view https://www.youtube.com/watch?v=NSGjau5YvBE

Time to stock up on Bitcoin (BTC) before it is too late.

Superb interview. Understanding economics is key. What dr Lacy Hunt says about QE seems to Go along with Richard Werner's ideas that QE is not inflationary. Of course there is not Just one kind of QE. The intricacies of monetary ppolicies vary according to legislation , the internal workings of institutions, ideas prevalent among those who run the levers of economy. So I say again this interview is superb. There should be more of that at that level. It makes imperative for those who want tô understand more of economics to study how money is created, to understand the banking system, the central banks.

So unless the constitution is rewritten we might get deflation first? Should I sell my gold/bitcoin or would they continue going up during deflation anticipating a rewriting of the realm in which the FED can operate? Otherwise cash dollars might be the trade of the century, even now, which a high dollar

Could the transformative technology change that Mr Hunt discussed be Bitcoin? If gold became the transformative tech then why not Bitcoin now?

Lever up and colonize space? All joking aside, this interview was fantastic. The intellectual humility and historical perspectives were world class. Would love a follow up interview exploring impact if deflationary and demographic forces on specific countries / asset classes. Any recommended resources on pending demographic shifts and how they could / will affect capital flows to specific asset classes? Those shifts at least feel structural / predictable relative to black swans currently in effect (COVID, oil shock, etc.).

How is applying the wrong value to collateral (say HTZ bonds) different than creating money?

The only part that should have been highlighted is that the yield from QE assets is returned to the treasury. It is this, plus the implicit understanding that these assets will be rolled indefinitely, that means debt has been monetised. The Fed CAN create inflation without changing the Federal Reserve Act owing to these two criteria being met. Consider this example to demonstrate how the Fed and US Treasury can work together to monetise debt and outright create state money inflation: Imagine the extreme hypothetical that the treasury runs a deficit of 330 million trillion dollars. US gov sends a cheque for a million dollars to every US citizen. The Fed buys these $330 x 10^18 treasuries to fund this 'helicopter money'. Perhaps a broker dealer keeps them for a couple of weeks between. Now, these treasuries were sold with a 1% coupon. Each year, ordinarily the US treasury would have to pay $330 x 10^16 in interest coupons. However as the Fed owns them, they don't. This is now sustainable. This is the important part. The Fed is NOW essentially paying the government's interest expenses. In doing so they have funded sending a million dollars to each person. So, we now have a scenario where the US gov has sent everyone a million dollars of new money. The US gov effectively has no ongoing cost for this, assuming the Fed keeps rolling the debt in perpetuity (as they currently do with QE assets). This must be inflationary, right?

I believe that it all comes down to this: there cannot be bailouts of any kind because the system doesn't reset and the debts just explode. If you must intervene to save the banks, it must only be against good credit which is illiquid. Getting away from this rule in 2008 has brought us to this mess

Could RV or anyone point me to the McKinsey report on 24 overindebted advanced economies mentioned in this interview please? Thanks!

My question for Dr. Hunt: Is the Fed "credit line" to the Treasury being used to buy high yield and investment grade bonds - is that DIRECT MONETIZATION? I don't see any reserves being created here. This would be appear to be inflationary or (at a much bigger scale) hyper-inflationary. This is direct monetization buying credit. Do you agree?

My view is this was an excellent interview by Kiril and well thought out logic by Dr. Hunt. Listening to these two smart and deep thinking individuals was a real pleasure. BTW, I respect and understand that everyone wants more specific ideas but I also want to develop a framework to make my own decisions. This video helped with that. As a side benefit it triggered me to think harder about the upcoming election.

Delighted to discover Real Vision's Christopher Walken.

I learned a few things about history but, that doesn't ring the cash register. I would suggest one thing that, I believe, every viewer would like to hear. At the end of every interview, ask what that person is buying or has invested in in the last 60 days. If these people are really as good as people say that could pay nice potential dividends. After all, isn't that why we subscribe?

Great interview, thanks. I listened twice and took notes. Hunt uses a lot of precise language and I found several points I wanted to look into and understand better. Thanks again.

If I were a Millennial (I’m a Boomer), I’d look at all this debt, see my life not as good as my parents, and reflect upon Student Loan debt that ballooned when loans could not be dismissed in bankruptcy. And nice things COST SO MUCH relative to income. And hell, the climate is all screwed up too. Did everything Boomers do give us headaches? And Millennials will intentionally inflate the debt away. Good for people with earnings indexing upward, tough on seniors. Clearly not an environment for easy market returns. Preparing for this event (more likely for this process) and maintaining a comfortable lifestyle is a major financial focus - and a reason I’m a RealVision subscriber. In the shorter term, I think we will experience localized inflation where there are shortages, but in an overall deflationary economy. If there is no demand, because consumers collectively don’t have disposable income, how can you maintain an inflationary environment?

EXTREMELY Interesting. He should of mentioned what he expects to happen to the stock market in the "recovery period" expected

amazing. also, can someone shoot a slow pan video of kiril's book collection?

I am really trying to understand why QE seems to decrease the velocity of money. Is it because 1) the money goes into financial system / assets, meaning that a larger % of say M2 is now stuck in financial system and hence not moving. Or is it more because 2) the banks increase lending as a result of QE, but loans are unproductive (gone to zombie companies that would not have gotten a loan otherwise) where it leads to less money moving around compared to if it had been to a healthy company? Combination of the two? Something different? Would love any help to understand this.

Also - my take after listening to this is our only path out of this (given savings / austerity will not happen) is we turn into Japan (low growth high debt) or Germany after WW1 (hyperinflation). Is that the crux of this?

Ray Dalio and Bridgewater have studied these long term debt cycles extensively and determined it is not just austerity that notes the resets. It is outright wealth redistribution via cancellation of debts, taxes, and monetary inflation. In every case, some form of debt jubilee is required. I fail to see the difference between Fed outright funding the Treasury's account and buying up unlimited bonds, other than the psychological effects on those who place confidence in the US dollar. I believe the UK's actions and the resultant lack of any significant move in the pound suggesting hyper-inflation will show there is in fact no difference between "debt monetization" and "creating reserves to cover deficits by B/S expansion", since the former and latter enable equivalent Treasury spending schedules when there are no bounds on what the CB can do now or in the future.

I still don't understand the argument that technically speaking the Fed isn't printing money. What if the Fed continues purchasing and never drains it's balance sheet (continues to purchase t-bills / bonds)? I can't wrap my ahead around why this is different from the Fed "spending" other than they have collateral to drain the money if deemed necessary. Is it that they are crowding out the private sector because currently excess reserves are held in cash by the banks? Regardless if the Fed just "spent" wouldn't it still end up as excess reserves, since the private sector is deleveraging? Can someone explain what I'm missing? Furthermore, I wonder if QE or money printing would have a different effect if banks were forced to hold t-bills or bonds (with repo available by the fed) and thus didn't crowd out the private sector and forced the money into the real economy? I'll be honest, my brain hurts. Dr. Hunt is super smart. Thanks for this video.

Amazing content as always. I have zero financial background which is why I feel so much of what is happening doesn't make any sense. It's like a big poker game where all the gamblers get bailed out by the house because they don't want the game to stop. At the same time, all the good players are cashing out because the "risk/reward" doesn't make sense anymore and the rules no longer apply. So are we basically standing on the sidelines waiting to see how long the house (Fed) can find new gamblers to keep the game going? Hoping things just get better. I realise it's an oversimplification but based on the content in this video it seems like we either have a greater fool market or a completely falsified market that no longer requires the economic machine to feed it?

One thing I found really interesting, was the fact deflation will cause firms to lower wages. I wonder if there is a fiscal or monetary policy that could help mitigate this risk specifically? If wages were to decrease we would be exacerbating the current wealth disparity we see and reduce the US consumer power which makes up 70% of GDP. It sounds like a major issue, interested to hear thoughts from Dr. Hunt and Kiril would say on this subject, although I know neither are politicians and don't want to be.

Incredible, very nice work RV.

superb!

Just brill, moar plz

This interview is so incredibly interesting. Alligns perfectly with Princes of the Yen.

I am so impressed with Kiril, as usual. But very disappointed In the orthodox and incorrect views espoused by Dr. Lacy Hunt - almost all of his economic theory seems to ignore the true dynamics of money creation (ie. banks are NOT financial intermediaries at all), and one does NOT need savings to fund investment. These are mainstream and empirically false ideas from classical economists that have nothing to do with how the economy and our banks actually function. Please have Prof. Werner on again, ideally interviewed by Kiril. That would be an absolutely amazing interview, and would teach people about what really happens in the real and financial economies. Cheers.

Love the interview so far. I beg to differ about inflation. Inflation always follows the money! The QE ends up in the markets, as banks loan to investors, not to main street. Everyone knows the markets are not reflecting the economy. The markets are reflecting trillions in the hands of investors. Certainly not a GDP productive use of funds! Common sense can pass for genius when too many economists have a convention. DLS

Dr Hunt talks about how the gold rush financed the western expansion and world war 2 allowed us to take the medicine of austerity. In the US, we have a massive need for infrastructure updates, strategic production capacity needs to return to the country, and decentralizing our national food supply chain. Could government investment in these type of strategically productive endeavors be our modern transformation point?

My only disagreement is with the initial snap back in consumption to the level Lacy suggests. I am looking hard at restaurant, shops and in tourist regions we've visited the past 4 days and I promise you there is very little activity. The tourist areas are 99% shut down in Lisbon where I am at my condo. Maybe states are different right now. Those who have only a credit card for consumption now do not have a CC, wages or savings. Some snap back sure but how come there be anything meaningful or measurable?

Kiril did an excellent job logically leading Lacy through his (Lacy's) long standing position on debt, debt productivity, velocity, output gap and potential trend in interest rates. Lacy was equally articulate in his explanations. It was a true lesson in clearing up classic misperceptions of monetary policy and its economic impact. Roger Y.

What an important and rich discussion.

So good I watched it twice. It isn't every day that most of us get to listen to an absolute wizard of textbook macro who also happens to make a living in the markets. I hope Real Vision will monitor the Bank of England's new (temporary?) power to spend, and let us know if anyone sees any hints that it is creeping into the Fed's authority or if it is expanding in the UK.

Currency War

Best interview I've seen to date. Absolutely outstanding! So thoughtful, clear and analytical.

Great video but it ended a bit abruptly.

Ultimately, human capacity is bound relative to influx of the money/credit supply. This antiquated system was/is predicated on pulling future demand into the current always in an effort to keep employment up & inflation stable. We're now at the intersection of too much debt & not enough demand to match coupled with the deflationary & efficiency pressure's of technology. In summary, our innovative output has rendered the system less dependent on requiring "more money" yet human's are still in the acquiring/quantity phase partly due to the ease of credit issuance & societal conditioning-the unwind decade is upon us, more for less.

i wrote a paper in 2008 about this need for some new transformative technology. That tech has not come yet. The way to tell if a tech is transformative is to gauge how much life (labor) will the average person give up to the tech. Think about indoor plumbing, or indoor heating, or indoor water, or a car, etc. Then compare that to a Fitbit, breadmaker, bitcoin, ebook, etc. Why do i say 'how much life to give up?" Because that is what a loan is - it puts you into debt servitude. The modern economy mostly functions on manipulating people into thinking they can't live without XYZ idiot product in order to get them into debt servitude.

Amazing interview. Perfect job Kiril and Lacy. Lacy is full of knowledge and spot on about everything. Please bring him on again. Would love to hear his thoughts on stocks bonds gold bitcoin etc

I have watched the RV interviews with Professor Werner and Dr. Hunt and their other interviews on Youtube. My take is that they both agree that the commercial banks are the mechanism that gets the extra money out to the economy. In the absence of the Japanese style "window guidance" forcing loan increases to relevant sectors/ uses (productive operational - good, financial assets - bad) under threat of a loss of banking license, the lending constraints on the banks appear to be the credit quality of borrowers and pricing for risk. Lending to already heavily indebted borrowers increases the insolvency risk for the borrowers and in turn the banks. The flat yield curve hurts their margins, the ability to absorb credit losses, and pricing for risk. Revenue is a key factor in determining, debt serviceability and solvency (and the austerity pathway to increased savings discussed by Dr. Hunt). Understanding the impact of recent events and policy actions on revenue will be critical. It appears that over-leverage/ over-indebtedness is the proverbial elephant in the room. If the debt problem can no longer be solved with more debt and controlled inflation can't be harnessed by the policymakers to inflate the debts away, are we forced to choose between a controlled debt jubilee or uncontrolled widespread bankruptcies and social unrest? At the conclusion of all these interviews, it would be helpful if RV could produce a summary video outlining the divergent views of the participants and how we will know, in time, if they are right or wrong. Maybe they will all be wrong.

Somewhat unclear on what this means for gold. Is he saying that the Fed is not printing money and not creating inflation? As such, he is implying that the gold price boom in 2010-2012 was unfounded (ie. concerns about inflation and unknown effects of QE were misplaced)? So this would mean that he thinks the expected gold price boom that many think is coming today is not going to happen. Perhaps someone can enlighten us.

If the US faces hyperinflation, will other countries also face hyperinflation?

Can anyone PLEASE explain to me why : 1) when government runs budget deficit, sells treasury to the banks/ hedge funds , sell it in a week to Fed trough QE is deflationary. 2) Fed just gives same amount of money to Treasury to spend (bypassing banks/ hedge funds ) MMT is highly inflationary. in both cases same amount of money created out of nothing, and went to finance same probably not productive spending ? I am not trolling, just really want to understand !!!!!

at 38 minutes i was screaming blockchain!!

Need to bear in mind that ‘Monetary Economists’ is not a one size fits all description. Dr Hunt is very much an ‘orthodox’ monetary economist who believes in the relevance of the monetary base, the money multiplier and velocity etc. The modern financial system has changed dramatically in recent decades as has money itself. Financial Globalisation has moved money on in all kinds of weird and wonderful ways. There are many very good economists who will give you a different way of looking at money and explain its evolution such as Perry Mehrling, Jeff Snider, Steve Ken, Richard Werner and Nathan Tankus to name a few. I would like to see RV do a money week or fortnight series in which modern views of money are discussed and debated. This is not a rally cry for MMT to be given some air by the way. How modern money works should not be confused with MMT. For example, Perry Mehrling has promoted a branch of economics known as the Money View which is not MMT. Jeff Snider is not an MMT’er but explains how largely irrelevant the Fed is in the context of global money. Nathan Tankus’ substack is very educational on money basics as well as more complex issues even though some may describe him as an MMT’er. The point is that relying only on the views of Monetary Economists such as Dr Hunt is illogical. It is akin to saying one persons opinion on an issue has to be the right one just because of who they are!

Rainy day? how? The US is transitioning from a democracy (perpetual deficits) to a communist dictatorship (the concept of deficit disappear). The economists always talk about the FED, etc, but never address the real root of the problem: democracy and government rising regulations which means perpetual defitics year after year until democracy ends. and ended will be in the West soon... For example, when they talk about Venezuela they imply that their hyperinflation is a monetary thing depending on the central banks (LOL). It is not. It depends on respect of private property in the nation. No respect of private property = capital flight > hyperinflation. That is why communist countries are in "perpetual hyperinflation"

could crypto be the transformative event as gold was in the 1840's?

The trouble is that Lacy does not offer any other solution than austerity. I see very little chance the young generation will accept that. We already had austerity for 10 or even 20 years with diminishing investment in common good and only a skeleton of public services left, whether at the federal or state level. All this while essential things such as healthcare and education are privatized and unaffordable. So is more austerity really tolerable? As Kiril says, we have to be better prepared for the future. And that includes coming up with something better than the good old idea of austerity.

Does bitcoin fall into the category of transformative technology?

Need some help RV community. I don't see the difference between Fed spending and QE that covers the fiscal deficit. I get there is an intermediary in QE, the primary dealers, but if the primary dealers know they can immediately resell to Fed all the debt issuance I have trouble seeing the distinction that Lacy Hunt is making about the Federal Reserve not having spending powers. Thanks in advance if anyone can help me understand. This interview was amazing

I have great respect for Dr. Lacy Hunt and always enjoy interviews with him. However, I want to compliment Kiril for the way the interview was conducted. I appreciate Kiril letting Dr. Lacy Hunt speak. In a number of other RV interviews, the guests are interrupted and prevented from clearly conveying their wealth of expertise. Please don't use ADD people to conduct these interviews for many reasons, including the incredible headache that they cause. The guest of the Prince of Yen interview was interrupted and directed in so many different directions that it gave me a huge migraine. Printing out the transcript only reiterated how ADD the process was. It is a shame that the knowledge of the guest was prevented from being communicated.

Lacy is good. I think Lyn Alden is as good as anyone out there today. Would love to see her on RV

It is these great interviews that bring so much value to real vision. Lacy Hunt is one of the best!

Raoul.... Instead of one guest and one interviewer ... Why not a panel of economist (equal statue) debating what they see coming next? Easy now to do on Zoom.

Having slept not to good over all these issues (see "hot debated below" to understand what I'm talking about) for one night it looks to me that the FED is in fact printing money and that all these complicated explanantions why it is not doing it are only given to hide this fact and to make it uncomprehencable for the puclic for one only purpose: Bailing out the more rich on the company and bank level and prevent their assets from deflating and to give just the amount of money to the less rich to prevent them from revolting. In the end it comes all back to what Henry Ford noticed already so many years ago when he said "If the public would understand the Banking System/Financial System we would have a revolution the next day" (if I remember this well). And that's the reason why Dr. Hunt says "I#m not in the mind changing business!" Just my two cents.

Great interview! Thank's for the excellent lesson. I guess I learned a lot. But there's one thing I did not get. What makes the difference between the goverment spending the money (producing more depts - as Powell was kind of begging last week - the FED buying these dept-bonds on the open market) and the FED paying the bills directly. Why is the second way producing inflation while the first is not if I understood this well as the money is spend to pay the same bills? Thank you for your explanations and please excuse my insufficinet English.

So good. Kiril and Lacy are two of the best. Always love hearing their viewpoints.

Thanks for another informative conversation about the problems facing the US and global economies. Although Dr Hunt prefers to stick to his own job rather than say what he would do if he were at the Fed, the Fed does have over 400 PhD economists who should be able to understand his points, and figure out the best way to resolve the problem, together with the Legislative and Executive branches of government whose mandate is to protect the citizens' "life, liberty and pursuit of happiness."

Brillant. Clear, concise, articulate, evidence based. Now to formulate and/or consolidate investment decisions for the next 5-7 years. Gold, Silver and qualtiy digital assets (online shopping, etc) appear to be no brainers in a well balanced portfolio. Thanks team!

That was incredible, thank you RV!!

How can we determine if there is inflation or deflation? Is there a formula? If so, what is it? Dr. Hunt's prediction of deflation should be testable. If we suddenly go into inflation, can Dr. Hunt detect it and change his prediction? Or will we be stuck with a theory that suddenly stops working? Where is the exit door for his theory?

https://www.congress.gov/bill/116th-congress/senate-bill/3550/text?q=%7B%22search%22%3A%5B%22federal+reserve%22%5D%7D&r=13&s=2 Introduced March 20th 2020 SECTION 1. SHORT TITLE. This Act may be cited as the “Municipal Bonds Emergency Relief Act”. SEC. 2. OPEN MARKET OPERATIONS. Section 14(b) of the Federal Reserve Act (12 U.S.C. 355) is amended by adding at the end the following: “(3) In unusual and exigent circumstances, the Board of Governors of the Federal Reserve System, by the affirmative vote of not fewer than 5 members, may authorize any Federal reserve bank, during such periods as the Board may determine, to buy and sell, at home or abroad, bills, notes, revenue bonds, and warrants of any maturity, by any State, county, district, political subdivision, instrumentality of a political subdivision, territory, possession, or municipality in the United States, including irrigation, drainage and reclamation districts. All such actions shall be subject to such limitations, restrictions, and regulations as the Board may prescribe.”.

This. Is. Gold. Thank you very much!

Three things: 1) Have to acknowledge that early prediction on non-inflationary effect of US QE is remarkable 2) According to Prof. Richard Werner the drop in the velocity of money is an illusion, chapter 14 in "New Paradigm in Macroeconomics". If you cannot afford the book, here his slides: https://www.oenb.at/dam/jcr:63a2b07f-1ef8-48cb-8e28-ef36698a8d19/werner_richard.pdf 3) According to Michael Pettis, Kenneth Austin and others, austerity should be read according to the proper historical context, and trade identities should be stating the right assumptions and non linear relationship between variables to be useful. Here you can find why for these authors it makes no sense right now to talk about austerity without major changes in the economic world order: https://carnegieendowment.org/chinafinancialmarkets/81871 https://national-economists.org/event/explaining-american-trade-deficits-the-unidirectionality-error-kenneth-austin-us-department-of-treasury-retired/

Dr. Hunt states (min 49:28 remaining): "The larger the govt deficit, the larger the govt dis-saving, which cuts into the private savings and undermines investment". I'm no economist but doesn't the Fed's monetization of increased treasury issuance provide the funds that would otherwise come from either the private sector savings or international creditors? Stated another way: If the Fed is stepping in where the private sector or international sector would usually step in to provide funds by buying treasuries, then the investment $$ from increased private savings is still there. Sounds like we are getting Fed/Treas $$ out of thin air, so I don't see any 'crowding out effect'..............just see more money supply (M2) chasing whatever goods/services are there to be had.

Well done. This is the first time I've seen someone interviewed who actually understands the Federal Reserve system (ie. banks being capital restrained when making loans and not reserve restrained (QE reserves don't get lent); QE creating reserves is not the same thing as creating money, etc.). Probably the most important interview today. Good find.

M takeaway from this awesome interview: 1.) Hold cash for the next 7-9 yrs of -2% deflation. 2.) Allocate some to gold in case we go hyperinflationary. 3.) Watch asset prices drop and then go shopping after 7-9 yrs. Does this sound right to everyone else?

Lacy does a much better job than I do in explaining debt, deflation and demographics and a solvency crisis vs a liquidity crisis...