Comments
Transcript
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THThere appears to be an inherent contradiction in Hunt's argument that the Fed funding 100% of the deficit is not inflationary as long as the Fed is limited to purchasing from banks Treasury bonds and bills already purchased by banks. The contradiction is this: Hunt ends this argument with the fact that the net result of such purchases is an increase in the Fed balance sheet for which the liability is bank reserves and the prerequisite for inflation is that banks lend out those reserves and that such lending will not occur for a list of reasons Hunt gives (which may be perfectly balanced). Okay that Hunt on the one hand. But on the other hand, Hunt makes the case that large budget deficits created by high deficit spending government fiscal policy is a drag on the economy and the end of his argument on this point is that the resulting high debt levels suck up the savings of the economy which then cannot grow because it doesn't have savings to invest. Okay, that Hunt "on the other hand". But wait a minute. It is inconsistent to argue that we won't have inflation because we'll end up with the banks having massive reserves they can't or won't lend while at the same time arguing that the high debt levels will result in insufficient savings so the economy will not have any money available to invest in productive uses. Does this bother anyone else? What am I missing?
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dwKiril has been speaking about this since his first interview with RV, and Lacy is quantifying it a bit more defining the mechanics of the fed in this discussion. Thanks again gentleman. Pushing on a string. https://www.investopedia.com/terms/p/push_on_a_string.asp
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JE.I would add a qualifier......" Once" great societies take on more and more debt.......... Great societies do not take on more and more debt. Lost societies take on more and more debt.
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TMCan we get the chapters, please?
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MAHi there, I watch this video as a millennial investor in his early 20's. My key take away is that monetary policy will be ineffective due to US debt situation and "Unless there's some transformative technology, something equivalent to the combustion engine" then a combination of lackluster GDP growth, lending, and an air of austerity will affect the market negatively. My question to the smart people in the community is... Do you think there is anything concretely equivalent to "the combustion engine" in the financial pipelines right now that will change the world in a 2-5 year time line? Is it naive of me to put trust and money in these SPACs and ARK investment ETFs that target hopeful millennial like myself? How can I hedge hope with the reality that is being thrown in my face watching this video?
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KZWith regard to the part at 42:24. Yes, but that will take some time, in the beginning the money velocity will take off as new loans are issued, right? And than there can be inflation
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RTExcellent interview! So much to learn from both gentlemen. But I was amused when both laughed about Bank of England having half-crossed the rubicon. I mena, honestly... Isn't the US also in unchartered waters now?
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JTJust some thoughts: 1) Lower rates have had a HUGE affect on the residential real estate markets creating major inflation in many markets 2) Chapman index shows the REAL calculation of inflation--which is very high, 3) Commodity markets are telling us that inflation is at hand. 4) To save the banks, the Fed WANTS inflation in order to steepen the yield curve. 5) The only way out of massive deficits is to inflate. So, inflation may just be a pig in the deflationary python, but it is here--for now.
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ARAusterity IS the answer. But the average first world person can't survive 3 minutes without their technology triggered dopamine hit - so any policy that requires any modicum of sacrifice is a non-starter. So just focus on your personal game plan and wait for the inevitable collapse. Happy New Year! lol.
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ssWe need a Lacy Hunt update!!! Please interview him again to start the year.
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JBThere is an incomplete thought that should be explored further. It has to do with shrinking the capital account and thereby decreasing our importation of net foreign savings. The worry is that interest rates increase as a result of lower foreign savings. Certainly this worry is outdated as our roi on sending our domestic production oversees by way of strong dollar policy as a symptom of the debt super cycle as the world reserve currency has shown to be a dead end. Malaise covered by intelligence is all too common.
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KZI have never come accross the fact that Japan had been overleveraged already since 1890. Can anyone tell me more about this? I have always had interest in this period of history, it’s even more interesting considering that those were the early days of capitalism in Japan, and already so much leverage....
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GMAgree with Kim S. below, it would be great to have Lacy Hunt back soon to hear what, if any, of his view have changed. It's always good to hear a contrary opinion to the reflationary consensus. BTW, if you don't read it already, Hoisington Investment Management's (free) quarterly newsletter is a must read.
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GMAgree with Kim S. below, it would be great to have Lacy Hunt back soon to hear what, if any, of his view have changed. It's always good to hear a contrary opinion to the reflationary consensus. BTW, if you don't read it already, Hoisington Investment Management's (free) quarterly newsletter is a must read.
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mpcan't believe this only has 47 likes
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APAbsolute Gentle-gems! As a millennial, they are old enough to be my grandfathers. I wish they were!
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NIGreat interviewer. Great guest. Thanks to both of you. One thing I can't understand about QE. I understand the part about reserves and the part about banks not wanting to lend, but why doesn't all of the government spending ($1T on the military alone) cause consumer prices to go up - which in the modern sense of the word would be called inflation?
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KSJust rewatched this great talk, I wonder what Dr Hunt would say today? Any plans to bring him back for an update?
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GSGreat conversation, a lot to think about. Let's hope & pray that Cathie Woods is correct about transformative, disruptive technologies that will provide the growth needed to overcome our debt induced low to no growth economic situation.
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!
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JSOutstanding - we are so screwed!