Home Truths for US Growth Outlook

Featuring Dr. Lacy Hunt

Dr. Lacy Hunt, one of the world’s most respected economic thinkers, weighs in with some cold hard facts in relation to the new US administration’s fiscal proposals, while putting some perspective around structural weakness in the US growth story and the constraints to GDP. Filmed on February 10, 2017 in Austin.

Published on
13 March, 2017
Topic
Fiscal Policy, US Economy, Global Outlook
Duration
40 minutes
Asset class
Equities, Currencies, Bonds/Rates/Credit
Rating
18

Comments

  • KL

    Kathlyn L.

    30 1 2018 02:49

    0       0

    More Lacy!!! Please Grant, do an interview with Dr. Hunt. Also would love to see an interview with Robert Kessler

  • TS

    Timothy S.

    24 10 2017 19:35

    0       0

    I've heard Dr. Hunt speak publicly twice and he has a great understanding of cause and effects in economics. Hard to get that in today's Peter Pan economy.

  • kh

    kaltops h.

    3 7 2017 13:31

    0       0

    Amazing interview. Lacy makes things super clear that its tough to counter any part of this understanding. Please interview Sean Corrigan,Jim Chanos and Russell Clark of Horseman

  • JW

    James W.

    18 6 2017 21:41

    1       0

    It simply doesn't get better than this. Knowledge, insight, analysis, and experience cogently conveyed by a pro.

  • WS

    Wouter S.

    17 5 2017 07:35

    1       0

    great piece! What an immense source of data / analysis. Thank you Mr Hunt.

  • GB

    Grant B.

    16 5 2017 18:26

    0       0

    Depressing.

  • SS

    Sean S.

    16 4 2017 02:59

    0       0

    This guy is just killing it — great!

  • Sv

    Sid v.

    11 4 2017 23:55

    0       0

    only the second program i have watched twice. thank you

  • Sv

    Sid v.

    11 4 2017 21:10

    0       0

    great presentation. Thank you RV

  • JJ

    J J.

    5 4 2017 15:13

    0       0

    Thanks RV. It's a great interview. One thing that I don't understand is why 30-year bond yield would be running under the rate of growth in nominal GDP? Growth of nominal GDP is the year over year "return" but the yield in 30-year bond is the "return" required to lock the money for 30 years. The duration is very different. From historical data, the relation of 30-year running below GDP growth seems not established. Any insight about this is appreciated.

  • AC

    Anthony C.

    3 4 2017 20:34

    0       0

    Meanwhile, the GENIUSES at the FED tinker with interest rates and an over-sized money supply, AND the other geniuses in Senate/House leadership positions diddle their navels

  • DH

    Dale H.

    22 3 2017 20:32

    0       0

    Great interview, thanks. One to watch again.

  • PS

    Parker S.

    20 3 2017 21:29

    5       0

    Thank you RV. What an incredible opportunity to step inside of a brilliant mind. More and more I've been realizing that I attempt to construct explanations for an over simplified view of reality. Dr. Hunt illuminated many subtleties that I previously would not have taken the time to consider. I second all the votes for Fed Chairman.

  • DP

    Daniel P.

    20 3 2017 20:34

    1       0

    Great interview, awesome insights and well delivered. I do miss the input form the interviewer and much prefer to hear the questions and thoughts from whoever might be conducting the interview. It helps with the flow of the conversation. However, excellent work as always guys.

  • BE

    Baha E.

    20 3 2017 13:38

    1       0

    Sobering. Great interview!

  • DY

    Damian Y.

    20 3 2017 12:40

    1       0

    Great interview, lots of interesting information to digest.

  • TJ

    Terry J.

    19 3 2017 16:21

    7       0

    Whilst I try to watch every single vidoe you produce, it is not always possible. However there are about half a dozen regular guests that I ensure I never ever miss and Dr. Hunt is one of those. To be honest having access to a few special interviews like this makes my annual subscription to RVTV absoultely priceless!

  • JS

    John S.

    19 3 2017 14:15

    4       0

    Excellent...can't conjure an argument against anything, particularly that idiot savant central bankers continue making policy errors. Every natural macro economic trend is deflationary but central banks will not (cannot) allow it and will continue to demonstrate their sole competence until imbalance overwhelm and markets violently retake control. Wish to live in interesting times? Granted.

  • RZ

    RICK Z.

    18 3 2017 16:21

    1       0

    Absolutely brilliant, and spot on - "we face a daunting task "

  • VS

    Victor S.

    17 3 2017 14:47

    1       0

    Great analysis Mr Hunt .... thank you

  • IV

    Ian V.

    16 3 2017 23:19

    3       0

    Fantastic interview, thank you, RV! I don't understand how one could see the economy any differently than this--his data corroborates what one sees on the "street". It is also strange that not many people follow or talk about the Velocity of Money metric when it is so critical and is in such an alarming trend. Until Dr Hunt's last RV interview, I personally hadn't heard Velocity mentioned since Econ 1 in University decades ago.

  • JG

    Joseph G.

    16 3 2017 20:59

    1       0

    Outstanding presentation. Strong analysis with excellent examples and clear grasp of the critical numbers and factors involved in this economy.

  • DY

    Dmytro Y.

    16 3 2017 12:04

    4       1

    One of the best interviews on RV! Really really great! Someone is telling the truth about economy and debt. Much appreciated this was published.

  • MM

    Michael M.

    16 3 2017 03:42

    6       0

    Annualized M2 growth rate since election is 2.5%. Annualized M2 growth for the prior year, around 8%. Fed is hitting the brakes hard on money supply growth, but everyone is focused on the gradual .25% rate increases.

  • RR

    Ronin R.

    15 3 2017 03:41

    3       1

    Were screwed.

  • rm

    richard m.

    15 3 2017 02:26

    2       1

    Obviously a smart evonomist..hedidn't even mention the equitymarkets...orgold😉

  • CR

    Charlie R.

    14 3 2017 23:53

    12       0

    I certainly cannot think of a better reasoned or more empirically supported assessment of where we are and where we're likely to go. Raul and Grant - great material for an RV Rewind here for sure! I'm sure you're filing it away!

  • DS

    David S.

    14 3 2017 22:26

    1       0

    The only tax cut that will be spent is decreasing low and middle income tax rates. They will spend all the money that they do not require to pay off credit card and other short-term debt. The other side of the coin is to raise minimum wages. Almost all of the increase in minimum wages will be spent. It is apparent that the wealthy and corporations will payoff debt, buy stock, increase executive pay, but not invest or spend.

  • SW

    Scott W.

    14 3 2017 18:01

    11       1

    @Steven D. I am of the same camp - have been since I "learned" the Austrian school in 2011. Hell of a time to get religion in precious metals by the way - talk about buying high! I think Hunt's thesis about deflation is right assuming no further interventions by central banks. Sort of the classic debt destruction via unwind. However, with pension funds trapped as they are, and all the other "social justice" ramifications under a no intervention scenario (asset price collapse), I cannot believe no intervention will be tolerated. And as such, they fed et al will do something - perhaps creative - that will merely increase the hidden pressure on US fiat and make the ultimate unraveling that much more traumatic. Which keeps me in the inflation camp in the long run. But hopefully before I'm dead.

  • DB

    Don B.

    14 3 2017 15:55

    4       0

    Of all the RV interviews, this is the first one I immediately listened to again. There is so much info presented both densely and brilliantly.

  • CD

    Chris D.

    14 3 2017 11:48

    3       2

    I like it. However, exponential debt is a critical component of a debt-based money system.. long bonds will be a disaster when the fiat goes Zimbabwe

  • GF

    George F.

    14 3 2017 08:36

    6       0

    "Reagen cut taxes" Reagan raised Social Security taxes, and introduced the alternative minimum tax.

    Reagan did lower the maximum tax rate. But rates are different from the amount of tax collection.

    Unmentioned is the largest federal expenditure, the military and the unfunded pension liability, Federal, state and local. Another unfunded liability is rebuilding Syria, Iraq, Afghanistan, and other lesser known placces.

  • SD

    Stephen D.

    14 3 2017 05:09

    23       0

    Well, that was sobering. I've been in the 'return of infaltion is inevitable' camp, I'm going to have to re-think that. Which is what makes RV so great, no sound bites, no gimmicks no sales pitch. Just smart people talking, long enough to make their point. And talking very well, even when, as in this case, with worrying conclusions.

  • BA

    Blair A.

    14 3 2017 04:08

    13       0

    I just had a huge steak, glass of red wine , sold all my stocks, bought long bonds for my heirs and will now take a Roman bath. What an inspiring talk.

  • KS

    Kathleen S.

    14 3 2017 02:09

    19       2

    We have not been digging the hole, Wall Street, the military industrial complex and the Central banks have indebted the people by lending into asset bubbles in housing and the stock market rather than lending into technology, research, business and things that will make an economy grow. This was not by accident it was done by design -- look towards Greece and you can see what the elites have in store for this country -- a feudal system where public property is privatized. The CIA and NSA spying is not for foreign invaders it is for the social unrest that is going to take place when this country goes bust. Make no mistake this is not by accident -- it is by design. Debt is a weapon (John Perkins book Economic hit man -- tells this story) the banks have turned this weapon on its own people. Buckle up this is going to get ugly.

  • CH

    Calvin H.

    14 3 2017 01:53

    8       0

    John H - the 'worst'?! My god man, , then you must think Greenspan and Bernake are the best? Good luck with that! LOL

  • ik

    ilija k.

    14 3 2017 00:21

    4       0

    All very interesting, nothing was mentioned about China? China is driving the current equity gains through it's 2016 loosening of credit, it has nothing to do with Trump or anything else, the global economy is tied up to the country that holds over 3 trillion dollars of reserves and is currently driving the global economy and it's reserves are shrinking due to this including it's massive capital outflows. China is already massively overcapitalised and is curently gone into overdrive again, it's a question of how long will their reserves last to support the global economy?
    Just follow past years iron ore, coal, crude prices which are directly tied to Chinas consumption and loosening of credit. This loosening of credit has spurred once again housing activity with increases in prices . this will start to slow as the market begins to absorb the hew highs.

  • WS

    Wes S.

    13 3 2017 22:36

    4       1

    Someone needs have Dr. Hunt school Peter Navarro...USD is the world currency, US must continue with a trade deficit, assuming the US wants to retain that status...hence, the UST thesis by Dr. Hunt...Trump want's a trade deficit, but, Navarro is arguing against...can't work, simple math...inflation or deflation...choose your poison...bet your money

  • HA

    Hamed A.

    13 3 2017 22:34

    5       1

    be great if he could mention what he thinks is driving equity prices up everyday, given his bearish views and what he looks for as a catalyst since what he describes has been true for years

  • SP

    Steve P.

    13 3 2017 22:07

    4       0

    Tad B. - the debt/gdp levels talked about constantly in financial media are all over the show. Most figures are stated just as debt/gdp without explanation of what debt is included in the overall figure. Government debt to GDP seems to be the figure most often used as comparison eg the oft quoted Rogoff/Rheinart studies tend to use this. Others use government debt plus consumer debt or add in corporate debt as well. And it is probably a function also of when the figures are calculated. The US Debt clock tells us debt is increasing so fast, the debt to GDP ratio is out of date by the time it is typed.
    All a bit confusing for us but the one take away that we do know is that the numbers being bandied around are all historically BIG in context.

  • SB

    Sam B.

    13 3 2017 21:43

    6       0

    He's quoting total debt/GDP which counts corporate and household debt, in addition to the government debt. 250% of GDP is just the what the Japanese govt owes.

  • TB

    Tad B.

    13 3 2017 21:26

    5       1

    Very interesting man….. despite a subject that can be quite boring.
    I'm unsure how he gets to Japan's debt being 600% of GDP when most accepted figures point to 250%. I would really like to know how he calculates this.

  • HJ

    Harry J.

    13 3 2017 19:49

    0       1

    When the debt needs to. E refinanced the. Let must be paid by the borrower.
    Bad news for borrowers in general.
    Yields must climb to cover risk and inflationary pressures.
    That goes for all borrowers.

  • JM

    Jim M.

    13 3 2017 18:48

    15       0

    Nobody tells this story better.

  • IJ

    Ian J.

    13 3 2017 18:33

    3       0

    rising rates = self defeating chicken

  • GT

    Graham T.

    13 3 2017 17:31

    31       0

    Wish this bloke was the Chairman and not Yellen.

  • RF

    Richard F.

    13 3 2017 16:16

    16       0

    I have followed Dr. Hunt for 7 years now at the SIC conferences. He has been consistent and correct for 7 years. If he expects a new low in the long bond yields then the overwhelming probability is we will get them.

  • SB

    Sam B.

    13 3 2017 15:57

    17       1

    I think he's spot on with the long bond thesis. In particular, he states well how nothing has fundamentally changed with regard to overall debt levels, demographics or anything all that meaningful since July 2016 (when the 30Y was 110 bps lower in yield). Even the elements of Trumpflation that are based on hard data, higher oil prices most notably, I believe will be end up being transitory. Inflation metrics in Q1/17 are benefiting hugely from base effects. Unless oil doubles again from here, inflation should recede back into the doldrums. Additionally, Dr. Hunt does a great job of spelling out 1) that Japan has demonstrated infrastructure spending does not lead to inflation or sustainable growth, and 2) that the Basel framework severely hinders credit driven inflation since the banks are forced to keep either excess reserves or sovereign debt on their balance sheets to comply with the HQLA/LCR rules. He could've gone even further into how the Fed does not control the long end of the curve; see Greenspan's efforts at that from 2004-06. Lastly, to John H's point, owning the long bond is not a "safe" trade. If the 30Y backs up to 4%, which is certainly possible, you'd lose 15%. That said, I wholeheartedly agree with Dr. Hunt that the risk/reward of the 30Y at 3.15% is highly compelling and I doubt we've seen the lows in yields at the long end of the UST curve. The 2012 and 2016 lows weren't accompanied by massive crises or US recessions... when we get either of those I expect the long end will be bid even more ferociously.

  • NH

    Neil H.

    13 3 2017 15:50

    22       0

    Lacy hunt and gary shilling are two of the only people who correctly called the decline in interest due to deflation. While many factors currently point to a possible move up in inflation, It is hard to argue with someone who has been correct for so long.

  • PJ

    Peter J.

    13 3 2017 15:38

    29       0

    Brilliant piece! Thanks Lacy. Although he makes Marc Faber look optimistic, he explains each of his points in clear simple terms that are difficult to contradict. I am a simple PI and find these pieces invaluable. I understood every argument and point presented. Although many of the RV presenters are brilliant minds, they often talk in terms (financial jargon) that I find hard to follow. Lacy presents point after point in terms that a 18 year old economics graduate could follow.

  • RE

    Rachel E.

    13 3 2017 15:31

    0       1

    Peter M. is correct.

  • rr

    rlw r.

    13 3 2017 15:25

    3       0

    John could you enlighten the rest of us with your detail concerning counter-ideas.

  • jh

    john h.

    13 3 2017 15:19

    1       56

    Quite possibly the worst economist I've ever heard. His reasoning is poorly laid out with too many conceptual errors to list but just think about his proposition for one second: the US has too much debt, global growth is slowing and all DM's have lousy demographics so the "safest" bet is....the long bond.

  • rr

    rlw r.

    13 3 2017 15:18

    4       0

    So lucid, ... more please

  • RE

    Rachel E.

    13 3 2017 15:15

    10       0

    Mr. Hunt should be the next Fed chairman. We need his wisdom in Federal reserve.

  • AP

    Alfonso P.

    13 3 2017 15:04

    4       0

    thanks Raoul, Grant, for bringing this excellent presentation, concise, simple and profound from a great economist.

  • PU

    Peter U.

    13 3 2017 14:46

    40       9

    A suggestion to RV Admin: There is a potential to learn from our viewers who vote a "thumb down". RV Admin should require or at least provide an area to comment on why you believe the interview deserved a thumb down. We learn from opposing views. If someone disagrees, I would like to understand his/her view point(s) vis-a-vis the content provided in the interview. Thank you.

  • AH

    Andrew H.

    13 3 2017 14:36

    3       0

    Pretty much the smartest guy in the room. Still does not explain what the stock mkt will do in the short term, but following his IR
    planning in the longer term has been great.

  • PU

    Peter U.

    13 3 2017 14:21

    5       2

    Same goes for Russell Napier. . . smartest guy in the room

  • PU

    Peter U.

    13 3 2017 14:19

    27       0

    I know Lacy professionally and personally. One of the smartest guys in the room.

  • T~

    Tshort63 ~.

    13 3 2017 12:43

    57       1

    Another stellar interview. Not a wasted word or thought, I could listen to him for hours. Precise, insightful, and humble. @realvision continues to set the bar higher every week.