The Implications of Peak Inflation
I was recently interviewed by Trey Lockerbie for The Investor’s Podcast.
This was an excellent conversation that covers not only the topics that investors are most concerned about today but also the broader policy implications of the extraordinary economic environment in which we find ourselves.
Please listen to this interview. I highly recommend it.
Topics include:
• How our economic system underwent a complete transformation during the half century since Dollars ceased to be backed by Gold.
• The secret to understanding the economy and the financial markets today is seeing that Credit Growth Drives Economic Growth.
• Why the economic policy response to the Crisis of 2008 and to the Covid-19 pandemic succeeded, while policymakers in 1930 failed to prevent the Great Depression.
• During the 16 months between February 2020 and June 2021, US Government Debt increased by $5.1 trillion, with the Fed monetizing 78% of that by creating $4 trillion through Quantitative Easing. And, yet, Inflation has remained constrained, with CPI increasing at an average annual rate of just 3.0% over the last two years. Why has there not been hyperinflation?
• Why inflation is likely to abate during the quarters ahead.
• If inflation does abate soon, this will be the second time in a dozen years that the government has gone trillions of dollars deeper into debt, while the Fed has created trillions of dollars to finance that government borrowing, without causing persistently higher inflation or interest rates. What lessons should we learn from that?
• Why Austrian Economic Theory was valid during the early 20th Century, but incapable of explaining the economic environment in which we live today.
• During the 1960s, the US government invested in Research and Development and won the Space Race. During the 1980s, President Reagan ramped up government investment in the military and the Soviet Union collapsed. Here we discuss the three reasons that the US government must fund a multi-trillion investment program over the next decade, as well as the dire consequences if it fails to do so.
• Why Credit Growth has peaked and what that is likely to mean for the price of stocks, property, bonds and gold.
• An attractive strategy for average Americans to grow their wealth.
After listening to this interview, consider subscribing to my video-newsletter, Macro Watch, if you have not already subscribed. There you will find nearly 75 hours of videos in the archives that explain the forces that drive the economy and the financial markets today; and you will have access to one new video approximately every two weeks.
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Click HERE to listen to this The Investor’s Podcast interview now.
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