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Top Three Videos – April 5, 2024

Lacy Hunt: America’s National Savings and Debt Crisis... (April 1, 2024)

Hidden Forces...

Summary

 

The global economy is performing very poorly due to negative national savings, leading to a downward trend in the standard of living and a difficult situation that will be very difficult to solve.

 

Impact of negative national savings on the economy

 
  • Lacy Hunt’s assessment of the global economy: “Poorly. Very poorly.”
  • The negative national saving is a more serious situation, impacting the circular flow and production of goods and services.
  • Negative net national savings means no increase in capital stock, leading to a downward trend in the standard of living.
  • The analogy of sustaining consumption by eating depreciation is similar to the Pilgrims eating the Indians’ seed corn, ultimately leading to a difficult situation.
  • Negative national savings means “we collectively are living beyond our means, but we don’t have the resources to increase the capital stock.”
  • The problem of negative net national saving is going to be very intractable, very, very difficult to solve.
     

Consequences of government policies on economic activity and wealth divide

 
  • The lack of recollection of major past policy mistakes leads to a cycle of repeating the same errors and worsening income and wealth divide.
  • “If accelerations in monetary growth only produce very transitory gains in economic activity, when people realize the inflationary impact of monetary policy, then the system becomes unanchored.”
  • As the government share of GDP rises, economic activity gets weaker and the income and wealth divide gets more divergent.
  • The relationship between indebtedness, economic deterioration, and adverse demographic effects should not be ignored.

Adam Hamilton: From a Cyclical Low to a Super Bull - Why This Could be Gold's Decade (April 3, 2024)...

Pallisades Gold Radio...

Summary

 
Gold is potentially entering a super bull market driven by atypical factors, presenting a significant investment opportunity for investors.

 

Drivers of Gold’s Value and Potential Market Impact

 
  • The probabilities are overwhelmingly on Gold’s side, making it the best environment for gold to increase its value.
  • Usually there’s a three-stage process for gold upls, but this gold up leg is really unique and different.
  • The drivers for gold’s seasonal rallies are well known and big, coming from events like Indian Harvest season, Indian wedding season, and year-end buying in December and January.
  • The global money supply growth since 1980 versus gold since 1980 shows that the total amount of currency in circulation is vastly higher, indicating huge potential for gold’s price to rise.
  • “If the public really starts chasing gold, if it starts to be something that everybody wants to own for this fear of missing out thing, gold can just go to levels that few can even imagine.”
  • Investment demand is the single biggest driver for major gold upls and bull markets, making it the main driver for this potential super bull market.
  • The speculators had only done 55% of their total potential buying from when this up leg started in early October at 1820 till now so 45% of the probable buying for this up leg is still outstanding, which is huge.
  • The inflation is driven by increasing money supplies, and the FED upped the US money supply by 115% in less than two years after the March 2020 pandemic lockdown.
  • The inflation is a huge driver of investment demand going forward and it’s not going anywhere.
  • Huge demand for gold, even when sentiment wasn’t great, shows the potential for a super bull market in gold.
     

Gold’s Historical Significance and Potential

 
  • Gold has historically been considered reasonable and prudent for centuries, with huge room for investors to chase it for a long time.
  • The next generation will have a huge demand for a digital gold currency that is physically backed somewhere in the world.
     

Investment Opportunities and Market Trends for Gold

 
  • Gold stocks are radically undervalued compared to the price of gold, presenting incredible buying opportunities for investors.
  • Smaller and mid-tier Gold Miners are expected to have the biggest gains due to production growth lowering costs and increasing profits.

Steve Hanke: Shrinking Money Supply = Recession And Sub-2% Inflation By End Of Year (April 4, 2024)...

Thoughtful Money...

Summary

 

The speaker predicts a recession and sub-2% inflation by the end of the year due to a 4.5% decline in the money supply since March 2022, with global uncertainty and caution in the market, and recommends investing in long-term bonds.

 

Impact of Shrinking Money Supply on Economy

 
  • “The economy probably dipping into recession later this year because of what the contraction in the money supply.”
  • The global trend of shrinking money supply could lead to a recession and sub-2% inflation by the end of the year, according to Steve Hanke.
  • A declining monetary supply leads to declining economic growth, which supports the prediction of a recession by the end of the year.
  • If the negative growth in the money supply continues, there is a possibility of flipping into deflation by 2025.
  • The money supply started tipping negative in December 2022, indicating a significant slowdown in the economy.
  • The analogy of a grenade in the python’s mouth symbolizes the impending negative stimulus and recession caused by the shrinking money supply.
  • Steve Hanke predicts a sub-2% inflation by the end of the year as the money supply has been trending down since 2022.
  • “Steve says look unless the FED goes bananas quickly uh on the the rescue side of things um we’re highly likely going to have some sort of contraction in the economy you know probably as soon as the end of this year early next year.”
     

Monetary Policy and Inflation Management

 
  • The key lesson from Turkey and Argentina is that monetary policy is not about interest rates, but about controlling changes in the money supply to manage inflation.
  • Going further out the duration curve to lock in today’s interest rates may be a profitable trade as interest rates are expected to fall with decreasing inflation.
  • “Monetary policy is not about interest rates. It’s about changes in the money supply.”
  • When fiscal and monetary policies go in opposite directions, the monetary policy always wins, dominating the impact on the economy.

 

 

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