Will Central Banks Use QE to Prevent a Liquidity Crisis? (w/ Michael Howell)

Will Central Banks Use QE to Prevent a Liquidity Crisis? (w/ Michael Howell)

MICHAEL HOWELL: I’m Mike Howell. I’m Managing Director of Crossborder Capital. We’re a fund management and research company
based in London. My background prior to that was that I was
at Salomon Brothers involved in research. And what we focus on almost entirely is global
liquidity and capital flows worldwide. We think that the world economy is clearly
stuttering. It needs a boost. Central banks have been behind the curve. They’ve basically been tightening too much
collectively over the last few months. And what they’re going to have to do is to
embark on a major easing program. In other words, another QE. That is very bullish for gold. And it’s pretty bullish for cryptocurrencies,
too. Yeah, I think one has to go back actually
quite a long time or one’s going to look at what happened to China starting in 2001, when
China was allowed into the world trade organization. As a result of that China built up a huge
trade surplus over time. It developed Chinese economy. China became very, very export-driven. And the US accommodated China, accommodated
Germany too. But effectively, China was being accommodated
by the US trade deficit. America is now saying enough is enough. They’re no longer prepared to accommodate
these big deficit diet China surplus. And this is the background to the tariff dispute. China was reacting to that. America imposed 10% tariffs, I believe, on
the 17th of September, within five days, China went and started to tighten monetary policy. Through October, China hit the monetary base
very, very hard and curtailed liquidity injections into Chinese money markets. We’ve seen the biggest slump in liquidity
in these Chinese money markets that we’ve seen for five years probably, and effectively,
that is slowing the economy hard, if you look at the backdrop, not only is Chinese manufacturing
slowing down significantly in the Chinese economy, but China dominates global value
chains, in other words, supply chains globally. And as China has slowed down, world exports
have also shrunk. And that has hit manufacturing companies worldwide,
but particularly in those locations that are involved in these supply chains. In other words, Japan, Taiwan, Korea, and
Germany. And those markets have been among the hardest
hit through the slowdown. America and service industry generally have
come out of this relatively unscathed. We’ve described the market outlook, in other
words, the stock market outlook as a market which is generally rising, but there is risk
of very sharp selloff, so what we call crevasses. To protect against that, what you need in
portfolios is effectively more bond convexity. Now, what’s the reason that you’re getting
these major selloffs? The major reason really goes back to the restructuring
of the global financial system, really in the wake of the GFC, the Global Financial
Crisis in 2008. We know there’s a big buildup of debt, but
debt needs to be refinanced. And the way to think about this is that the
world financial system is no longer a new money raising system. It’s effectively a refinancing mechanism. And if it’s a refinancing mechanism, what
you need is balance sheet. In other words, size. You’re not too worried about the level of
interest rates. So, the focus that the markets have and the
media has on interest rate cuts, we think are broadly meaningless. What you need to understand is the volume
of liquidity markets. In other words, balance sheet size, and in
particular, if the private sector is not coming up with balance sheet with central bank balance
sheet. Now, the key issue with the private sector,
which is what makes the whole system a lot more fragile, and contributes to these crevasses
is essentially that there was a shortage of safe assets in the system. Now, what do we mean by this? Safe assets are basically high quality bonds,
particularly Treasuries, particularly US Treasuries, but to some extent, corporate securities have
crept into that collateral mix. And the reason they crept in is there are
insufficient Treasuries in the system to provide collateral. Most lending now is collateral-based. And the reason for that is that what you have
is some very, very big new players in the markets, which we call corporate institutional
cash pools that basically come out of foreign exchange reserve managers in Asia, or they
come out of US corporates that are running major Treasury piles of cash. And what they need are safe short-term assets
to invest in in the money markets. And effectively, what’s happening is that
the bonds are being repoed and sold back to the CICPs, and that is the mechanism of refinancing. That works very well until you started collateral
problems. And collateral problems can occur if you get
an economic slowdown, for example, and the value of the corporate slice of that collateral
tranche comes under pressure. And then the whole liquidity mechanism collapses. That’s what we’ve seen a number of times. We saw it clearly in 2008 with mortgage backed
securities. We saw it again briefly in 2018 in December
when markets sold off. And what’s happened every time is the central
banks have come in, particularly the Federal Reserve. And that’s what happened through December
and January. And this is the basis for changing central
bank policy now. They’re beginning to realize that behind the
curve, liquidity has been way, way too tight. And now, what you’re seeing is central banks
beginning to ease but the leader is the People’s Bank of China. One of the ways that you can gauge the tightness
of the US system is to compare Fed Funds Rate, which everybody knows, with the term premia,
which is a slightly wonkish concept, but it’s the premium that investors prepared to pay
for long-term debt, long-term Treasury debt in the US, compare that to the Fed Funds Rate. Normally, the two move extremely closely together. But effectively in the last two years, term
premia have collapsed relative to Fed Funds. The collapse in term premier is equivalent
to a significant or it implies a significant monetary tightening. And that monetary tightening could be equivalent,
on our estimates, to a Fed Funds Rate which looks at around about 5% points. So way, way above reported levels. We think China has changed policy. And we think that the decisive move was around
mid-May. Now, the geopolitical background of that time
was right across the Chinese media, there are reports from Xi Jinping of three red lines
that the Chinese put down that say they would no longer negotiate on these three aspects
of the trade dispute with America. And those red lines meant that America effectively
had to now yield, China wouldn’t yield. And they’re not going to go back on this because
it would be a huge loss of face. In other words, this seems to be a very significant
watershed in the whole trade tariff dispute. What China did at the same time was to start
to inject liquidity back into their money markets. Effectively, what they’re saying is, we are
ignoring trade. We are starting to stimulate the domestic
economy. And we don’t really care if the yuan now devalues. The reality is here with us now because the
yuan has broken 7 against the US dollar. The magic 7 number. China reside to plow money back through the
money markets, liquidity injections by the People’s Bank that has persisted through May,
June, July and into August, and then they’re backing that up with other measures of fiscal
stimulus infrastructure programs and a lot more is likely in the pipeline. It is more targeted. It’s looking much more at infrastructure programs
as far as one can tell at the moment. It’s been given certainly to the state-owned
banks, and they’ll be generally at more into state-owned enterprise. Now, I want to stress here that this is not
a first best solution. This is the second best solution. China cannot continue to keep getting growth
through debt. We know that. But in the short term, this is the reality
that is happening. The Chinese economy needs to get between 6%
and 6.5% growth a year. China has estimated that the trade dispute
could cost it 1.5% points in GDP every year that this persists. It pushed the growth rate significantly below
their targeted rate. And therefore, they need to rebalance to get
the growth rate up. And hence the stimulus. Other central banks will follow the Chinese
lead simply because of China’s importance in the world economy and the importance of
the yuan in terms of a currency within these global value chains. Essentially, what you’re seeing at the moment
is as China has devalued and started to push in more liquidity, you’ve seen devaluations
generally of companion currencies or peer currencies against the US dollar. Other countries that are experiencing fallout
from the slowdown in China will want to try and boost their economies. And so we’re starting to see an increasing
debate in Asia and in Europe about easy monetary policy, already a lot of countries, for example,
Australia, are already doing that. The Federal Reserve is starting to cut interest
rates. But the most important thing that the Federal
Reserve can do is to expand liquidity. And that’s what it’s doing. Now the $64,000 question, which comes back
to the dollar is will America allow the US currency to appreciate? In other words, to put it another way, other
units to devalue again the US unit? And that with the answer that we think is
no. In other words, there’ll be a lot of pressure
being put on the Federal Reserve now to try and cap any dollar appreciation by printing
money. So effectively, we’re in a currency war, and
every currency, every economy is trying to leapfrog every other economy in terms of monetary
ease. Who wins out of that? Financial assets should generally do pretty
well. But the gold price comes out of this magnificently. And cryptocurrencies, which are pure liquidity
play should do extremely well. We call this Shanghai 2.0, which parallels
the Shanghai Accord that occurred in early 2016 following the G20 meetings. After those meetings, the G20 countries agreed
to stimulate their economies. And that broadly came through in terms of
central bank balance sheet expansion, or what we call QE. That launched an equity rally. Equity markets rallied strongly through the
back end of 2016, through 2017 and until they hit the hiatus in 2018. This is happening again. It is not coordinated this time around, but
it’s coinciding. It’s coinciding, because every country is
now trying to react to the slowdown, which we say is China-induced by basically trying
to stimulate their economies. And as each one tries to beggar thy neighbor,
so to speak, you get a general lift in liquidity worldwide. There’ll be a lot of pressure now for the
US currency’s rise, particularly if other countries are beginning to leapfrog the US
in terms of monetary easing. Therefore, the US has to keep up. And we think the pressures will start to build
on the Federal Reserve and the Treasury to try and maintain dollar parity at current
levels. And that will mean more monetary stimulus
coming through. So there’d be a lot of pressure on the Federal
Reserve to do even more QE. The point is against this ground, where generally
central banks are easing, this is the environment where equity markets tend to do pretty well. The best time for investors in equities are
when central banks are trying to stimulate economies that are very sluggish, such as
now. There’s a lot of competition now to see who
needs the most. And unless the US matches other major economies,
you’re going to start to see the US dollar rise. And that’s something that the administration
clearly doesn’t want, so they’re putting a lot more pressure on the Federal Reserve to
expand the QE programs. In terms of what this will actually mean,
we think there’ll be a significant easing of policy. To try and put it into perspective, probably
you’re going to see the equivalent of 100 basis points of US rates that will be bullish
certainly for the front end of the yield curve. It will mean that the yield curve likely steepens
and there is a chance that long yields could come down as well. But generally in this environment, when central
banks are trying to stimulate economies that are very sluggish, equity markets are the
big winners. Can we grow away out of a slump with credit
or debt alone? And the answer is probably not. But it does help to alleviate some of the
symptoms. What you’re likely to get is much stronger
financial asset prices. In other words, if you look at equity markets,
we can’t expect very much from the E, but the P can expand probably quite significantly. And generally speaking, as far as we can see,
well, the equity markets, while not being cheap, are comparatively inexpensive. What the big danger for markets is, is if
you get a major cracking liquidity as we saw previously in 2008. Now, we don’t think that’s on the cards, because
basically central banks are now beginning to act. That’s clearly something one has to watch
very carefully. Equity markets generally should do pretty
well in this environment. And if we’re correct, then what we’re looking
at is what we’ve termed a quick recession. In other words, investors prepare to look
through the outside. What you could easily get is a rally in value
with cyclical stocks which have clearly been under great pressure in the last 12 to 18
months. If you look worldwide, we think there is scope
for Asia to rebound based on this China reflation trade. And there is scope for Europe to rebound based
on what the ECB is likely to do. And in particular, when Christine Lagarde
gets into the helm of the ECB, it is likely that there will be some significant easy moves
there too. I don’t think there’s any good price inflation
in the system. We’re in a secular disinflationary environment,
which is being compounded by the fact that you’ve got long-term demographic problems. There simply is excess supply in the world
economy. Therefore, if liquidity goes into the system,
what you will get is further asset price inflation. And that’s the name of the game. There’s a good chance that bond yields could
go down. Now, this is a very dangerous trade. And I think that one has to say wholeheartedly
that buying bonds on negative and very low yields, on what could only be a 2, 3 or 5-year
view, is a crazy investment. But more and more investors are being browbeaten
into doing it. And the reason being is that there is a shortage,
a structural shortage of duration in the world economy, and particularly in the US system. And what that means is that the duration of
US pension liabilities is, for example, around 20 years, whereas the duration of the assets
is around 10 years. Now, a lot of pension plans have been holding
off, closing that duration gap, because they feel, they believe that bond yields already
are too low. But there’s a pain trade. And the lower the bond yields get, the more
that those plan sponsors will begin to capitulate, and start to buy more bonds. And that’s when you cook in a downside flip. So there’s a very clear asymmetry in the system,
because investors will be browbeaten into buying bonds as the yields drop. So it’s what he’s called in the pound’s negative
convexity. And that could be a problem. In other words, even though this environment
would seem to be unfavorable for bonds, because normally when central banks ease, yield curve
steepen. We could be in an environment where actually
the curve steepens, but across all maturities, the entire term structure drops. Commodities in our view should go up. And I think there’s a very interesting parallel
here with maybe what went on in the 1930s. Now, it’s always very dangerous to go back
and look at history. But one of the things that seems to be underway
is that the Trump administration is trying to divide the world in two. In other words, there’s a China-based system,
and there’s an American-based system. And in other words, there’s a lot more that
comes after this trade dispute. In other words, there’s attempts to try and
divide the world economy. And that was more or less what was happening
in the 1930s. In that environment, in the 1930s, there was
a scramble for resources. And that may be what’s on the cards now. A lot of variant TV commentators, I admit,
take a very different view. And they say, what’s going on is that you
will see commodity prices collapse if China is decoupled from the US system. It’s possible. There’s a logical case for that. But I think the opposite could happen. And with a lot of central bank liquidity being
plowed back into the system, I think it’s much more likely the commodity prices will
rise. The bellwether of that is the gold price. Gold normally leads other commodity prices
by around 9 to 12 months. And I don’t see any reason why that shouldn’t
happen now. There’s a real risk here of the US dollar
going up, and the dollar could easily overshoot. And that’s one of the dangers one’s got to
be alert to. Because a stronger dollar is unambiguously
negative for global liquidity, because it represents a big monetary tightening. We think the Federal Reserve will try and
stop that. It’s not in the administration’s interest
to allow the dollar to appreciate. And we think the pressure on the Federal Reserve
will build. Now one of the things one got to think about
in the background here, both for China and for the US, and for their political leaderships,
they face elections, both of them in the next 12 to 18 months, even Xi Jinping as it happens. Although he’s been installed as paramount
leader for arguably two decades, the reality is that he has to face the politburo for very
important debates in 2021. And China is trying to attain what is called
middle income status on World Bank numbers. And that has been a goal for the Chinese administration. Xi Jinping needs to get that. He needs growth. Trump needs to be reelected. He wants growth. So there’ll be a lot of pressure on the policymakers
to try and deliver growth for both those two economies. Trade is unquestionably the paramount issue. And markets are understandably skittish about
the worsening in the trade environment. One looks at the media, the odds continually
go up. Everyone’s trying to make this trade situation
look worse and worse and worse. But it’s been very much in China and the US’
interest to resolve the trade issue relatively quickly because both leaders need strong economies
going into 2020. What we think the outcome will likely be is
that probably by the end of this month, the end of August, come early September, the cost
will be set in terms of Federal Reserve ease. What you’re already seeing in terms of the
Federal Reserve balance sheet is a significant step having liquidity injections. China, as we noted, is already doing that,
we just got to wait for the ECB and Bank of Japan to come in. In other words, liquidity is starting to flow
into the system now and it normally tends to lead financial markets by around about
3 to 6 months. And therefore, certainly by Q4, markets, we
think should be beginning to move strongly upwards again. I think we ought to be under no particular
illusions that more liquidity doesn’t create growth. It will stabilize economies, it can flatten
out the cycle, but it doesn’t increase productivity in any way. And it doesn’t add to long term economic growth. In other words, what it does is it affects
in equity markets, the P multiple, it doesn’t necessarily affect the E in terms of long
term trend in E very much. The problem the world economy has got is it’s
saddled by debt, and it’s saddled by ageing populations. And the West is facing pronounced competition
from emerging markets and China. And that broadly is why we’ve got a secular
low growth rate. Liquidity is not going to change that, but
it may make us feel better. What we’re looking at is effectively a correction
of the selloffs. And if we are correct and we’ve called this
the quick recession, China is now easing and trying to stabilize its economy. What you will see is a lot of those markets
who have sold off very heavily in the wake of this China slowdown are the ones that could
bounce back pretty significantly. But Australia’s already had a very big bounce
through this year so far, but you’re likely to see Europe rebounding strongly, Korea rebounding,
and Japan. Punch line unquestionably is watch liquidity. Liquidity is the most important thing in the
global economy and global financial markets right now. What do you buy? You buy gold. If you look at global liquidity, it’s clearly
a very difficult thing to measure and to monitor. We do that systematically and professionally. So we cover 80 countries worldwide. But clearly, everybody can’t do that. What are the signs that liquidity is moving
into markets? Broadly, what we would say is to look at probably
three things. One is to look at the price of gold. Gold is a very sensitive asset class. Equally, I’ve mentioned cryptocurrency, but
let’s stick with gold. Gold, if gold goes up, it’s a sign that liquidity
is moving into markets. The second thing is to look at the slope of
the yield curve. Yield curves always steepen 6 months after
liquidity conditions start to improve. And that is a rule, which has worked for 3,
4 decades. It’s a very clear rule. Steepening yield curves mean more liquidity,
flattening yield curves mean tightening liquidity. Yield curves at the longer end of markets,
so looking at the 5 to 10-year spreads or 35 spreads already beginning to steepen. And that’s a sign that liquidity is bottoming
out and picking up. And the third thing to look at, which is sign,
if you like, if tension or stress is the corporate credit spread in the US. And the reason for looking at that is if that
spread begins to widen out, there is a risk of a crevasse vast in markets, as we warned,
because the whole collateral system is fragile and it rests a lot on the integrity of US
corporate debt, which is held as marginal collateral. So if credit spreads widen, then you could
see a pushback and liquidity could drop. So what I would like to see is rising gold,
steepening yield curves, and flat to narrowing US corporate spreads.

Posts created 18790

100 thoughts on “Will Central Banks Use QE to Prevent a Liquidity Crisis? (w/ Michael Howell)

  1. Are you tired of getting these videos weeks, months, or years after they were recorded? Sign up for a free trial with RV Premium here: https://rvtv.io/RealVisionYT

  2. this educated idiot is talking about symptoms and not the root cause. he assumes the sale that it's already accepted the central bank fractional reserve ponzi scheme- that's the problem. all whilst the " synagogue of satan" laughs from their world banks. this dude is a useful idiot.

  3. Does not matter what the banking muppets do there will eventually be a systemic crisis. The next wave of idiot monetary policies is just another stage/step prior to the collapse.

  4. DOES THIS DORK ACTUALLYTHINK THE CENTRAL BANKS WANT TO PREVENT A LIQUIDITY CRISIS? The ability to set interest rates and control the monetary supply has essentially allowed the Central Banks to conspire together and play the global economy like their own personal accordion.
    Firstly they inflate the system with cheap and easy credit at low interest rates thus creating overconfidence and encouraging individuals, corporations and governments to borrow more than they can afford. Then by raising interest rates and constricting the amount of new money put into circulation, they squeeze… and subsequently scoop up as collateral the property of all the people companies and nations who failed to keep up with their obligations.
    This is why there has been a financial crisis or stock market crash every ten to eleven years like clockwork since 1977. None of them were accidental. Each hnas brought increasingly vast sums of wealth to and further consoliation of the financial secto while driving the general public further towards debt serfdom.
    Economists like this dolt may tell you that it was the ineptitude of the central banks that got us into this mess and the problem now is that the Federal reserve doesn't have a plan for when the next crisis comes, but you should all know better.

    They do have a plan and the plan is the problem.
    Janet Yellen's job was to inflate the everything bubble. Powell's job is to pop the everything bubble but to do so in a way that won't leave everyone blaming the globalist bankers who engineered the collapse. Trump is the nationalist patsy who is setting himself up to be the fall guy for crimes of the Federal Reserve.

    Meanwhile, the growing tensions between China and the US are not accidental either. China’s meteoric rise to power has been orchestrated over many decades by many of the same banking giants that have financed America’s development for the past century and it was fueled by the same fortune 500 companies that have kept America’s economy moving in recent history. Their rivalry has been staged. The conflict that ensues will have been orchestrated to pit the two global super-powers against everyone else in the middle… then force us all to submit to whatever monstrosity of supranational banking and/or governance comes crawling out of the wreckage.

    Do you remember in Star Wars how Chancellor Palpatine (aka Darth Sidius) commissioned the creation of the Clone Army to help the Jedi Knights fight against the Separatist Uprising (which Palpatine also controlled)? And by pitting both sides against each other he was able to wipe out the entire Jedi Order and usurp control of the Galactic Senate. What once had been a forum where different sovereign planetary systems could negotiate their differences (kinda like the United Nations) was henceforth transformed into the stage for a totalitarian dictatorship and in the end there was only the Emperor and his apprentice Lord Vader ruling over an oppressive galactic empire.

    Same basic difference, just a lot more Sith.

    It’s the same basic scam called a “Two Man Grift”

    Another example would be when the CIA funded ISIS to invade Syria so that Washington could send US Troops to also invade the country under the pretense that they were fighting against terrorists. Then they both proceeded to bomb that beautiful country into the stone age.

    And I pray you haven’t forgotten when they did basically the same thing in Libya a few years earlier in order to to execute the late great Saint Mommar Qaddafi.

    This doodus excuse for an economist, on the other hand should be forgotten entirely

  5. Okay, so stocks are going to go up, gold, Bitcoin and real estate prices against fiat will rise. Great, I own some of that stuff and want to buy some of the other. That being said, I'm wary about all the potential threats for US, EU and China's economies. Investing in those assets (apart from Bitcoin, which I will own regardless) now would be a great ticket to the ride but my subjective gut feeling is that they're overpriced. And this guy said it himself: injecting liquidity makes us feel better but it doesn't increase any real value production.

    What happens when many of those assets will be outside of averago folks' income options? Poverty, crime, mass shootings and increasing susceptibility to populists in government administrations, that's what. And populists will blame guns, racism, immigrants and what have you to justify their incompetence.

    With Trump, we already see the economic inequality situation to be dire, and because I don't see anyone apart from the elite getting much wealthier due to more liquidity in rich people's pockets, Trump will probably be reelected and he will probably drive the economy over the cliff. That's my discount.

  6. The QE PROGRAM by the US FED & other Central Banks has only achieved Collateral Asset building and not a build up of Manufacturing or Production growth.

  7. Wow great informative interview. I feel sorry for the middle class families that will be affected by higher inflationary prices in assets. Welcome to Venezuela in USA folks. Get ready 🙂

  8. 2019
    Fraud, theft and corruption – The financial sector, as we know and love it!

    My heart is bleeding for those millionaires and billionaires, now experiencing a minor slowdown. Why not lower the interest rates, while we ramp up the money printing?

    What could possibly go wrong…

  9. Has not been a surplus since the Clinton
    What liquidity problem
    Mean too many poor people are participating and not losing anymore in the markets?
    Your little highlander games going to be over there is another recession?
    Or are you just another
    Bear-itter trying to make you're short delusions coming to fruition
    There's usually a dip in September keep your money in the market
    When it falls by the bottom

  10. 22:00 He quotes a rule-of-thumb that has worked for 4 decades. Some "rule" – did it work a century ago? When do the 1% start sharing their wealth, or will we see riots in the street?

  11. Yeah, yeah, yeah.. people with money are given all the money won't invest in their economies, so they buy bonds and their countries won't change the laws to force investing and won't change the system to get money gets fed to the poor and middle class instead.

  12. Most of the world is already at zero or negative rated. All countries have generated QE deficits to devalue their currencies in order to stay competitive with the US dollar. The US have had a hiatus on QE and raised rates since POTUS has been in office. Other countries cannot go much lower. By the US lowering rates to zero as hinted at, they will force the insolvency of major economies into the forefront. Capital will fly into the US delaying their inevitable currency reset.

  13. Booo booo comercials 👎👎👎👎 I delete Your Channal from my playlist 👎👎👎 Greed kils the Youtube experiance!!!

  14. Cross boarder . . . Humm? I may have found one of the causes. Pass along the name Michael Howell to Madame Defarge
    He did say bonds. I started laughing so hard I had to play it back again. . . Workers share. Innovators share. Capital Investor Interest Seekers share. Predatory Finance Interest Seekers share. Who will win? Who sees the players? Who knows the real game?

  15. There is no trade deficit with China if you include services (insurance etc). why do the commentators always ignore this?? It is a reckless omission.
    The USA’s problems are that it has borrowed.too much and spent all its money on the military, not infrastructure.

  16. President Trump is working with Russia and China to bring in new currencies backed by gold with a target date of April 1, 2020 . At least 10 trillion of the more than 20 trillion debt in America can not be accounted for ? They found $200 million hidden in Thailand in Barry's mansion in the jungle . This was split 50 / 50 with the Thais on recovery ?

    After the disaster in Haiti back in 2010 – an Air Canada plane full of metal boxes containing US $100 bills . 1 layer 6 wide X 9 long is $540,000 plus there were 20 layers in the box – 1 box $10,800,000 and the plane was full . What bank had this much money or was it from the Federal Reserve and where did the money go – NOT TO HAITI . This was one of the biggest scams ever !!!!

  17. A very balanced presentation on post Trump trade war economy. True, only the services sector of USA are keeping world economy functioning. But the production is low, like Japan, Korea, EU etc. Only China have positive growth, but somewhat reduced, feeding on loans, bonds etc., and the internal market. Trump is sure to lose out on production and China will be the winner.
    Liquidity is the key and debt is unavoidable, but will be balanced by growth. Gold will be back.

  18. Yearly US deficit increase since Trump was sworn in: From roughly 500 billion per year to over 1 trillion a year.

    Does anyone ever stop and think about this: If you just took 1 billion of those funds you could basically give every US citizen 3 million dollars.

    Where is 1 trillion a year going? And that's just the federal deficit, not the total budget. It also does not cover state deficits or budgets. LoL!

    It's called enslavement through debt.

  19. no matter how big the 1percent gets it is still reliant on wage slaves ,simply put if they have NO JOB AND CAN NOT BORROW [ even with negative rates ] the system can not create more DEBT therefore no CREDIT OR LIQUIDITY and then the realisation of the DESTRUCTION OF CURRENCY and CAPITAL through default

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  22. The USA should've diversified its supply chain decades ago. I get interlinking with China for strategic purposes aka if we fail, they fail, but still there were plenty low cost labor areas on the planet

  23. "Liquidity" printing money will work only for very short period of time..if printing money works so great no one will work, just print money

  24. China does QE for the people, small to med size businesses, & infrastructure. The Fed does QE for big banks. Period. Better learn Chinese.




  28. No one seems to worry about inflation any more. That's probably when it will hit. I don't buy the robots thesis of jobs being taken any time soon. Robots doing your hair and taking care of your kids and granny, that will be awhile….though I do hope they start folding my laundry soon.

  29. Fed will probably hold short term rates at 2% and do lots more QE. Rates any lower than 2% will have more people and countries dropping the dollar for gold. Last time they went to 0 rates, people could go to stocks, but this time stocks are overpriced for the amount of risk they have.

  30. QE means counterfeiting. Easing means counterfeiting. Rising dollar means counterfeiting. Federal Reserve means counterfeiting. Interest rate drop means counterfeiting. Stimulate means counterfeiting. Growth means counterfeiting. Debt means counterfeiting. Financial prices means counterfeiting. Liquidity means counterfeiting. Central banks acting means counterfeiting. Rally means counterfeiting. Rebound means counterfeiting. The system means counterfeiting. Asset price inflation means counterfeiting. Commodities should go up means counterfeiting inflation. Divide the world economy means counterfeiting inflation. Central bank means counterfeiting inflation. Gold leads means counterfeiting inflation. US Dollar means counterfeiting inflation. Computer credits mean counterfeiting inflation. What does all this mean? Counterfeiting and inflation.

  31. So with all of the Bazzillios of dollars the government printed; how come I didn't get any money nor did any body that I know?
    Is there a secret line somewhere that I have to stand in to get my million or what?
    I feel like I'm missing out!

  32. Corporate America loves cheap Chinese goods they can mark up several hundreds and sell to consumers using bank issued cards with 17% interest. They love this situation until the economy slows and liquidity dries up. They then point the finger at the Chinese and go crying to the FED for more bailout money. Nothing but a big corporate welfare scheme at the expense of the working class.

  33. Just answering the title of this video, yes and that mechanism also known as inflation is how CBs steal the productivity of those driving the GDP. It's a deal with the devil that's about to come due and the end of CBs will be crypto currency.


  35. The financial war on middle class is the reason of financial sector collapsing. There is Zero reasons to feel empathy for banks, quite opposite.

  36. Central banks are tools of the conglomerate that control the worlds financial system. The plan is to collapse for currency rebirth not to repair. This video is clueless.

  37. This QE must be moneypumping of hundreds of trillions seized by Executive Order, for crimes against humanity. "Somebody" is frothing at the mouth to shove more trillions of citizen-originated debt through a Greenspan-trickledown economy, into a cesspool of ungodly trillions of atolen wealth..Lol…pump up assets, let cabal rats dump and monopolize decades of Fed and actually-earned trillions, sloughing-off ungodly trillions of taxpayer-earner wealth in a huuge sell-off, withing the margin of tolerance for theft,…then moneypump again…, sell-off, monopolize, moneypump, sell-off, monopolize….and listen to experts try to whitewash and legitimize this half-century of cabal feeding-frenzy with a mouth-full of marbles.

  38. The Australian "bounce" is a paper-ghost. Assets have been artificially inflated to prevent wholesale collapse – but it's a ponzi-move that will reflect on the market as reality sets-in.
    Riding over all of that is the unsustainable asset bubble set in motion by top-end QE.
    More top-end QE makes it worse. The real liquidity squeeze is in private debt – which is massively in over-shoot .. we are all maxed-out.
    If we turn to the bounty of the Earth to pay for the deficit – Guess what?
    Look out your window today – extinction-rebellion will only grow as the bounty of our Earth proves to be over-drawn.

  39. Its already happening! Its offcourse just Qantitive Easing this latest Repo market injection. Course if bank payes back to fed ? Does the fed then destroy fysically the $75 billion repo injection mulitiplied by 5 now (its 5 days already and after 24.00 tonight Glenn, not 3) .
    They should but i dont think they will. And it is not part of the programs plan neither. Let those 2 banks we all know wich they are fall over or atleast inform the market / public.
    Another point. This is what you get with histpric artificially low interest on savings, deposito's AND on loans! Banks run out of money alsl the otherwise 'sound' ones! Aside monetary and other inflation increases!
    Do we go nuclear for our grid atleast? Aside all other practical renewable investments like solar wind tidal etc? You bet!

  40. Very prescient in the light of the repo squeeze this week,
    and now the Fed's planned overnight and term repos
    until QE4 starts in earnest in November.

  41. GREAT INTERVIEW! This exactly what is happening now.. Does anyone know any other economists or investors that have similar point of view please?

  42. there is NO LIQUIDITY CRISIS there's a bad system crysis they need to overhall everything
    (saying there's a liquidity crisis is like saying the cyclists in the tour the france have drug problem when they know no clean person can finish the race with out killing themsleves)

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