Thread by @NathanDallon

I want to give a huge shout-out to @DiMartinoBooth regarding her recent @RealVision interview with Lacy Hunt.

I wanted to highlight a few new ideas that hadn't gotten into my head before this conversation.

realvision.com/shows/danielle…

1/13

"As a result of the deteriorating increase in our standard of living, we have caused not just in the United States, but globally, a major deterioration in the demographics during this period of high indebtedness."

-Lacy Hunt

2/13

I had never connected Federal Reserve and Treasury policies having a DIRECT effect on demographic deterioration.

"And what effect this would have long term on home
ownership rates, on headship rates, on household formation."

-Danielle DiMartino Booth

3/13

That question from Danielle seems so obvious to ask once I heard it! Persistent deflation due to over-indebtedness CLEARLY impacts the most intimate decisions made by people everywhere.

4/13

This was an amazing Danielle question:

"Does it matter where valuations are at any given point in time for how efficacious Fed policy is or is it just a matter of they've got enough tools in the toolbox to continue...

5/13

...incentivizing corporate management to do as they've done now for-- well, since the financial crisis."

Lacy:

"Well, this is the way I look at it. Two decades ago and prior to that, the stock market was considered a leading economic indicator...

6/13

...I don't think it is anymore. I think basically it's become a tool of monetary policy and they place considerable focus on it and the stock market no longer plays that role."

7/13

That cleared up my thinking on the market since 2018. Again, once @DiMartinoBooth asked the question it seems so obvious!

Then @DiMartinoBooth evokes @scientificecon and highlights another great and clarifying point.

8/13

"I cannot tell you how many people-- and then the evidence is I visited for a long time recently with Richard Werner, who spent many of his years in Japan in the aftermath of the 1990s and we definitely created debt specifically for the purpose of consumption...

9/13

...which should be inflationary in the short term."

Again, SO well said. If we debt spend consumption, there is a TEMPORARY or TRANSITORY bump in prices until the debt has been CONSUMED. Then the trends go back to baseline.

10/13

Then Lacy finished off the interview with a poetic framework of the two paths forward (status quo debt heavy path or MMT direct printing).

Lacy Hunt:

"So to sort of paraphrase T. S. Eliot, this is what I would say, Eliot said, that the world ends not with a bang,...

11/13

...but with a whimper. It ends with a whimper if the solution is more and more debt. It ends with a bang if you convert and start going to more and more money printing."

12/13

Such a great interview. I learned a bunch. Can't wait for a @scientificecon and @DiMartinoBooth interview!

13/13