Dr. Lacy Hunt doesn't care for the consensus regarding inflation, a thread:
US Debt has eroded Real Per Capita GDP. The action by the Fed and Treasury in 2020-2021 hasn't changed that. 
M2 money growth did happen due to the combination of Fiscal and Monetary policy, however, that increase in M2 money stock HAS NOT created persistent inflation.
Fed Reserves aren't money and don't leave the financial markets. Fed moves old debt onto its balance sheet.
Fed Reserves aren't money and don't leave the financial markets. Fed moves old debt onto its balance sheet.
The Fed HOPES that moving old debt onto its balance sheet will create new debt creation in the private economy, but M2 money growth is falling (total M2 remains high, but the rate of growth fell in Q3 and will continue to fall).
Fiscal and Monetary policy HAS NOT lead to more economic activity. The Spike in M2 has lead to a DECREASE in velocity of money - indicating that the Debt IS NOT productive. There isn't an increase in gross national income to cover principle and interest on the existing debt.
Unproductive debt erodes economic growth. Further, the debt has left the banks in a state of "disrepair."
spglobal.com/marketintellig…
The falling Loan to Deposit ratio indicates extreme uncertainty by both lenders and consumers. More people holding money and banks not lending.
spglobal.com/marketintellig…
The falling Loan to Deposit ratio indicates extreme uncertainty by both lenders and consumers. More people holding money and banks not lending.
Dr. Hunt looks to @AtlantaFed and its GDP projections. Although inventories are up, actual sales are flat AND if you believe CPI numbers, then producers are sliding. The services sector can't be the whole recovery. Manufacturing tells us that growth is flat or slightly negative.
At the 33:30 of the video in the first tweet asks Dr. Hunt isn't the consensus opinion to take on more debt? Hunt responds with a Margret Thatcher quote regarding consensus: blogs.lse.ac.uk/politicsandpol…
Dr. Hunt then recounts that the "consensus" has been telling him that rates were going to go up STARTING IN 1990.
"Trying to understand the consensus or to get agreement from the consensus in my opinion is an absolute waste of time."
@SantiagoAuFund
"Trying to understand the consensus or to get agreement from the consensus in my opinion is an absolute waste of time."
@SantiagoAuFund
Now, every NEW DOLLAR OF DEBT there is only 20 cent increase in GDP.
Thats negative people. Monetary policy's power right now is frustrated and temporary. The more debt encouraged by the Fed via QE and the more ACTUAL debt created by treasury will do LESS AND LESS over time.
Thats negative people. Monetary policy's power right now is frustrated and temporary. The more debt encouraged by the Fed via QE and the more ACTUAL debt created by treasury will do LESS AND LESS over time.
Not surprisingly Dr. Hunt is still Long Bond bullish.
He still doesn't care for the "consensus."
Whether that is the "old wall," the fancy math of Quants, crypto hippies, or tech hopefuls.
He still doesn't care for the "consensus."
Whether that is the "old wall," the fancy math of Quants, crypto hippies, or tech hopefuls.
Until there is a deleverage OR there is a new system that bypasses debt and goes to direct money printing, this chart below is all that matters in the long haul.
/fin
/fin
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