How Are The Global Macro Forces of Financialization, Debt Deflation, and Structural Demographics Driving The Outlook For The Global Economy? Demetri Kofinas Speaks With Lacy Hunt For The Hour.
In this episode of Hidden Forces, host Demetri Kofinas speaks with Lacy Hunt, Executive Vice President of Hoisington Investment Management Company. For nearly 14 years, Dr. Lacy Hunt was Chief U.S. Economist for HSBC Group, one of the world’s largest banks. He was also Executive Vice President and Chief Economist at Fidelity and held the position of Senior Economist for the Federal Reserve Bank of Dallas.
Global Macro is an investment strategy based on the interpretation and prediction of large-scale events related to national economies, history, and international relations. Many of these are chronic conditions, include debt deflation, structural demographics, a historically low savings rate, rising inequality, falling productivity, and the financialization of the global economy. How do all of these global macro phenomena derive from a single economic force? What role have governments played in amplifying and perpetuating their impact by bailing out financial markets and flooding the banking system with cheap money?
This is a conversation full of data, statistics, and econometrics – bank lending, money velocity, monetary aggregates, disposable income, liquidity coverage ratios, and credit spreads – but it is also a story about how we managed, despite the warnings of history, to repeat the blunders of economies past, by replacing credit for capital, and liability for effort. How will we navigate the next recession, having wasted the last 8 years chasing the shadows of wealth through buy-backs, stock appreciation, and financialization? Where will the demand come from in a consumer-led economy still fighting the forces of debt-deflation with diminishing savings rates and rising interest expenses? How will we manage our unfunded liabilities, mortgage payments, rents, and college tuitions, with such poor structural demographics? And how does all of this tie back to the resurgence of populism and the escalation of geopolitical tension in a world tied together by our liabilities but torn apart by the specter of conflict, the failures of diplomacy, and the expediency of war?
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Reading List for Lacy Hunt, Global Macro, Financialization, Debt Deflation, and Structural Demographics:
The Panic of 1907 by Robert F. Bruner
The Forgotten Depression: 1921: The Crash That Cured Itself by James Grant
The Great Crash 1929 by John Kenneth Galbraith
Manias, Panics, and Crashes: A History of Financial Crises by Charles P. Kindleberger
The World in Depression, 1929–1939 by Charles P. Kindleberger
Devil Take the Hindmost: A History of Financial Speculation by Edward Chancellor
A History of the United States in Five Crashes: Stock Market Meltdowns That Defined a Nation by Scott Nations
Against the Gods: The Remarkable Story of Risk by Peter L. Bernstein
Fault Lines: How Hidden Fractures Still Threaten the World Economy by Raghuram G. Rajan
The Escape from Balance Sheet Recession and the QE Trap: A Hazardous Road for the World Economy by Richard C. Koo
Too Big to Fail: The Inside Story of How Wall Street and Washington Fought to Save the Financial System—and Themselves by Andrew Ross Sorkin
Why Nations Fail: The Origins of Power, Prosperity, and Poverty by Daron Acemoglu
The End of Economic Man: The Origins of Totalitarianism by Peter F. Drucker
The Origins of Totalitarianism by Hannah Arendt
Theory of Economic Development by Joseph A. Schumpeter
The Alchemy of Finance by George Soros
The Crisis Of Global Capitalism: Open Society Endangered by George Soros
This Time Is Different: Eight Centuries of Financial Folly by Carmen M. Reinhart and Kenneth S. Rogoff
Bernard Baruch: The Adventures of a Wall Street Legend by James Grant
The Creature from Jekyll Island: A Second Look at the Federal Reserve by G. Edward Griffin
Secrets of the Temple: How the Federal Reserve Runs the Country by William Greider
The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance by Ron Chernow
The Warburgs by Ron Chernow
Dark Genius of Wall Street: The Life of Jay Gould by Edward J. Renehan Jr.
Reminiscences of a Stock Operator by Edwin Lefèvre
American Colossus: The Triumph of Capitalism, 1865-1900 H.W. Brands
The Power of Gold: The History of an Obsession by Peter L. Bernstein