Jim Rickards: Weakness, Recession in 6-9 Months, But a Very Strong Economy in 2-4 Years
00:00 Introduction and welcome back Jim Rickards
01:18 2024 election review
05:07 Economic implications of election results
07:24 Trade policies and auto industry tariffs
09:29 The “American System” explanation
16:32 Analysis of Trump victory/Harris loss
21:45 Inflation discussion and public impact
24:24 Economic outlook: recession in the near-term vs. long-term growth
29:00 Jerome Powell and Fed leadership discussion
31:32 Labor market analysis and job revisions
36:45 “MoneyGPT” book and AI in daily life
41:56 AI’s impact on market crashes
45:23 AI, nuclear warfare, and empathy limitations
47:36 Historical nuclear war prevention examples
49:32 AI limitations in crisis management
51:01 MoneyGPT book release details and closing
On August 9, 2007 George Bush gave a press conference on the economy. He provided the following key points that sound similar to recent economic related comments from the White House.
“Fundamentals of our economy are strong..”
“..job creation is strong..”
“..real after tax wages are on the rise..”
“..inflation is low..”
“..the global economy is strong..”
“..there is enough liquidity in the system..”
Professor Steve Hanke discusses the most misunderstood economic events affecting global markets.
0:00 Introduction
0:35 Economic Events
6:07 Impact of Money Supply on Economy
10:08 Rising Rates and Their Impact
12:23 Gold Market Outlook
14:05 Two Big Wars and Their Economic Impact
18:48 Market Overvaluation
21:18 Investment Strategy Advice
23:12 Book Preview: Capital, Interest, and Waiting
27:27 The Concept of Waiting in Economics
39:45 Conclusion
The following describes a prelude to The Big Short 2.0. Video quality is problematic, but the audio is good. Fraud and corruption are expected to appear this summer.
Are $Trillions Of New Loans About To Be Pumped Into The Housing Market? | Melody Wright
0:00 – Less Home Equity Than Estimated
4:33 – Role of The GSEs
9:23 – Government Holds 85% Of Mortgages Now
13:16 – Does The Market Need More Home Equity Loans?
19:35 – What Are The Biggest Risks Here?
24:12 – Is This A Bad Idea?
34:48 – Is This Setting Up The Big Short 2.0?
41:09 – Melody’s Latest Housing Market Update
In this FOMC Press Conference Powell noted the following key points:
We have covered a lot of ground and the full effects of our tightening have yet to be felt.
Today we decided to leave our policy interest rate unchanged and continue to reduce our securities holdings.
Nearly all committee participants view it as likely that some further rate increases will be appropriate this year to bring inflation down to 2% over time.
Committee participants generally expect subdued growth to continue in our summary of economic projections. The projection has real GDP growth at 1.0% this year and 1.1% next year, well below the median estimate of the longer-run normal growth rate.
Inflation remains well above our longer-run 2% goal.
If the economy evolves as projected the median participant projects that the appropriate level of the federal funds rate will be 5.6% at the end of this year.
Reducing inflation is likely to require a period of below trend growth and some softening of labor market conditions.
In the FOMC Press Conference on December 15, 2021 Powell noted the following key points:
In addition, in light of the strengthening labor market and elevated inflation pressures, we decided to speed up reduction in asset purchases.
Beginning in mid-January, we will reduce the monthly pace or our net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities.
If the economy evolves broadly as expected, similar reductions in the pace of net asset purchases will likely be appropriate each month, implying that increases in our securities holdings would cease by mid-March – a few months sooner than we anticipated in early November.
Powell forgot to mention that stock markets around the world would collapse in the first half of 2022. Regardless of what Powell says in the June 14, 2023 Press Conference, Engrbytrade™ calculations indicate stock markets are expected to decline during the last half of 2023.
During the first eight minutes of the December 15, 2021 speech, Powell provided the following points.
The FOMC kept interest rates near zero and updated its assessment of the progress that the economy has made toward the criteria specified in the Committee’s forward guidance for interest rates.
In addition, in light of the strengthening labor market and elevated inflation pressures, we decided to speed up reduction in asset purchases.
Healthy financial positions of households and businesses
FOMC participants continue to foresee rapid growth
Summary of Economic projections shows the median projection for real GDP growth stands at 5.5 percent this year and 4 percent next year.
The economy has been making rapid progress towards maximum employment.
Job gains have been solid in recent months, averaging 378,000 per month over the last three months.
The unemployment rate has declined substantially – falling 6/10 of a percentage point since our last meeting and reaching 4.2 percent in November.
The recent improvements in labor market conditions have narrowed the differences in employment across groups, especially for workers at the lower end of the wage distribution as well as for African Americans and Hispanics.
Labor force participation showed a welcome rise in November – but remains subdued, in part reflecting the aging of the population and retirements.
In addition, some who otherwise would be seeking work report that they are out of the labor force because of factors related to the pandemic, including care giving needs and ongoing concerns about the virus.
At the same time, employers are having difficulties filling job openings, and wages are rising at their fastest pace in many years.
How long the labor shortages will persist is unclear, particularly if additional waves of the virus occur.
Looking ahead, FOMC participants project the labor market to continue to improve with the median projection for the unemployment rate declining to 3.5 percent by the end of the year
Compared with the projections made in September, participants have revised their unemployment rate projections noticeably lower for this year and next.
Supply and demand imbalances related to the pandemic and [to] the reopening of the economy have continued to contribute to elevated levels of inflation. In particular, bottlenecks and supply constraints are limiting how quickly production can respond to higher demand in the near term. These problems have been larger and longer lasting than anticipated, exacerbated by waves of the virus. As a result, overall inflation is running well above our 2 percent longer-run goal and will likely continue to do so well into next year.
While the drivers of higher inflation have been connected to the dislocations caused by the pandemic, price increases have now spread to a broader range of goods and services.
Wages have also risen briskly, but thus far, wage growth has not been a major contributor to the elevated levels of inflation.
We are attentive to the risks that persistent real wage growth in excess of productivity [growth] could put upward upward pressure on inflation.
Like most forecasters, we continue to expect inflation to decline to levels closer to our 2 percent longer-run goal by the end of next year.
The median inflation projection of FOMC participants falls from 5.3 percent this year to 2.6 percent next year. This trajectory is noticeably higher that projected in September.
We understand that high inflation imposes significant hardship, especially on those least able to meet the higher cost of essentials like food, housing, and transportation.
We are committed to our price stability goal.
We will use our tools both to support the economy and a strong labor market and to prevent higher inflation from becoming entrenched.
We will be watching carefully to see whether the economy is evolving in line with expectations.
The Fed’s policy actions have been guided by our mandate to promote maximum employment and stable prices for the American people.
In support of these goals, the Committee reaffirmed the 0 to ¼ percent target range for the federal funds rate. We also updated our assessment of the progress the economy has made toward the criteria specified in our forward guidance for the federal funds rate.
With inflation having exceeded 2 percent for some time, the Committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment.
All FOMC participants forecast that this remaining test will be met next year.
The median projection for the appropriate level of the federal funds rate is 0.9 percent at the end of 2022, about ½ percentage point higher than projected in September.
Participants expect a gradual pace of policy firming, with the level of the federal funds rate generally near estimates of its longer-run level by the end of 2024.
Of course, these projections do not represent a Committee decision or plan, and no one knows with any certainty where the economy will be a year or more from now.
At today’s meeting, the Committee also decided to double the pace of reductions in its asset purchases. Beginning in mid-January, we will reduce the monthly pace or our net asset purchases by $20 billion for Treasury securities and $10 billion for agency mortgage-backed securities.
If the economy evolves broadly as expected, similar reductions in the pace of net asset purchases will likely be appropriate each month, implying that increases in our securities holdings would cease by mid-March – a few months sooner than we anticipated in early November.
We are phasing out our purchases more rapidly because, with elevated inflation pressures and a rapidly strengthening labor market, the economy longer needs increasing amounts of policy support.
In addition, a quicker conclusion of our asset purchases will better position policy to address the full range of plausible economic outcomes. We remain prepared to adjust the pace of purchases if warranted by changes in the economic outlook. And, even after our balance sheet stops expanding, our holdings of securities will continue to foster accommodated financial conditions.
To conclude: We understand that our actions affect communities, families, and businesses across the country.
Everything we do is in service to our public mission. We at the Fed will do everything we can to complete the recovery in employment and achieve our price- stability goal.
On September 26, 2018, just before the Dow and S&P500 peaked on October 3, 2018 Jerome Powell said, “The economy is strong.” This was followed by a 19% decline in the S&P500 and a 24% decline in the Dow. On May 3, 2023 Jerome Powell said “The U.S. banking system is sound and resilient.” Another collapse is expected.
