With longer-term U.S. interest rates rising and no plan to reduce the budget deficit, is a U.S. national debt crisis imminent? Topics covered include: Show Notes Moody's Ratings downgrades United States ratings to Aa1 from Aaa; changes outlook to stable—Moody's Ratings Research Update: United States of America Long-Term Rating Lowered To 'AA+' On Political Risks And Rising Debt Burden; Outlook Negative—S&P Global Interest Expense and Average Interest Rates on the … [Read more...]
503: U.S. Stocks Have Never Been This Overhyped or Expensive
What are the tangible and intangible factors that have contributed to long-term U.S. stock market outperformance compared to the rest of the world? Despite these advantages, why might we still want to continue to be globally diversified? Show Notes American productivity still leads the world—The Economist The Outlook for Long-Term Economic Growth by Charles I. Jones—Federal Reserve Bank of Kansas City How Much Will Global Warming Cool Global Growth? by Ishan B. Nath, Valerie A. … [Read more...]
433: What Happens If The U.S. Defaults On Its Debt? Here’s Why It Won’t
What are the grave consequences if the U.S. debt ceiling isn't increased and the government defaults? What would the Federal Reserve and the Executive Branch do to prevent default if Congress doesn't act? Topics covered include: Show Notes The Debt Limit Since 2011—Congressional Research Service 7 doomsday scenarios if the U.S. crashes through the debt ceiling by Jeff Stein—The Washington Post A debt ceiling default would send the U.S. housing market back into a deep … [Read more...]
295: Federal Reserve Insolvency and Monetizing the National Debt
How central banks can become insolvent and why it can lead to hyperinflation. What are four ways the Federal Reserve and the U.S. Treasury could monetize the national debt. Topics covered include: Show Notes Credit and Liquidity Programs and the Balance Sheet: Federal Reserve liabilities—Board of Governors of the Federal Reserve System As of and for the Years Ended December 31, 2019 and 2018 and Independent Auditors’ Report—The United States Federal Reserve System Different … [Read more...]
245 Plus: March 2019 Mid Month Update, Inverted Yield Curve, Puts on ETFs, and a Private Lending Limited Partnership
In Plus episode 245 for the week of March 23, 2019, we look at investment conditions as of mid-March including flash PMI reports. We revisit the accuracy of inverted yield curves in predicting recessions, and what is different this time now that the yield curve has inverted. We look at why long term interest rates could increase during the next recession. David discusses his recent trade to buy puts on two non-investment grade fixed income ETFs. Finally, we look at a limited partnership … [Read more...]
241: Do Budget Deficits Matter? Modern Monetary Theory Explained
Why modern monetary theory isn't worried about federal budget deficits, why budget deficits never go away and what are the risks if budget deficits get too large. We also explore what else proponents of modern monetary theory believe. In this episode you’ll learn: What are the core principles of modern monetary theory.How federal budget deficits increase private sector savings.What is crowding out as it relates to interest rates.What are the risks of running too large of budget … [Read more...]
169: The Debt Ceiling—What Happens If the U.S. Defaults
What could happen if the U.S. Congress doesn't raise the debt ceiling and defaults on U.S. financial obligations. In this episode you’ll learn: Show Notes The Debt Limit: History and Recent Increases - D. Andrew Austin - Congressional Research Service U.S. Department of Treasury debt limit documents Debt Limit: Myth vs. Fact - U.S. Department of Treasury Here's What Happened the Last Time the U.S. Defaulted on Its Debt - Matthew O'Brien - The Atlantic The … [Read more...]
157: The Most Important Economic Question of Our Time
Why the likelihood of a future fiscal crisis sparked by the national debt depends on whether there is a limited or an unlimited supply of money. Is it possible the federal government's endless borrowing could crowd out the private sector and harm the economy? In this episode you’ll learn: Show Notes Congressional Budget Office 2017 Long-term Budget Outlook Going for Broke: Deficits, Debt, and the Entitlement Crisis - Michael D. Tanner Bernanke’s Paradox: Can He Reconcile … [Read more...]
MNY042 Plus: Federal Governments Outsource Money Creation to Banks
In this week's Money For the Rest of Us Plus episode, I explain that while governments can theoretically create money by spending that in practice they have outsourced money creation to banks. I also share a paper that helps explain much of what was covered in Episode 42. Finally, I discuss the rebound in oil prices, the strong jobs report and my bond portfolio. The episode length is 12 minutes. … [Read more...]
4: Seesaws, Budget Deficits and the National Debt
A seesaw is the perfect analogy to understand many aspects of the economy and investment markets. For a seesaw to work properly, you need at least two people‒one on each side. When looking at the economy, we should always be asking, "Who is on the other side of the seesaw?" In this episode, we apply the seesaw analogy to federal budget deficits, the national debt, and trade. You'll learn: What seesaws have to do with investing and the economy.The importance of having an … [Read more...]
