We are in very interesting times. We live what is probably the most surprising bull market in history. Excess of demand-side policies, massive liquidity injections, and low rates have zombified the economy and driven debt to all-time highs, while the economic slowdown is evident.
Continue reading Market Euphoria, Global SlowdownAll posts by Daniel Lacalle
Why We Should Worry About Stagflation
Central banks have tried to create inflation at any cost under the misguided view that this will boost growth and help reduce the debt burden. Just as a pilot driving a Ferrari with the instructions of a Ford T, central banks are pushing the accelerator looking at the rearview mirror and screaming “go faster, we have not crashed yet!”.
Continue reading Why We Should Worry About StagflationU.S. Budget: Spending Is The Problem
Every time there is a budget debate, politicians from both parties will discuss the deficit and spending as if the first one did not matter and the latter could only increase. However, the main problem of the US budget in the past four decades is that total outlays rise significantly faster than receipts no matter what the economic growth or revenue stream does. For example, in the fiscal years 2018 and 2019 total outlays rose mostly due to mandatory expenses in Social Security, Medicare, and Medicaid. No tax revenue measure would have covered that amount.
Continue reading U.S. Budget: Spending Is The ProblemCoronavirus: Is This The Black Swan Many Feared?
The slump in energy commodities and copper shows the fragility of the global economy and the risks to the consensus’ reflation trade. It is easy to blame the recent fall of commodity prices on the coronavirus outbreak, but the weakness was already evident before the outbreak.
Continue reading Coronavirus: Is This The Black Swan Many Feared?