We havent talked much about the economy of late. If we listen to Powell, things are on fire. Of course, when one looks at two metrics, it could be led to believe that.
In this video I discuss how the situation in England is no surprise and how pension funds are getting slammed. This is going to cause even more problems down the road. As for the US, there is still a lot to be leery about. We are watching inventories along with consumer demand as a metric of what will be taking place.
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And those pension funds, how much money would they be talking about?
The numbers were never good but I think the countries will run out of bonds eventually. There is only so much supply out there due to all the QE done.
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Summary:
In this video, the speaker explores various economic indicators pointing towards a challenging economic scenario. He discusses issues such as growing inventories in retail due to a decline in demand, the impact of the end of stimulus checks, struggles faced by pension funds, and potential repercussions in the bond market. The speaker also touches on the velocity of money and how a lack of movement in the financial system can hinder economic growth. He concludes by cautioning about an inevitable negative turn in the economy and the need to address underlying issues.
Detailed Article:
The episode delves into the current economic landscape, focusing on multiple factors affecting the overall financial health. The speaker begins by highlighting the increase in retail inventories, attributing it to a combination of excessive product supply and diminishing consumer demand. This situation serves as a key indicator of the broader economic state, reflecting the challenges faced by major retail players like Walmart, Target, Gap, and Amazon.
The cessation of stimulus checks from the government, coupled with rising essential costs like rent and mortgages, has led to a reduction in consumer spending. The speaker emphasizes the impact of this shift on the economy, underscoring the significance of consumer behavior in driving economic activity. He explains how previous stimulus measures fueled spending, especially on goods due to restrictions on services, and how the current scenario of debt reliance is unsustainable.
Moving forward, the discussion shifts towards the strain faced by pension funds, particularly in the UK, due to the need to sell bonds in a declining market. The speaker predicts a ripple effect across Europe, echoing the challenges encountered by pension systems in other major European economies like Italy and Germany. This trend highlights the interconnectedness of global financial systems and the potential risks associated with a widespread pension fund crisis.
Furthermore, the speaker touches upon the concept of the velocity of money, stressing its importance in facilitating economic expansion. He highlights a decades-long trend of sluggish money circulation, not only in the US but also in the EU and Japan, as a hindrance to robust economic growth. The lack of fluid capital movement impedes investments, job creation, and overall economic progress, signaling a fundamental flaw in the financial infrastructure.
In a cautionary tone, the speaker warns about an impending negative economic shift, dispelling any overly optimistic views about the current economic situation. He suggests that a potential downturn may be necessary to address underlying issues and eliminate unviable elements from the system. The episode concludes with a sobering reminder of the economic challenges ahead and the need for vigilance in navigating uncertain financial waters.