In lieu of our usual FFTT, wanted to share our transcript of a lengthy conversation we had last week with Ed Harrison of Real Vision.  This interview touched on US fiscal spending, the Fed, inflation, the USD, the CNY, how the US is different than Japan, whether BTC is a threat to USD hegemony or not, and numerous other topics. We have “enhanced” this transcript with charts and articles to support the points we made

“We now have 3 disappointing jobs reports in a row…there’s a danger of double-dip recession” (page 2) “After 50 years of outsourcing the manufacturing base to Asia, the US is at the point of paying Americans to be consumers” (page 3) “Fed QE leads to bank deposit growth, which, in turn, leads to increased bank demand for USTs.” (page 7) “Senior Biden Administration officials have suggested western nations might support a major revaluation of the

The TBAC released a plan for financing record US deficits: Have the Fed create money, use that money to buy USTs from the US banking system, and then have the US banking system use those new reserves to finance the US’ 2021 deficit (buy USTs.) In plain English: Going forward, the key driver to US inflation will increasingly no longer be private bank loan growth, but rather, the US government’s willingness to spend money!  Any

“Policymakers, look in the mirror, it’s just starting” (page 2) Our key macro takeaway from the GameStop saga (page 4) Fascinating points made by Hoisington Management (page 5) Fed and other G4 Central Banks are tightening USD liquidity (page 6) Multiple potential indicators this week suggest that USD liquidity is tightening (page 7) China is “drinking the US’s milkshake” (page 8) “For the 1st time since 1979, Taiwan is invited to attend a US presidential

Key quotes from this interview with “Mr. X”: “Consensus appears to be that Biden will spend like crazy and the Fed will monetize whatever is needed, and while I agree that will likely be the end game later this year, virtually no one is discussing international and domestic investor moves away from the USD system and the possibility that the Fed and US might try to tighten monetary policy to defend that USD system for

Arguably the most important investing question for early 2021E = Will the Fed buy “enough” USTs? (page 2) Bank of Canada gives a preview of how markets might react to taper talk (page 4) FX-hedged UST yields suggest the USD has fallen enough to re-introduce stronger Japanese UST demand (page 5) Cracks already appear to be emerging in the most USD-sensitive and interest-rate sensitive sectors (page 7) Policymaker rhetoric around BTC intensified this week regarding