Richard Duncan is in Thailand where the virus never took hold despite the fact that thousands of Chinese visited prior to the outbreak. Assuming the virus doesn’t return, we’ll be viewing this as one of the great economic experiment in history. In the US, credit growth has been the great driver of economic expansion. When credit growth slowed or ended, we saw recessions take hold. During 2008-09 credit growth slowed and the Great Recession ensued. Then the Fed reflated with asset inflation. Now we’re in a new paradigm. The virus has been a huge blow to the credit based economic growth cycle. The Fed is doing everything in its power to keep the credit bubble growing. What will it look like after the Virus? If we let everything collapse then the government’s debt will explode anyway. $5-10 trillion in new debt is coming. The Fed will have to underwrite it. Their balance sheet has expanded 52% in the past 6 weeks. What would happen it there’s no new inflation and the world doesn’t end? If not, we’re living in a new economic environment. It will be a brave new world. Make sure you take advantage of Richard’s special offer to MacroWatch, just use the code FACTS, and sign up today.
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