Money For the Rest of Us

The House of Cards: Evaluating Economic and Financial Warning Signs

Sep 27, 2023

The podcast discusses economic and financial warning signs to pay attention to, the impact of government debt and interest rates, why central banks don't control the stock market, and the potential for the dollar to plummet. It emphasizes the importance of basic freedoms and goods, explores the term premium and fiscal situation in the US, and highlights the influence of central banks and the significance of travel and creation in the financial system.

27:27

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Quick takeaways

Assessing basic freedoms, fundamental goods, interest rates, and the behavior of the private sector are crucial for evaluating the overall health of the financial system.

Monitoring trends in interest rates, national debt, and other indicators while considering the stability and vibrancy of local communities and individual freedoms is key to understanding the financial system.

Deep dives

Assessing Economic and Financial Warning Signs

The podcast episode delves into evaluating economic and financial warning signs. It highlights the prevalence of fear mongering and the importance of distinguishing legitimate concerns from exaggerated predictions. The host emphasizes the need for careful analysis and consideration of key indicators that reveal whether the economy and financial system are truly heading towards a major disaster. The episode addresses specific listener questions related to the stock market, national debt, political stability, and the dominance of the US dollar. Throughout, the focus is on assessing basic freedoms, fundamental goods, interest rates, and the behavior of the private sector as crucial barometers of the overall health of the financial system.

Introduction

2min

The Financial System and the Concept of Money

8min

The Importance of Basic Freedoms and Goods

8min

The Term Premium and United States Fiscal Situation

6min

Influence of Central Banks, Reserve Currencies, and Diversification

4min

The Importance of Travel and Creation in the Financial System

2min

What are the economic and financial system early warning signs that we should heed rather than get caught up in fearmongering? When should we start to worry about ballooning budget deficits, the national debt, a currency collapse, or the stock market?

Topics covered include:

Signals to monitor to see if things are falling apart
How much government debt is too much and why interest rates are key
Why central banks don't control the stock market
Why the dollar remains dominant, and what has to change for it to plummet in value

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Show Notes

The Dawn of Everything: A New History of Humanity by David Graeber and David Wengrow—Macmillan

How Much Is Enough? Money and the Good Life by Robert Skidelsky and Edward Skidelsky—Penguin Random House

U.S. National Deficit—Treasury.gov

Budget and Economic Data—Congressional Budget Office

Japan's growing debt mountain: Crisis, what crisis? by Andrew Sharp—Nikkei Asia

The Dollar: The World’s Reserve Currency by Anshu Siripurapu and Noah Berman—Council on Foreign Relations

Currency Composition of Official Foreign Exchange Reserves—International Monetary Fund

Total credit to non-bank borrowers by currency of denomination: US dollar—BIS