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July 12, 2021 | Hoisington Q2 Quarterly Review and Outlook
Danielle Park
Four pages of big picture insight, Hoisington Investment Management’s Second Quarter Review and Outlook “Too Much Debt” is now available here. Spoiler alert:
The current economic growth and inflation rates of 2021 will be the highest for a very long time to come. The main obstacle to a return to sustained growth in the standard of living, extreme over-indebtedness, was dramatically worsened by the multiple rounds of fiscal stimulus which has caused the temporary improvement in economic growth and inflation in the second quarter. No pathway out of this trap exists as long as the overreliance on debt remains the only tool of monetary and fiscal policy. The situation is no different in Japan and Europe. Thus, while long Treasury yields can increase over the short run, the fundamentals are too weak for yields to stay elevated. More debt does not cure a subpar economy mired in a debt trap. Given the above, our view is that the trend in long-term Treasury yields remains downward.
Hoisington chief economist Dr. Lacy Hunt spoke with Jay Martin for the Cambridge House Q2 Wrap Up in June, here is a direct video link.
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Danielle Park July 12th, 2021
Posted In: Juggling Dynamite
I disagree with Dr. Hunt. Inflation is a monetary phenomenon. Perhaps not always in the short term but always in the long term. The proof: try and find a nice house for $10,000. Easy to do in 1956, impossible in 2021.