John Mauldin, Editor
Outside the Box
Hoisington Quarterly Review and Outlook – First Quarter 2015
Characteristics of Extremely Over-Indebted
- Transitory upturns in economic
growth, inflation and high-grade bond yields cannot be sustained because
debt is too much of a constraint on economic activity.
- Due to inherently weak
aggregate demand, economies are subject to structural downturns without
the typical cyclical pressures such as rising interest rates, inflation
and exhaustion of pent-up demand.
- Deterioration in productivity
is not inflationary but just another symptom of the controlling debt
- Monetary policy is ineffectual,
if not a net negative.
- Inflation falls dramatically,
increasing the risk of deflation.
- Treasury bond yields fall to extremely low levels.
The Non-Sustainability of Transitory Gains
Downturns Without Cyclical Pressures
Faltering Productivity is Not Inflationary
Monetary Policy Is Ineffectual
Inflation Falls So Much That Deflation Risk Rises
Real Treasury Bond Yields
Overview of Present Conditions
Lacy H. Hunt, Ph.D.