Is it possible for Our Government to maintain A resilient Economy through policy?
Ed Dowd I was among the reputable macro analysts who incorrectly predicted the recession in 2022 and 2023.
Mr. Dowd, who used to manage BlackRock’s money, has been trading on Wall Street for a long time and is now the founder of Phinance Technologies, was featured on the Julia La Roche podcast this week: In what ways will The upcoming Economic Recession differ from The past one?
Mr. Dowd claims that two unprecedented events, namely the record-setting deficit spending during peacetime and record immigration levels at eight to ten times normal levels, were responsible for keeping us out of recession
The $2 trillion deficits kept asset prices high and enabled a significant number of people to keep their jobs. The mass immigration resulted in an immediate surge of cash flows, thanks to the support provided by NGOs and governments, as well as money given directly to immigrants that was spent without delay
If it were nearly sustainable, every government would simply spend its way to prosperity. Governments’ persistent efforts to achieve prosperity lead to an escalation in economic crises. There are no exceptions
The government’s inability to stimulate the economy for good is being curtailed by a decrease in immigration and spending
Mr. Dowd restates his oblique assertion that the BLS has been grossly overestimating job numbers, and that when the real numbers are revealed, the stock market will react negatively
Why Recessions Are Good
Although recessions are a significant issue for all individuals, they can also be advantageous
The middle class can now afford to buy homes more easily due to the lower asset prices during recessions
Inefficient businesses or deadwood are eliminated during recessions
The reduction of interest rates during a recession leads to an increase in housing affordability, while government debt financing is less expensive (thereby reducing deficits)
AF ew Other Random questions can be asked to you by me. Mister Dowd::
Stock The prices will experience a significant shift, so save some dry powder to invest in it
Gold The possibility exists that prices could fall initially before they can increase again if investors were forced to sell gold to meet margin calls, as happened after the 2008 crisis
The dollar The value will decrease before a dollar shortage and banks’ cessation of lending due to the recession
Inflation The decrease in government funds and rents (30% of CPI) incurred by immigrants will result in a decline
The use of DOGE has the potential to decrease rates In the event that it indicates a genuine aptitude to reduce spending and manage deficits
Originally published at Https: //www. Jvmlending. Com On February 7,2025.