Episode 25
Lacy Hunt | The Global Macro Forces of Debt, Deflation, and Demographics on Markets and the Economy
Episode 25
Lacy Hunt
Lacy Hunt | The Global Macro Forces of Debt, Deflation, and Demographics on Markets and the Economy
summary
In this week’s episode of Hidden Forces, host Demetri Kofinas speaks with Lacy Hunt, Executive Vice President of Hoisington Investment Management Company. For nearly 14 years, Dr. Lacy Hunt was Chief U.S. Economist for HSBC Group, one of the world’s largest banks. He was also Executive Vice President and Chief Economist at Fidelity and held the position of Senior Economist for the Federal Reserve Bank of Dallas.
Global Macro is an investment strategy based on the interpretation and prediction of large-scale events. Many such events are driven by chronic conditions, including debt deflation, structural demographics, and low savings rate. What role have governments played in amplifying and perpetuating the impact of these forces by bailing out financial markets and flooding the banking system with cheap money?
In order to answer this question, we must rely on a panoply of data, statistics, and econometrics – bank lending, money velocity, monetary aggregates, disposable income, liquidity coverage ratios, and credit spreads. How will we navigate the next recession, having wasted the last 8 years chasing the shadows of wealth through buy-backs, stock appreciations, and financialization? Where will the demand come from in a consumer-led economy still fighting the forces of debt-deflation with diminishing savings rates and rising interest expenses? How will we manage our unfunded liabilities, mortgage payments, rents, and college tuitions, with such poor structural demographics? And how does all of this tie back to the resurgence of populism and the escalation of geopolitical tension in a world bound together by our liabilities but torn apart by the specter of conflict, the failures of diplomacy, and the expediency of war?
Producer & Host: Demetri Kofinas
Editor & Engineer: Stylianos Nicolaou
Join the conversation at @hiddenforcespod
bio
Dr. Lacy H. Hunt, an internationally known economist, is Executive Vice President and Chief Economist of Hoisington Investment Management Company (HIMCO), a firm that manages $4 billion for pension funds, endowments, insurance companies and others.
Lacy is the author of two books, and numerous articles in leading magazines, periodicals and scholarly journals. Included among the publishers of his articles are. Barron’s, The Wall Street Journal, The New York Times, The Christian Science Monitor, the Journal of Finance, the Financial Analysts Journal and the Journal of Portfolio Management. The Board of Governors of the Federal Reserve System and the Dallas Federal Reserve Bank both published his research.
The Wall Street Journal, The New York Times, Business Week, Barron’s, Time, Newsweek, U.S. News and World Report, Investor’s Business Daily and many other domestic periodicals have quoted Lacy. Among the foreign press, Lacy’s views have appeared in The Financial Times, the Nihon Keizai Shinbun, the South China Post, The International Herald Tribune and The Straight Times. He has been a guest on PBS on The Nightly Business Report, The News Hour, and Wall Street Week. He has been on CNNshows Moneyline, and Business Morning and on CNBC’s Squawk Box and World Business. He has also appeared on CBS Evening News, NBC’s Today Show, and ABC’s World News Tonight.
He has made numerous presentations in all the major financial and economic centers in Europe, Asia, the Middle East, Africa and North America. He has appeared on radio and television outside of the United States, including The BBC, NHK and TV Tokyo. Dr. Hunt has testified before various committees of Congress, including House Ways and Means, Senate Finance and Senate Banking.
Previously, Lacy was Chief U.S. Economist for the HSBC Group, one of the world’s largest banks, Executive Vice President and Chief Economist at Fidelity Bank and Vice President for Monetary Economics at Chase Econometrics Associates, Inc. Lacy considers himself fortunate that he had the opportunity of working for two firms led by great bankers: David Rockefeller (Chase) and Sir William Purvis (HSBC).
A native of Texas, Lacy has served as Senior Economist for the Federal Reserve Bank of Dallas. While at the Dallas Fed, he served on the Federal Reserve System Committees: Financial Analysis and International Economics. He successfully completed the training program at the Federal Reserve Bank of New York. When he entered the Fed, William McChesney Martin was grappling with a severe inflation and when he left Author Burns was also trying to contain rampant price increases, virtually the opposite of the challenges facing Janet Yellen and the Fed today. At the Fidelity Bank of Philadelphia he had the responsibility for managing the Trust Department’s Comingled Fixed Income Fund in the 1970s and early 1980s. This fund produced one of the highest returns during this inflationary era.
He earned his BA from Sewanee: The University of the South (1964), his MBA from the Wharton School of the University of Pennsylvania (1966), and his Ph.D. in Economics from the Fox School of Business and Management of Temple University (1969). From Sewanee, he received an honorary Doctor of Civil Laws in 2013 and their Distinguished Alumnus Award in 2016. Lacy served on the Board of Trustees of Temple University from 1987 to 2010 and is now an honorary life trustee.
He received the Abramson Award from the National Association for Business Economics for “outstanding contributions in the field of business economics.” He is a life member of the American Finance Association. He was a member of the Economic Advisory Board of the American Bankers Association and Chairman of the Economic Advisory Board of the Pennsylvania Bankers Association. He served on the Monetary and Fiscal Policy Affairs Committee of the National Chamber of Commerce. He was a member of The Money Marketeers of New York University.
The honorary doctorate from Sewanee reads “His career path has included stops at some of the most powerful financial institutions in the country, where he has not only influenced internal investment policy but has left an indelible mark on the nation’s economic policy through his publications, speeches and appearances in the national media.”
Lacy and his wife JK (Janet Kay) live in Austin, Texas. They have four daughters, two sons and three grandsons.
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Sed nimis multa. Duo Reges: constructio interrete. Egone non intellego, quid sit don Graece, Latine voluptas? Nam de isto magna dissensio est.
Si de re disceptari oportet, nulla mihi tecum, Cato, potest esse dissensio. Illa sunt similia: hebes acies est cuipiam oculorum, corpore alius senescit; Nummus in Croesi divitiis obscuratur, pars est tamen divitiarum. Sed tamen enitar et, si minus multa mihi occurrent, non fugiam ista popularia. Non semper, inquam; Nam adhuc, meo fortasse vitio, quid ego quaeram non perspicis.
Quamquam in hac divisione rem ipsam prorsus probo, elegantiam desidero. Ex quo, id quod omnes expetunt, beate vivendi ratio inveniri et comparari potest. Itaque hic ipse iam pridem est reiectus; Quid enim de amicitia statueris utilitatis causa expetenda vides. Collatio igitur ista te nihil iuvat. Suo enim quisque studio maxime ducitur. Sed ne, dum huic obsequor, vobis molestus sim. Egone quaeris, inquit, quid sentiam?
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Quae cum magnifice primo dici viderentur, considerata minus probabantur. Quid igitur, inquit, eos responsuros putas? Nec vero sum nescius esse utilitatem in historia, non modo voluptatem. Nunc vides, quid faciat.
Cur igitur, inquam, res tam dissimiles eodem nomine appellas? Quae cum magnifice primo dici viderentur, considerata minus probabantur. Quid, cum fictas fabulas, e quibus utilitas nulla elici potest, cum voluptate legimus? Idem etiam dolorem saepe perpetiuntur, ne, si id non faciant, incidant in maiorem. Tu autem negas fortem esse quemquam posse, qui dolorem malum putet. Quid igitur, inquit, eos responsuros putas? Intrandum est igitur in rerum naturam et penitus quid ea postulet pervidendum; Sic, et quidem diligentius saepiusque ista loquemur inter nos agemusque communiter. Consequens enim est et post oritur, ut dixi. Idemque diviserunt naturam hominis in animum et corpus.
Sed venio ad inconstantiae crimen, ne saepius dicas me aberrare; Si longus, levis. Non igitur de improbo, sed de callido improbo quaerimus, qualis Q. Tollitur beneficium, tollitur gratia, quae sunt vincla concordiae. Ut alios omittam, hunc appello, quem ille unum secutus est. Nec mihi illud dixeris: Haec enim ipsa mihi sunt voluptati, et erant illa Torquatis. Haec et tu ita posuisti, et verba vestra sunt. Quae fere omnia appellantur uno ingenii nomine, easque virtutes qui habent, ingeniosi vocantur. Hosne igitur laudas et hanc eorum, inquam, sententiam sequi nos censes oportere? Nondum autem explanatum satis, erat, quid maxime natura vellet. Et quidem illud ipsum non nimium probo et tantum patior, philosophum loqui de cupiditatibus finiendis. Me igitur ipsum ames oportet, non mea, si veri amici futuri sumus.
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Ne tum quidem te respicies et cogitabis sibi quemque natum esse et suis voluptatibus? Ea possunt paria non esse. Isto modo, ne si avia quidem eius nata non esset. Velut ego nunc moveor. Theophrasti igitur, inquit, tibi liber ille placet de beata vita? Apparet statim, quae sint officia, quae actiones.
Et quidem iure fortasse, sed tamen non gravissimum est testimonium multitudinis. Tecum optime, deinde etiam cum mediocri amico. Itaque haec cum illis est dissensio, cum Peripateticis nulla sane. Duae sunt enim res quoque, ne tu verba solum putes. Quae quo sunt excelsiores, eo dant clariora indicia naturae.