“Dedollarisation?” 🛑 THIS is what EVERYONE is MISSING | George Gammon

Summary

In the J Martin Show, George Gamon, the 'Rebel Capitalist,' discusses macroeconomic trends, focusing on treasury and currency markets. He shares his insights on the yield curve's inversion and its historical correlation with recessions, emphasizing the importance of economic indicators. Gamon also addresses the potential impact of market corrections and the Fed's role in economic cycles. He outlines his investment strategy, including a focus on gold, T-bills, and call options, while cautioning about the risks of relying solely on government intervention and the potential consequences for the economy.

Takeaways

• 📉 The recent market correction confirms existing economic indicators, particularly the significance of the treasury curve as a recession predictor.
• 🔄 The inversion and un-inversion of the yield curve are seen as a gradual process, often leading to a recession when the curve is no longer inverted.
• 💼 Insiders in the banking and corporate world, with access to information not available to the public, are believed to influence the yield curve by buying long-term treasuries in anticipation of economic downturns.
• 🌐 The global nature of financial markets means that local economic issues, such as those in Japan, can have broader implications affecting the velocity of dollar liquidity.
• 💡 The idea that the Federal Reserve can prevent a recession by cutting rates is challenged; historically, rate cuts have occurred in response to recessions, not as a preventative measure.
• 💸 The conversation around dollarization and the potential for a shift away from the US dollar in global trade is complex and contingent on various economic factors.
• 🏦 Banks play a critical role in the creation and destruction of money supply through lending practices, impacting the broader economy and financial stability.
• 📊 The treasury market is seen as an indicator of future growth and inflation expectations rather than just a reflection of supply and demand dynamics.
• 🚨 Concerns about the potential unwinding of the yen carry trade and its impact on global financial markets highlight the interconnectedness and fragility of the global economy.
• 🌳 The focus on personal financial planning and diversification, including commodities and gold, is suggested as a prudent strategy in the face of economic uncertainty.

Q & A

What is the primary focus of the J Martin Show?

The J Martin Show focuses on dissecting the greatest minds in geopolitics and finance to better understand the world's current state.

How does George Gammon approach macroeconomic analysis?

George Gammon approaches macroeconomic analysis by digging deeper than most to get to the root cause of economic events and trends.

What does George Gammon consider the most powerful economic indicator?

George Gammon considers the treasury curve as the most powerful economic indicator due to its historical correlation with recessions.

What is the historical correlation between an inverted yield curve and a recession?

Since the 1950s, an inverted yield curve has preceded almost every recession, making it a strong predictor of economic downturns.

How does George Gammon view the Federal Reserve's role in economic cycles?

Gammon believes the Federal Reserve typically drops interest rates in response to a recession rather than to prevent one, and that their actions often follow market trends rather than lead them.

What is George Gammon's perspective on the current state of the US economy?

Gammon suggests that the current soft economic data, combined with the yield curve's behavior, indicates a high probability of a recession or hard landing in the medium term.

What is the significance of the yield curve un-inverting according to George Gammon?

The un-inversion of the yield curve is seen as a confirmation of economic concerns and a potential precursor to a recession, rather than a sign of economic improvement.

How does George Gammon interpret the actions of financial insiders in relation to the economy?

Gammon believes that financial insiders, with their advanced information and connections, are often early indicators of economic trends, as they adjust their investments in response to upcoming changes.

What is George Gammon's view on the potential impact of a global recession on the US dollar?

Gammon suggests that while there could be short-term inflationary pressures if foreign holders of dollars repatriate them, the long-term impact could be a strengthening of the dollar due to reduced global demand for US currency.

What investment strategy does George Gammon recommend in the current economic climate?

Gammon recommends a cautious approach, starting with a gold allocation for insurance, followed by conservative investments like T-bills, and using call options to maintain upside potential while waiting for better investment opportunities.

How does George Gammon perceive the role of government intervention in the economy?

Gammon is critical of excessive government intervention, suggesting that it leads to economic distortions and inefficiencies that ultimately decrease the standard of living for the average person.