No one does it like Kate Welling – we're talking financial-world interviews here, "interrogatory journalism," as Kate would put it – and her interview of Dr. Lacy Hunt, which you're about to read, is in my opinion one of the best she's ever done, and the best I've seen with Lacy.
Kate's interviews, which she publishes in welling@weeden, normally get seen only by the institutional investors and other market pros who are her clients; but she has kindly allowed me to share this one, in which Lacy tackles the same fundamental challenge I've been writing about these past few years: How do we deal with the economic crisis we've brought upon ourselves through the buildup of too much debt? How do we get out of the hole we've been digging, when the tried-but-not-so-true Keynesian (and Bernankean) methods just get us in deeper? How do we work through the end game of the Debt Supercycle, when there are seemingly no good or easy choices left, and find our way forward into an era of renewed growth and hope?
Lacy doesn't give us The Answer, but what he does give us that is really helpful is a deep historical understanding of economic forces and the key players who have tried to manage them, guys like Irving Fisher, who completely missed the call of the Great Depression, but learned a thing or two from it. Bottom line: "... if Fisher is correct, and if we try to solve our current problems by getting deeper in debt, then what Fisher is saying is the additional indebtedness doesn't make us stronger, doesn't increase our options. It makes us weaker, reduces our options."
My answer to everything tonight, as my brain, which is still in Cape Town, tries to catch up with my body in Dallas: take in a Mavs game!
Your giving microeconomic forces their due analyst,
John Mauldin, Editor
Outside the Box
Face The Music
Road Back To Prosperty Is Through Shared Sacrifice, Says Lacy Hunt
Last time Dr. Lacy Hunt, the chief economist at Austin, TX-based Hoisington Investment Management was interviewed in these pages, in July, 2009, the rebound in stocks from their crisis lows was only months old — yet he remained firmly in the bull camp — on bonds. As it turns out, Lacy, and the entire portfolio management team…