Is there a “limit to growth” as exposed in the Meadows Report? Our global system works on “growth” of production to generate employment and income, which takes several forms: wages, incomes for enterpreneurs and stock holders, capital gains, rent and interest income, which themselves finance State income (taxes!) and other institutional incomes. Private and public pension funds run on “total returns” from assets, themselves tied closely or loosely in the long run to the underlying “cake” that we all “eat”, which is also called Gross Domestic Product: the total economic value generated per year.

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Grinding to a halt: Total Factor Productivity for USA, Germany, UK, France, Japan, OECD

The total “cake” we produce and…


But relax: it is a low probability event!

As I explained in several past posts, ultimately the Central Bank of any country can stabilize market conditions when the shit hits the fan under ONE very important condition: inflation is under control or at least tolerable. This is the case now, as can be seen by the graph of the inflation in core personal consumption expenditure:

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FRED tool of Federal Reserve of Saint Louis

In a rare and quite low probability event, something extreme happened in short term government debt (“Treasuries”) in March 2020: lots of sellers started selling their T-bills en-masse to get the cash for short term…


Interest rates are at long term historical lows and stock pricing is historically high, based on various metrics. Why and what is likely to happen?

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Asset prices and “yields” go in opposite directions

It is important to start with the basics: asset prices and “interest rates” go in opposite directions, or more precisely, asset prices and “expected yields” go in opposite directions. Indeed, if you pay the very same asset 100$ instead of 200$, it is a better “deal” at 100$: you pay less for the same future expected value. Hence, when asset prices go UP, expected yields go down…


The virus issues are causing a complete and extremely rapid social breakdown into fear, panic, paranoia, and finger pointing. This is due to a combo of social media, major media outlets, and politicians all accepting the complete breakdown os social fabric while being inept or clueless (or both) OR adding fuel to the fire of division and paranoia (Trump style). I would dare say all are wrong in their respective approaches, but we could “hold things together” for a while by helping individuals directly.

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And I am FOR the closing of schools and many other measures. But there are things…


The “virus recession” and the policy response to it is going to bring record deficits in dollar terms AND near-record levels in % of GDP as well. For many countries, this comes on top of an already-high government debt. Many people seem to wonder if there is some magic and we can just go on like this no problem. Here is a text to think clearly on this topic.

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What does NOT matter is the dollar amount of debt. This must stop. If a person earning 10 million per year and without any other debts has a debt of 1…


Each year, the standard flu kills about 45 000 people in the USA alone. We barely talk about it. The path of the standard flu expansion and deaths in the population would look much like the coronavirus graph if we traced it. Now we are trying to “flatten the curve” of the Coronavirus expansion with various “social distancing” policies. What is the cost?

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Of course the Covid-19 case has novelties relative to the standard seasonal flu and they are non-negligible:

  1. There are no vaccines.
  2. It is not fully understood.
  3. It spreads more quickly and easily.

There‘s more, like it seems…


As I wrote in my last few posts, the impact of “the virus recession” is likely to be brutal and huge, BUT short-lived. This is because the “fundamentals” were generally fine before the recession started and are likely to be generally fine once it is over. There are however a few risks that this recession could bring about and must be kept in mind, especially in terms of what to expect once we enter 2021.

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Governments and central banks are all over this and will throw everything they have and the kitchen sink at it in their “whatever it takes”…


Before the outbreak of the virus, all was well and fine in general as far as “the economy” goes: low unemployment, plenty of jobs, etc. Sure there were structural challenges for all countries, but we were not in crisis mode and global recession. Will this pass quickly? Will it all be “water under the bridge”?

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The Economic Fundamentals

The fundamentals of “the economy” are that we produce stuff, called “goods and services” and we consume that “stuff” directly or indirectly in one way or another. …


Are you ready to see what it looks like when a complex interconnected system gets a wrench thrown in its finely-tuned moving parts? This is what is about to happen. This is a follow-up to my previous post on this subject, so please read that post first. Here is what I see coming…

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The rate of growth of the virus in the USA is astronomical. At current rate, there will be at least 100 million infected and 1 million deaths by May 1st just for the USA. …


A microscopic virus is bringing the global economy to its knees. Lets understand what is going on and see what could happen.

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Ready for a crash

The global economy was ripe for a shock: stock prices were sky-high in the USA as per the CAPE ratio and other measures, unemployment rates were at 4o-year lows in many countries such as the USA, Germany, Japan, Canada, the UK, and many others.

When the economy reaches “full capacity” and stock indices are very high, any shock can launch a “run for the exits”, which then launches “negative feedback loops” between financial markets…

Pascal Bedard

Sharing thoughts on economics, finance, business, trading, veganism, animal liberation, and life lessons. Founder of www.PascalBedard.com

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