Washington Post columnist Neil Irwin stopped by to discuss his book, The Alchemists: Three Central Bankers and a World on Fire. It's a great read on the history of central banks, including how they responded to the financial crisis and the challenges they face in the future.

In this brief video segment Neil explains why housing, credit standards, and financial assets are key things to watch as we gauge the recovery and look to the future. A full transcript follows the video.

Morgan Housel: When you're looking at a possible recovery, what are three variables that you look at?

Neil Irwin: Housing is the big one. Housing is amazing because it's been so central to this entire panic and crisis and recovery, the last several years. It's amazing.

Residential investment in the United States, it's about 2.5% of GDP right now. The post-war average is more like 4%, so that's some room to grow right there without getting into bubble territory, without getting into some real imbalances. There's room for housing activity and housing construction to grow a lot. I think there are signs that's finally starting to pick up and starting to happen.

Elsewhere -- in credit availability, credit standards -- banks are starting to get more comfortable in their assets and their capital position. They're starting to get to the point where the credit system, the banking system, can be supportive of growth in a way that it hasn't been for the last five years, ever since the crisis.

Finally, there's all kinds of financial assets. This one's more controversial because of course the stock market, other kinds of financial securities, they're more narrowly held. It's more things held by the wealthy and upper-middle income people. At the same time, we've seen pretty remarkable gains across all kinds of assets over the last five years ... four years, I guess I should say.

The stock market is the one we see every day, in our investment web sites, as it may be, but all kinds of corporate debt markets, that's supportive of businesses looking to invest. If there's a problem in the economy right now, it is not a shortage of capital for large companies to invest.

Morgan: So it's a shortage of demand.

Neil: It is.