The Rise And Fall Of The Age Of Debt | Russell Napier
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- เผยแพร่เมื่อ 15 พ.ค. 2024
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Russell Napier, founder of Orlock Advisors and publisher of The Solid Ground Newsletter, returns to Forward Guidance to share how China’s decision to peg its currency the Chinese Yuan in 1994 at an artificially low rate had enormous consequences on world’s monetary system, and why China may be soon be forced to make a monetary policy decision regarding its currency which may have similarly large consequences for the globe. Filmed on March 13, 2024. Russell is the author of two books, “Anatomy of a Bear Market: Lessons from Wall Street's four great bottoms” and “The Asian Financial Crisis 1995-1998 And The Birth Of The Age of Debt.”
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Russell Napier’s newsletter, The Solid Ground: russellnapier.co.uk/
Russell’s first book, “Anatomy of a Bear Market: Lessons from Wall Street's four great bottoms”: www.amazon.com/Anatomy-Bear-L...
Russell Napier’s second book, “The Asian Financial Crisis 1995-1998 And The Birth Of The Age of Debt”: www.amazon.com/Asian-Financia...
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Follow Jack Farley on Twitter / jackfarley96
Follow Forward Guidance on Twitter / forwardguidance
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Timestamps:
00:00 Introduction
00:52 How To Spot A Change In Monetary Policy
03:50 Birth Of The Age Of Debt
08:43 Chinese Surpluses Are Getting Smaller
14:10 China's Choice Between Deflation Or Devaluation
18:23 China's Growth Requires Massive Expansion In Narrow Money
27:10 VanEck Ad
27:53 Is China The Biggest Real Estate Bubble Ever?
30:35 PBOC Likely To Move To Flexible Exchange Rate In Order To Achieve Their Goals In Controlling Price And Quantity of Money
33:53 Is Foreign Lending Contingent Upon U.S. Dollar Reserves?
36:29 The Origin of The Chinese Stock Market In 1992
39:11 Valuations of China's Stock Market
41:33 Buy Cheap Currencies, Not Cheap Companies
54:11 Napier's Views On Japanese Currency And Stock Market
58:51 The Lessons Of Quantitative Easing (QE)
01:01:27 The Future of Japanese Monetary Policy
01:03:10 The Interest Rate Shock Has Not Broken Something. Why? Will This Continue?
01:06:16 Are Higher Interest Rates Deflationary Or Inflationary?
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets. - บันเทิง
Finally, you can easily access Bitcoin in a low-cost ETF with the VanEck Bitcoin Trust (HODL). Visit vaneck.com/HODLFG to learn more.
unfortunatley this russel is an atlanticist that has already made his mind and the reasons he brings up are true but the conclusions arent saying that because chinas stock market is 10 times pe means the same thing when us was 10 times pe looks over the structure of the pie rather than how much of it is left stock market doesnt run the real economy in china like usa
Woooooooow. HUGE props for bringing Russell Napier to the show! He's such a sharp mind. Much looking forward to this episode! And btw, Jack you do an absolute stellar job with this podcast. Top notch content.
Best interview of Russell Napier Ever. Unbelievably good job done Jack. Many congratulations
Oh well done. Mr Maestro himself. More Mr Napier please. He's excellent. Well done Jack.
Another Russell podcast just landed banking crisis = new rules for investors and regulators. Offers the investment thesis for those seeking. Hasn't changed. Gold, equities (particularly Industrials, defence and infrastructure). Whilst historically equities didn't weather inflation well in the 1970s he argues diff context this time round, not least subsidised credit from govt who are taking over the system, crowding out private investment.
I like this guy-not opinion just historical facts-you make up your own mind. Bravo
It would be interesting to have Russell and Michael Howell on together.
Kurt Russell and Russell Brand.
Discuss
Agree - would be fascinating. Or perhaps Charles Calhounis whose academic style might complement Russell better.
Indeed, that would be quite a matchup
Michael Howell and Russell have a most different time horizon in their analysis. The variable which matters for Howell is liquidity a rather short to middle range one, the question which matters for Russell is long term monetary politics conditions. That’s a difference like that between wheather and climate. A prudent investor should rather follow Michael Howell in his decisions with a 1 to 2 years horizon and take up to 10% of his net (!) profits and buy gold preferably storing it not necessarily physical yet definitely in a location where his government can’t get to it
I would love to hear more about the portfolio he sees as best for this new “regime”.
One of your best guests ever - great job Blockworks.
Napier is the GOAT. A true legend, along with Howell and Alden.
And Groman
The takeaways of this discussion (for the average person in the street) begin at 1:02:00
and they are: i) Napier believes interest rates will go up rather than come down as governments will choose inflationary mechanisms rather than deflation ;
ii) He envisages a monetary system where the government forces the private sector to use their savings to buy government bonds - capital controls; iii) Restrictions on the free movement of capital; iv) The current structure of investment portfolios need to be changed to accommodate governments whose remedy for debt is to inflate away the savings of the private sector.
I think governments are already doing that (forcing people to buy government bonds). Americans and Brits don't buy Canadian debt, so why do Canadian financial institutions hold it? Because it's required. There were some recent news articles about using the Canada Pension Plan (a government pension) to somehow boost investment in Canada. That's a really odd thing to say because they would already be doing that if investing in Canada was the highest risk-adjusted return. Every program ends up being some political scam, and every country does it. Doesn't the US Social Security fund mainly hold US government bonds? Do they hold that because it's the best possible return or because it's yet another government scam? Of all the things they could invest in, and in all the countries in the world, that just happened to be the best thing to hold?
Always amazing to listen to Russell! One of the great minds of the Financial world today
At last, a fresh interview with Russell, well done BM. 🎉
Can we get Louis Vincent Gave to give a counter view to Russell Napier views on China? Cheers.
I've watched this interview 4 times now and going to listen another 4.
Fantastic interview. A man who shared his vast knowledge so eloquently and with such humility and with practical application, it’s a political economy so beware. Brilliant 👍
I give Jack a 10 out of 10 for that one. Fantastic questions and an amazing interview.
Best interview I've heard all year!
Very well done, Jack! You've come a long way since RV. I think you're one of the most prepared and astute financial interviewers out there. Kudos for getting Russell on your show! He's always so interesting.
Congrats Jack. I told you a couple of years ago at a Maverick crypto party that I could see you learning during your interviews. Whatever you are doing to prepare these days is excellent. You sounded more like an old pro than a journeyman here. Great job!!
GREAT JOB JACK, LOVE YOUR INTERVIEWS.
Another excellent interview Jack with the Russell Napier. Thank you!
Great historical look at global economics. Russell Napier is a great guest to have on your show.
Fantastic interview! Well done Jack. Thx a lot
This was brilliant, thanks Jack. One of your best
When I see a Jack Farley notification, I get excited. You're crushing it with these interviews! 🙏
Chris Farley was always jealous of Jack
Terrific interview. Sharp, alternative, holistic perspective!
Wooow! Been waiting for ages to get big Russel Back well done!
Amazing conversation from two brilliant minds. Thank you!
Jacks getting better at this game. Fair play .
yep i had to watch this twice
Even if you didn’t fully understand all of that and I think not many do, it was a great listen, well done.
This was really excellent. Great work, Jack.
Unfortunately I didn't get any insights on the Indian economy in terms of how it is doing monetarily and financially. Still unable to understand why the Indian equities are going up and up, but still no concrete reasons why it is going up, esp. when foreign investors/FPI are withdrawing from India.
Money printing. Rising tide lifts all boats.
Thanks for a good interview!
Some great insights in this interview.
awesome discussion, thanks russell and jack!
Go figure, a pinned ad for crapcoin
Would be nice to hear Russell opinion on how to position moving forward in such a perilous climate
PE is important to get a grip on the true value/price of the stock market. When PE is crazy high a crash has profound implications on the economy and the country at large, it effects a bunch of things. But ONLY in countries where the stock market is big, as in Western countries. In China and Russia the total value of the stock market is much lower. Of the stock market in Moscow would crash 80% most people wouldn't notice it. It wouldn't create large effects on anything besides rich people who own stocks. Even if the Chinese stock market is over valued it isn't so very dangerous for China.
Man, awesome interview, so many pts discussed not seen "anywhere"...would like to see Napier annually vs 2-3 yrs, his insights have always surprised me since 2017 when I first read his work/thinking....I need to buy that book asap...
Big interview!
No mention of energy and growth in energy supply, the fundamental enabler of growth?
Fantastic session
We need to see Russell Napier and Hugh Hendry in the room at the same time. Lock the doors and let a go pro record the slap dowln! Acid lCapitalist vs. Great Mistakes Librarian!
Economic investigator Frank G Melbourne Australia is following this informative content cheers Frank 😊
The issue is : where are these vast amounts of US treasuries? As the US debt spirals out of control will this encourage world central banks to dump treasuries? and negotiate via brics ( simply by using a brics member nation to act as a front for the deals- its easy to imagine Dubai for example as a new financial hub.
Superb, and scary, analysis and historical review
Thanks guys!!
Great guest.
I have been patiently waiting for Russel Napier to return. When he tells me China has issues I believe his analysis from others it feels like propaganda at times.
Great stuff, thanks again!
In Gold we Trust!
Awesome stuff
Brilliant, he really gets it!
Not the best Napier interview I've heard. Next time, I hope the interviewer skips the background and macro picture that's been covered in this and prior podcasts and focuses on concrete actions for the here and now (and foreseeable future).
I don't think they could skip a Chinese monetary system overhaul. That hasn't been covered before. But I wholeheartedly agree with your sentiment: the lack of practical application brought this interview to a premature and rather disappointing end.
Top notch.
Where does the private holding of gold into this scenario
Russell is a mind.
He certainly has one
Phenomenal
Very good
The consequence is going to be up only for gold
"The terminal value of Chinese stocks is zero" wow. I believe this means all western foreign investment will be cut off either by the west or China. More worrying times ahead of Russell is correct.
Always interested in Napier's take, but disappointed you guys didn't really get into what this means for investors. I know he has a service, but it's very expensive and I'm sure the vast majority of your audience can't afford it. I assume he still likes gold, favored US companies, and Asian equities ex-China. You could have at least explored what Japanese unloading of foreign holdings would mean for US markets.
Jack AT HIS BEST
At the end....since levelling off is "always" on the downside.....the world seem headed to become a big "emerging" like market. The equity ratio UK/ world is an observation hint
Gosh - I’m
Struggling to understand how to protect my investments - this scared me ?
I like the comment about wealth redistribution from savers to government. 😂 every time I try to engage in business in Latin America, I’ve met i’ve had my wealth redistributed in painful lessons. One guy actually had the temerity to say; “ you don’t understand the standard of living I need to keep up”
I think i am just going to unsubscribe from others and listen to the one here. Great insights!
That’s why I always thought bank bail ins would be non runner as private money be converted for bonds bank shares which would be highly deflationary.
a genius
Aye laddie!
Minute 12. China "second largest economy"? GDP PPP China 35 trn dollar and USA 24. China produces MORE products and services. To not calculate with PPP in country comparisons is just wrong. If the coming 7 years goes like the last 7 years China's economy will be at least twice that of USA.
Oh hell no. Way off buddy.
That's debt that doesn't even include 15 trillion USD in LOCAL GOVERNMENT DEBT. Include that at the same time readjust the GDP down 30 to 45 percent (it is only reported locally and they are required to hit Numbers from Xi or disappear, so they DO hit the number even though it doesn't add up).
Jack 💪
🔥
Change Chinese monetary policy because PE is high in China fearing a stock market crash.
Stock market capitalization in China is 16 trn dollars in a economy with GDP PPP of 35 trn. That is a third. Calculated with GDP 18 trn dollar GDP stocks are worth around one year of GDP.
US stock market capitalization (NYSE + Nasdaq) is 50 trn dollars in a economy of GDP 24 trn. That is twice as much.
If the Chinese stock market would crash it won't change China dramatically and certainly not monetary policy.
PE stocks China 10.
PE stocks USA 45.
And China is in trouble?
Xi's announcement will be roughly in June, 2024 but that could be also rescheduled too.
Who knew Davos from Game of Thrones was also a financial expert? #IfItsNotScottishItsCrap
How would the BRICS development impact on the Chinese international trade and monetary flows. At the moment this seems more an anti politicalized dollar
initiative. However what would happen if the BRICS negotiated international trade in the notional value of gold - thus de-coupling the commodity from the western price fixing cartels that currently dictate golds global value. China and Russia governments have been stock pilling bullion for 2years.
BRICS is hot garbage. There really isn't anything to say about a bloc that is basically intended to transfer energy resources from irrelevant economies like Russia, into the hands of the Chinese. It really is that simple.
China's weakening economy reflects the weakness of western economies imports from China especially in manufacturing, so the cold war is down to China offering deflation which goes against western nations inflationary/debasement policy. I agree with Russell's "ambush" theory as a once off bounce from the rapid debasement. Also imo rates will come down at least in the short term, the embedded inflation policy has yet to be priced into the long end, so its all still to play for
Imagine what would happen to all of european factories in China is they invade Taiwan...
Great history recap. But what use is this guy? He’s a one factor analyst
How many books have you written?
Discussion on global monetary system but no talk about the eurodollar system which IS the global monetary system 🤷♂️
What happened in 1994
hope you get your twitter account back soon, Jack! 🥰
I don’t think a massif RMB depreciation could lift the Chinese growth as it does to Japan’s market because too much frictions. For the time being, the government will try to have his upper hand on every corner of that “triangle”. Letting RMB to free float wont be easier than trying to controlling that “error and omission” in the Capital account: they both give the same direction: a currency depreciation. Chinese money is driving Bitcoin and US stock price. One way to have that money back is keep the RMB stable.
So 1trn debt is not a problem for the usa?
Not when you have a higher inflation environment. Hell, 20 percent of that debt disappeared into inflation since 2021....
R.N. - the best!
Van Yuk Chinese food 😮
Did it occur to the guest that if banks were forced to buy worthless Japanese bonds wealth would flee the banks and Japan? This is not World War II and the borders are much more porous. We now have many more options on how to move wealth instantly to other parts of the world.
He's covered this before. He says their culture is such that the banks and institutions will comply with the MoF.
👀
When you realize BTC is the cbdc they won't control the asset but control everything through laws and knowing everything you have and do with btc.
Oh this perpetual China bashing saying China is in trouble. Over and over have I heard that for years. "China problem growth GDP". Really? Look at the numbers.
Yes, growth is lower than before but still very high.
1993-2013: 7-15%, average 10 % during 20 years
2014-2024: around 6% during 10 years.
Imagine a growth of 6% the coming 10 years in China. That is a GDP 80% larger than today. But maybe it will be only 4%. Then GDP will be 50% higher than today.
No. China does NOT net buy treasuries. About 8 years ago they had 1.4 trn dollars in treasuries but today 0.8 trn, almost half. Besides, the proportion of US debt owned by China is much smaller now. In 2016 it was 8% of US debt. Now it's only 2.5%. China is only rolling off debt, not buying and not selling. In 4 years it will be close to nothing. Then the Petrodollar can die. They have lent out some dollars but I guess those loans can be changed to Yuan if the dollar tanks. Today Chinese part of US debt is 2.5% as I said, but in only 3 years it can be as low as 0.5% since the US debt is exploding. The government deficit is in fact now 3.5 trn per year since the debt grows by 3.5 trn per year. And since Covid different accounts were filled with cash that they have spent now. They must borrow more. The US debt WILL explode and almost the only buyer will be the FED. Some day the world will say no to this US scam and ditch the dollar. Besides, the BRICS will dedollarise. Besides, countries in the Global Majority will not trust having reserves in the US since they steal the money when they want to. No. The dollar will go to shit just in a few years. Not more than let's say 7 years. And some silly CBDC won't change that
You really don't get it at all.
You have to come to this with some knowledge already...
All those in DEBT that can never be paid back in lifetimes should have no business managing money period. Debt allows a thief to steal.
Much the opposite actually. Those with debt bought ASSETS. inflation will erode the payments. Basically ALLOWING leverage is the scam. But that is why governments lend to oligarchs
Jack don't worry about twitter account. SPY goes to moon
People give away their biases even when they don't know they are doing it......this guy is a huge sino phobe.....never ever heard him say even an iota positive view on anything Chinese...... I've seen most of his videos ....never...all these doomsday prophecies will come to nothing.....chicken for Chinese are not coming home to roost, more like coming home to roast🤣🤣🤣
Western propaganda. I had great respect for russel now its down to 0
I like this accent. It's sort of soft-Scottish or upper-north and just confusing enough to keep me guessing.
Mostly northern Irish