Well, this has aged well in light of all the recent events. It really does take a crisis, and we do have quite the crisis on our hands. USD is skyrocketing, the question is how much further will it go? Will the swap lines alleviate some of the pressure? Personally, I don't think it will be enough.

Can we get an update from these two gentlemen perhaps sometime first quarter in 2020?

To be filed under very late and not very helpful comments, excellent conversation. I've followed the back and forth on twitter for some time. At times, the twitter back and forth seems a little too contentious for what I hope for from two smart gentlemen. This video relieved that concern. My take: in the coming chaos, the dollar rallies so strong it weaponizes itself and the world finally demands an alternative. So Brent then Luke.

I thought that this was an amazingly good discussion. No one can know the future but we can at least be alert to the various potential outcomes. That is the only way to calibrate the risks.

Brent talks about "older gold guys waiting for the payoff since the 70's or 80's" but the reality is that gold has been going up at a rate of 7,5% annualised since 1971. If their goal was the preservation of capital, they've done extremely well.

Let's have a 10-15 minute summary update every quarter or so. End of April would be next. Dovish FED effect. This will be the most important and central trade of our life time.

Luke Gromen is the smartest guy on RV.

Ok, let us assume Luke is right, the USD collapses, so demand for treasuries falls and yields rise to the roof (payback for running huge deficits). What happens then to stock prices? The other currencies rise significantly, what happens to exports of those countries? Who are they going to sell to? Marcians?? What happens to those countries stock markets???? This scenario is worse thank the great depression.... but in the end, a collapse in the USD would quickly fix the CA balance, so that means the US wins the currency war.... unless, everybody else also devalues, and we are back to a strong dollar, just at a much lower level of economic activity.

Very good discussion for the allotted time. It doesn't matter who you listen to, the $ appears to be currently range bound. I am out of gold (and sliver) because I think its going to go higher. However, I remain on tenterhooks ready to buy precious metals and stocks if the dollar falls below support. If metals go up along with the dollar then perhaps the end game is upon us after all these years of false economics.

I expected more, a lot more. Very disapointed. No mention of the Fed, the PPT or the ESF. I think Brent lives in Lalaland, but he's far from alone in that respect unfortunately. He's in the company of the vast majorirty of people and especially so those managing other people's money. They know the future may be vastly different one day and the US's exceptionalism may not be as permanent as they wish, but dismiss all that casually simply because they can't see it happening soon. How pathetic. As for the conclusion of this 'debate', they both semed to agree - that the dollar will weaken... eventually. The real question, as always, is timing. Cause and effect is a a natural law and it is not governed by the time it might take from one to the other. People like Brent like the system as it is, it serves them well. Full stop.

If you you are listening Real Vision.. We need more of this and throw all the newer ideas in the can

Just half through the interview and I have to give tons of credit to Grant for handling one particular situation really well. It’s when Luke started talking about how the US weaponised the USD via Switzerland and thereby hyperinflated the Iranian economy. It’s a classic Luke moment, where he uses a phrase that hides a relatively complex mechanism and I assume I’m not only one who finds this kind of discourse difficult to follow. Grand interrupted him and asked him to explain what he meant by that. I think only the best interviewers don’t allow details like that slip through the net. Well done Grant!

They dont talk about bitcoin but seems the alternate system is bitcoin

great vid, to Luke's point on offshore Chinese Debt. The recent book new Silk roads book outlines huge increase of offshore debt to developing nations in Africa and Asia where a demographic boom made it possible. Any further thoughts on this would be great?

What kind of whiskey are you gentlemen drinking??

Great exchange and very glad it was finally put on video! Always learn something from these sharp minds as they debate this topic. Thanks for the insight, gents!

V informative and insightful, thx

Excellent interview and very informative. Thanks for that

Great interview. I‘m really curious on how this will play out. I‘m more aligned with Brent.

Good conversation, good times. Thanks guys!

Epic, 10/10

That was a good conversation. One of the better videos on the site

Excellent discussion but it is clear that the dollar can go up or down depending a great deal on the decision making both fiscal and monetary as well as geopolitical. It seems as though Powell has made a turn back toward monetizing the debt rather than allowing the market to fall back toward more reasonable valuations. These twists and turns by those in power make predictions that much more difficult.

I tend to side with Brent as I always understand him much better than Luke, maybe Luke is right, but he is not as good at putting across his ideas...he is talking about jet fighters and a bunch of rando things. His thinking is either not clear or this is not the format that gets him across the best. Also Grant was surprisingly cordial to Brent...was he kicking him in the shins secretly under the table?

MMT, debt jubilees, capital controls, currency wars, crypto.....all good topics for Steve Hanke to weigh in on via long format.

Great interview, loved it!

Outstanding,will be adding them to Twitter ASAP! Also would like to know the impact of issues that will likely continue to develop in the EU and the potential for volatility in the EURO and how that might affect their dollar thesis and timing.

Gents i know you all -Brent less so -as we never talked via phone....here is what is strange to weird in the whole conversation you never mentioned the Fed flipping on 1/4/19? If rates dont go up how does the $, and you also didn’t mention Italy in recession and Germany+France +China in trouble and the UK in limbo Brexit . The world is going into or in recession so How does the dollar rise??? Unless you assume Brent ,the Fed still raises rates? Kudlow wants a strong $ trump does ...not final point.

Luke, have read your book twice now, have been uncertain of your reference to the explosion in derivatives. Do you think sovereigns and other buyers of treasury dept were sold (purchased) interest rate derivative protection? Purchasing quadrillions of protection for trillions of debt? If this is not what you meant , could you explain what you and Mr. X were discussing. Thanks

Please see my reply to MB below.

and before I forget - excellent format. could have been a notch longer to delve more into certain arguments. but pls continue the format into other topics, eg volatility with Chris Cole, or debt jubilee etc.

general question to the audience: while many aspects influence a currency, what is more important, trade differentials or purchasing power parity? or have TDs rather a short term impact whereas PPP are the long term parameter? tks for feedback.

Enjoyed the conversation. As always that pesky timing gets in the way

This format really works with these guys, only wish it was a bit longer. Really wanted to hear a sit down with them and this hit the spot. Funny how many disagreements come down to timeline. I am curious to see what happens if we get a disruption of the euro, then see how that effects the dollar? Anyway, thanks all, hopefully we can hear from them both soon!

Excellent. I really feel Luke brought more neat to the table.,,

Make these an hour long, two hour long, really great conversation.

Unless I am misinterpreting this, the only key difference between the two of them seems to relate to timing really. Luke thinks we are further down the line on de-dollarisation of the world whilst Brent thinks there is still a painful transition to pass through first, which is likely to support the dollar. Whilst I enjoyed the debate I am still stuck on the fence!

My favourite quote was from Brent when he said 'Everyone is a long term investor, until they are down 10-15%' So true.

Entertaining conversation but no discussion about how economic (not political) fundamentals like growth and inflation across countries (namely US vs Europe/EM) affects the dollar. It’s all about politics and its potential effect on the dollar. Politics is merely an amplifier (whether it be up or down) of fundamental economic trends. Still, as mentioned, politics is entertaining, makes front page news and therefore easy for narrative construction.

This is what new media is! Loved following this on twitter and all I wanted was to hear them debate in person. Wish it was longer. Thank you ReaVision, Luke, and Brent.

Great stuff! Liked how they kept it professional and friendly at the same time! Got a good chuckle at the Harry Potter and Sci-Fi references MMT? Sounds like we need an expert view segment on that please!

Gold is already part of the FX market. It works well as individual fiat currencies collapse like Argentina and Turkey did in the last year. Any portfolio should be hedged with some form of gold or related asset in case the whole fiat currency system falls apart at the same time. The daily FX market does not, however, follow any economic model Austrian or otherwise. It is the resultant of human assessments of the relative value of all included currencies at one time. We are already down the rabbit hole of FX markets after the gold standard was eliminated. As Russell Clark discussed, we need to make a currency forecast as part of major trades. Currency forecasts are often wrong in direction and timing. Hedging FX forecasts cost money, but it is the only long-term approach that may work. Glad I do not need to be fully invested. DLS

Superb format. What could be more thought-provoking than hearing both sides of an important argument? The trick is to keep the debaters engaged head to head--rather than simply arguing past each other, e.g. each addressing a different time-frame. ('Happens all the time in the Munk Debates.). So the moderator needs to actively steer the conversation. (That's YOU Grant! :) Please run more of these.

A few too many analogies. Other than that, an absorbing conversation. Great to see two sides of what i think is the most important debate in the financial marketa right now. Thanks

I think Luke is a very smart guy but that he is way too bullish on China and he does not understand how things have changed drastically in China in the last 10 years, especially in the last 3-4 years. Xi's Western media coverage is very different from the reality of what is actually happening in China. There are a lot of free YouTube videos where many successful European and Americans who have lived in China, tried hard to learn good Mandarin, tried hard to assimilate into their culture and even married Chinese wives there are now being kicked out of China. The Wall Street Journal even ran an article in the last 6 months how successful foreign businessman are leaving China en masse. Many have felt that the rules and taxes were changed on them and they are being forced out. On top of this drain in talent in China, China now has an enormous debt problem. Their debt and credit are growing at far faster levels than their gold holdings. And many Chinese families there are in debt up to their eyeballs according to my sources. So on a relative basis, the US appears safer (but is being given more rope to hang itself with long term) than the EU, emerging markets and China.

Excellent content from three very smart guys and excellent facilitation by Grant. Caused me to change my mind about the direction of the dollar in 2019. Also a shout out to whomever was filming this as it was natural and made me feel like I was in the room.

Both very good guys! Follow both on Twitter too. Another great value Talk here in realVision! Thanks Only thing is that Next they have to drink the whole bottle!!

Wonderful. Now I have no idea which way the dollar is going!

Vintage RV here with a civilized discussion, diametric viewpoints and perfect moderation by Grant on what is, indeed, THE most important lynchpin of all financial positioning going forward. Raoul and Julian of Macro Insiders will be the first to agree that it is all just one trade based upon the US dollar—just get that right and position accordingly. This is what I enjoy most about RV—fresh, timely, well thought out arguments based upon historical and temporal data/factors that can allow us to make up our own minds....or perhaps, more importantly, if not entirely persuaded by either argument position for both outcomes with a heavier weighting as to which side of the argument we come down on. We must hear from these Gentleman again in six months time!

Do not apply Austrian Economics free market thinking to a Fiat Market system. Well said.

This sort of stuff is the heart of RV. Thank you.

1. The feds recent capitulation to the stock market increases the probability that if the dollar made a new high, it would be squished back down in a heartbeat, as US multinationals would be screaming and stocks will be dumping, and neither the Fed or Trump want that. So if Brent is right it will not be for long. 2. I cannot believe nobody gave levels for the dollar! Come guys, Grant, Luke, Brent, what will the DXY be on Dec 31 2019? Lets see who is closest! Otherwise your all wimps:)

It is just too late in the political cycle to weaponize the USD. Trump needs to carry the same swing States as in 2016. How he does that with a strong USD is beyond me. Those guys can hardly compete with a weak USD. Or am I missing something of Brent's argument?

Pretty light on real macro here.

Great discussion, can we have a revisit / update once a quarter until the shit eventually hits the fan?

Love how Grant isn't sitting in the middle. If he was, Luke and Brent would be opposite each other and the discussion would seem confrontational. Nice touch.

I am glad you guys did this conversation so their points are out there and we don't have to hear about this from them for awhile. It is like hearing a red sox and yankee fan arguing...

Odds of a substantive trade deal (vs truce) seem close to zero, and not sure why Trump would weaken the $ to appease China, who are only now facing a reckoning for their decades-long credit binge. Without being thrown a an implausible lifeline, China is going to have to deal with its banking / credit crisis well before US has to worry about its liabilities. That's very, very $ positive.

Great to get these two together and digging deep into their positions. Thank you.

Best Exchange yet. Amazing. Love watching them on Twitter.

great talk!!! I always learn something with these guys! very clear and eloquently put as well.