The Rise of the Debt Supercycle

Published on
January 29th, 2020
Duration
27 minutes


The Rise of the Debt Supercycle

The Expert View ·
Featuring Christopher Watling

Published on: January 29th, 2020 • Duration: 27 minutes

Christopher Watling, CEO and Chief Market Strategist at Longview Economics, joins Real Vision to unpack the causes — and potential consequences — of a rising debt supercycle. Watling provides context for his long-term and short-term market outlook based on his view of an unanchored global monetary system. Filmed on January 22, 2020 in London.

Comments

Transcript

  • JC
    Jorge C.
    3 February 2020 @ 20:11
    Could you please provide more details regarding the book THE HISTORY OF DEBT, because I couldn’t find it.
    • Rd
      Ronald d.
      4 February 2020 @ 00:54
      Could it be "Debt The first 5,000 years by David Greaber
  • DS
    David S.
    1 February 2020 @ 17:30
    Surprised Christopher does not think gold standard is the proper anchor
    • MH
      Mark H.
      3 February 2020 @ 12:28
      I think there's like 3x dollars then gold at this point so that would create quite the turmoil. I'm not smart enough to know what that even means though, but I like your idea. "Keep it simple, stupid" always resonated with me.
  • DP
    David P.
    2 February 2020 @ 20:38
    I enjoyed the interview, but "China is hanging in there?"....Umm. Might have to disagree with that one. Granted China will lie about their growth, but tough imagine Q1 GDP in China will be robust.
  • RS
    Rob S.
    31 January 2020 @ 14:10
    One persons debt is another persons asset... Any reduction in debt is also a reduction in money.
  • KC
    Kirk C.
    31 January 2020 @ 13:53
    Who would lend money if the amortization gets within a few years of his debt jubilee???? How would an economy deal with lenders no longer providing that credit - housing, corporate debt, small business loans completely disappearing. The economy would shrivel, massive unemployment, bankruptcies, for a feel good solution.
  • FG
    Flavio G.
    31 January 2020 @ 13:22
    I would like to take the services of Longview Economics and then declare a debt jubilee. Effectively, I would be sharing responsibility on the unpaid invoice with Mr. Watling.
  • RI
    R I.
    30 January 2020 @ 02:38
    As much as I hope he’s wrong, he makes a good case for further upside in The Market (ie US equities).
    • DS
      David S.
      31 January 2020 @ 04:04
      As long as CBs add liquidity, some major stocks like Apple, Microsoft. etc. will continue to go up. When the punchbowl is taken away, it will change. DLS
  • LC
    Liliana C.
    30 January 2020 @ 12:23
    Excellent, thank you!
  • PV
    P V.
    29 January 2020 @ 10:09
    Central bank liquidity has been driving prices? Really? Disappointing, shallow, nothingburger. No real insights or unique pov. Pls RV curate speaker selection better.
    • BS
      Bevyn S.
      29 January 2020 @ 14:02
      I second that. This seems like a replay of a lot of interviews. Let's get some more diversity of opinion here! Let's get Richard Koo back on...!
    • BS
      Bevyn S.
      29 January 2020 @ 14:10
      It would even been interesting to see a civilized debate between some MMT or Keynesianist vs an Austrian... Nothing against this guy, just would like to see some intellectuals identify flaws in each other's reasoning vs a one way dialogue. Could be very informative!
    • MG
      Michael G.
      30 January 2020 @ 04:12
      The statement is still true
  • CM
    Chris M.
    29 January 2020 @ 21:56
    Very well spoken, but had to give this one a thumbs down. Had a hard time correlating the debt super cycle problems to the market being up 20% based on bank liquidity. Granted, liquidity is driving this market as it is going up on PE expansion and not earnings growth. Might have been helpful to get more detail on Christopher's thoughts around this market prediction.
  • JH
    Jesse H.
    29 January 2020 @ 17:32
    Enjoyed this one - somewhat of a rehash of other points of view & other interviews, but nonetheless some important thoughts to reflect on here. Largely agree that we are not in capitalist system and haven’t been for many years, and debt is main albatross around our necks in terms of hampering productivity & prosperity. Do not agree debt jubilee is workable or even plausible, especially because the debt is not evenly distributed and some countries and private actors would suffer far more than others. There are some very powerful actors who would suffer asset price declines and see declines in their wealth. This will end one of two ways in my view: the relief valve of nature via climate change (or disease), or the relief valve of social disruption and possibly revolution & increasing civil unrest. Both may occur at once, as we seem to be seeing now.
    • JH
      Jesse H.
      29 January 2020 @ 17:38
      Find it very ironic that he talks about how “optimistic” he is at the end of the video, after talking about how we are at the end of a debt supercycle. Am I missing something here?! Seems like a very high uncertainty environment in which to be an investor.
  • JH
    Jesse H.
    29 January 2020 @ 17:36
    Sorry but one thing he says has to be addressed: we know that the Philips curve is not accurate as a model. Mainstream economics as a profession has ironically greatly hampered our understanding of how economies actually work. Please question what you read. Thanks.
  • JS
    Jim S.
    29 January 2020 @ 17:27
    Great interview! Chris describes much of Richard Duncan’s view that capitalism has fallen by the wayside and the credit growth drives economic growth... Duncan continues with that with credit growth low the fed has to supplement with asset price inflation to keep the party going. Chris’s endgame is different then what I have heard so far, so thanks for adding a different viewpoint!
  • JL
    Johnny L.
    29 January 2020 @ 16:59
    where is that US acceleration going to come from? Seriously, what drives that? Stock chasing is not evidence of housing or consumer or GDP. Unless I misunderstood some things, this interview is heavy on hope and light on facts
  • JB
    Jon B.
    29 January 2020 @ 13:26
    Chris succinctly puts the case for the reflation trade juxtaposed with the debt-super cycle. Whilst I'm a perma-bear and would love to see the indexes collapse, I have a nagging suspicion that there is new meaning to "don't fight the fed"
  • DS
    David S.
    29 January 2020 @ 11:43
    Good call on the American consumers. The coronavirus is certainly going to cause a lowering of Chinese consumer spending in China and abroad. Thanks. DLS
  • BT
    Brian T.
    29 January 2020 @ 11:19
    Yet another speaker who feels that inflation is coming (seems logical with repo QE)-- so, equities, gld, and leveraged real estate should all continue to do well in the long run- right? But then there's that dollar shortage whispering in the background to keep the dollar strong and inflation in check in Raol world view?? I suspect that a debt jubilee is a dream for indebted 'masses' that would relate to houses and credit card debts? Interesting perspectives overall- the concept of a pegged currency, perhaps global in nature, that would completely disrupt the current 'borrow and print into oblivion capitalism' that has created great, though fake, wealth (and inequality) in our country-and world.
  • DS
    David S.
    29 January 2020 @ 10:53
    Mr. Watling is certainly correct that capitalism needs a reasonable investment hurdle rate to allocate capital. We created this rabbit hole when we went off the gold standard. (The gold standard was not perfect, but did provided some restraint.) Wall Street ended the game in 2008. No one wanted consequences, so CBs printed tons of money vastly increased the difference in wealth distribution. This generates populism on the far left and far right. We did this to ourselves. From a society point of view, we are now in a wealth oligarchy/republic in the US. The wealthy use polarized media to elect the politicians who will vote their way. A republic divided by populism on the left and right cannot stand. Like any bankruptcy this will star off slowly, then all at once. Sorry, I would like to be more optimistic, but I am not smart enough to see a way out of this rabbit hole. DLS
  • JH
    Jason H.
    29 January 2020 @ 06:25
    So what happens to lending when you know a Jubilee is on its way? When done unexpectedly surely it rewards reckless borrowers? Is that what we really want to do?
    • DS
      David S.
      29 January 2020 @ 10:23
      Anyone who wishes can look up Biblical debt jubilee in Wikipedia. It is much more than forgiving debt. As far as the debt forgiveness, everyone would get all their loans paid off before. In addition, who would lend money past the jubilee date? A Biblical jubilee is interesting, but has no merit in today's financial world. Any pegged monitary standard would just be a hedge fund's dream - breaking the Bank of England. Controlling the money supply went out the window with the gold standard. The free floating FX market is here to stay. Deal with it. At least FX traders have skin in the game. DLS
  • JQ
    James Q.
    29 January 2020 @ 09:14
    Fed is the market. Got it