Hendry and Gromen: The Dawn of Chaos

Published on
July 24th, 2020
67 minutes

Hendry and Gromen: The Dawn of Chaos

The Interview ·
Featuring Hugh Hendry and Luke Gromen

Published on: July 24th, 2020 • Duration: 67 minutes

The global economy had been running higher for over a decade, and the coronavirus has been a major speed bump. But what happens when central banks have replaced the airbag with a dagger? This is the very question that Hugh Hendry, founder and former CIO of Eclectica Asset Management, explores alongside Luke Gromen, president and founder of Forrest for the Trees. Hendry and Gromen explore the fate of the U.S. dollar through the lens of Charles Kindleberger's theory about "monetary hegemony."They analyze the various interest rates and current accounts of different countries and break down how these nations manage their exposure to commodity risk. Filmed on July 20, 2020. Hugh's report, "he Dawn of Chaos," can be accessed here: https://rvtv.io/3fX1uHd



  • WG
    Wade G.
    28 July 2020 @ 20:54
    I'm sure he's a crackup and I respect his achievements immensely, really, but honestly I haven't understood Hugh since he was loosing money immediately after the GFC but had the clarity of mind and morals to call the central banks out for what they are: grifters administering a ponzi. There are cogent comments below challenging his characterization of "benevolent hegemon". I'll add Hugh seems to pretend the 71 betrayal and default never occurred, and so he misses the "self-appointed" origins of our hegemony; seems never to have heard of Triffin's dilemma, which answers his first question, what's wrong with the system, explaining exactly why it must fail; ignores the growing rot brought to this nation by the very "elastic currency" liquidity he celebrates, even while he cautions we need a lot more of it; and seems never to have read Say's Law. Later in the interview Hugh suggests deficits are good, to be embraced and encouraged, and then references productive investments that produce revenue steams sufficient to repay the debt. Are u kidding me? What game of pretend are we playing? If US fiscal stimulus was productive, our debt wouldn't perpetually grow at a faster rate than the economy. We need an army of government paid bureaucrats to successfully generate completely falsified, substituted, weighted, hedonic-adjusted measures of inflation to hide the tax this elastic currency system imposes on its serfs. We live on a finite planet, with finite resources; maybe our money system should have some natural constraint. Hugh seems to believe an elastic currency has no costs and further is necessary for advancement. This seems to me to be self-evidently ludicrous. I look around our country and the world and fear a permanent loss of capitalism. To me, Hugh seems to have constructed some alternate reality on his way to a trade meant to overcome the very system flaws his premises deny. I don't get it.
    • EV
      Eugene V.
      5 August 2020 @ 19:42
      Permanent loss of capitalism?
    • GP
      Glen P.
      7 August 2020 @ 11:46
      Fabulous analysis.
  • JP
    Justin P.
    26 July 2020 @ 09:49
    This was a great interview. The only potential problem you will have with future guests is their nervousness (reluctance to come on) when their views get challenged by Hugh.
    • EC
      Earl C.
      26 July 2020 @ 20:03
      Hughes central argument imho is parroting what I was told in 3rd grade social studies in 1960.
    • EV
      Eugene V.
      5 August 2020 @ 19:49
      If executed with respect, why would being challenged be an issue? It should reveal even more, no?
  • PJ
    Paul J.
    26 July 2020 @ 14:19
    Who's that stuffy long haired sweaty hippy? Total inappropriate for a serious channel.
    • AR
      Anthony R.
      29 July 2020 @ 05:40
      Jeez. Who cares.... Focus on content, not packaging.
    • EV
      Eugene V.
      5 August 2020 @ 19:45
      I happen to think it's awesome to see different characters. Ad hominem statements is not constructive, rather comment on what was discussed.
  • wj
    wiktor j.
    5 August 2020 @ 19:08
    A bit of flawed analysis. The primary banks aren’t really selling the treasuries but hoarding them and selling them back to the fed. If I am correct China will be buying treasuries soon enough. Right now china needs the dollars so its selling. I agree the debt is not repayable. The problem with China is that no one wants their funny money. If something is settled with funny money the other nation goes and sell them and buys dollars asap.
  • RO
    Richard O.
    2 August 2020 @ 03:57
    To maintain this monetary hegemony based on a pure fiat system , the US dollar has to be used as much as possible & the make sure it is the case by lending it efficiently globally in great quantity (even when there is a high risk of default). By contracting large amounts of U.S.D denominated debt , the American establishment has a direct influence on the policies of global governments , while creating sound financial alignment with various head of states & private entities ( through the World Bank , the IMF , & other private financial entities etc..). Thus , there is a limit to monetary sanctions by the American governments on a global scale to maintain & perpetuate this hegemony as it is anchored on extensive global lending. Hendry's comment about the so called benevolent aspect of the U.S state towards the rest of the world since 60 years is utterly amusing & delusional... Nonetheless great conversation as usual RV !
  • LX
    Lai X.
    31 July 2020 @ 23:06
    Hendry is a humble and congenial inquisitor that it’s pleasant even he “persecutes” and Gromen has the coherence of a philosopher. And coherence is a sure sign of a pragmatist who states what is and what is likely to happen and not what ought to be.
  • RM
    R M.
    24 July 2020 @ 19:36
    Would like to get you two in a room with Steve Keen and Jeff Snider. Steve may understand money (or at least understand it very differently) than just about anybody. And Jeff has studied overseas dollars, or Eurodollars, which are a different beast than domestic dollars. Let it run 2 hours, it would be very enlightening.
    • MC
      Mathew C.
      24 July 2020 @ 19:47
    • AT
      ALAN T.
      24 July 2020 @ 20:51
      yes indeed.
    • PU
      Peter U.
      25 July 2020 @ 14:53
      I would pay an upcharge for that
    • ak
      alex k.
      30 July 2020 @ 14:04
      I would gladly pay extra for this content too!
    • EM
      Eivind M.
      31 July 2020 @ 21:55
      That would my dream come true! Make this happen please!
  • DG
    Dave G.
    24 July 2020 @ 19:41
    Maybe I missed it but why did the dollar go from 75 to 100 in 2014? Was the cause the foreign banks not buying treasures?
    • ak
      alex k.
      30 July 2020 @ 14:02
      I THINK it was the other way arround. Foreign banks ingeneral ease buying when the dollars starts rallying, but this is only my understanding of the video. I did wonder the same thing tho.. What caused the dollar rally to begin with? Was it private banks slowing down on lending? I would love to hear some thoughts and/or resources on it.
  • VS
    Victor S. | Contributor
    27 July 2020 @ 11:05
    Gents “what’s so bad vs gold “?? Ur drinking to early , the debt of US is going to be $29 trillion in 2 months. The dollar And debt is the Fed . The fed allows debt to increase to unbelievable levels. What’s “bad “is the Capitalist system is going to end from this . So why (Liberty) did the US become the greatest nation in history your going to end. When we go down we will not get up in the same form ... it will be a communist dictatorship in my view which will come from hyperinflation.
    • TB
      Tobin B.
      30 July 2020 @ 02:44
      At least that which we fear we can anticipate.. and as such, change!
  • MO
    Master O.
    24 July 2020 @ 08:44
    Real vision maybe Hugh Hendry needs to be given his own show in the platform, and call it the Hugh Hendry Interviews just like Kiril and Danielle have. Hugh massive improvement from the Richard Werner interview in terms of letting the guest finish his thoughts and doing an excellent job in pushing back. In another note, I highly encourage subscribers to read Luke's book "Mr. X Interviews where he flushes out lots of the issues discussed and much more, and I believe a follow-up book is coming soon.
    • AB
      Alastair B.
      24 July 2020 @ 09:08
      Seconding the idea of Hugh having his own show
    • rc
      ritesh c.
      24 July 2020 @ 19:00
      Indeed a great interview. I second the idea of Hugh having his own series on RV!
    • LF
      Liam F.
      24 July 2020 @ 22:07
      Thirding Hugh's show.
    • TP
      Timothy P.
      25 July 2020 @ 00:11
      I'd love to see Hendry grill guests -- I'm on board with that idea.
    • CS
      Christopher S.
      25 July 2020 @ 00:47
      Bring back Richard Werner
    • PC
      Peter C.
      26 July 2020 @ 15:32
      I would too but I couldn't understand half of what Hugh was saying. Going to have to read the transcript.
    • PJ
      Paul J.
      28 July 2020 @ 20:34
      He sound smarten up first and start to dress and look like someone who'd any normal fellow would pay attention too first with all due respect. It's not all right to come onto set looking like a burnt out bum in sun glasses in need of a shower, totally disgraceful.
  • AP
    Ash P.
    28 July 2020 @ 16:36
    Fixed money supply forces a stark decisions on where we invest - invariably we will choose the opportunities generating the greatest productivity. Increase money supply and suddenly you've (in theory) decided that we have potentially infinite money. One hit from the pipe is not a problem maybe...but you've started the slippery slope towards slamming. That's dangerous when you have politicians and central bankers making decisions. At the best of times they make decisions based on data - always outdated, always incomplete. Usually of course they make it based on their own interests - they are programmed to slam.
  • RK
    Robert K.
    25 July 2020 @ 12:09
    All nice argumentation. Only one thing makes me extremely angry: the relativisation of US vs China. How the fuck can you even contemplate comparing a democracy with a big brother society? That's one little factor most of the analysts / economists choose to ignore somehow. Hugh, would you also praise the state sponsored economic boom of nazi germany (1932 - 1938)? Is a bit of a moral spine something finance people could grow?
    • AD
      Antonio D.
      25 July 2020 @ 12:35
      Real question: If their goal is to understand macro trends in order to help you position your portfolio for wealth creation, how would you want them to approach this instead?
    • RK
      Robert K.
      28 July 2020 @ 15:06
      Antonio D. We can argue all sides. But at the end we should do the right thing (aligning our profits with doing the right things). One of them e.g. is avoiding investments into the CCP led China. Why support the evil.
  • CL
    Christopher L.
    24 July 2020 @ 15:18
    Luke is a joker
    • SB
      Stephen B.
      24 July 2020 @ 15:56
      Luke turned me onto gold last year. Brilliant decision.
    • AC
      Andrew C.
      28 July 2020 @ 10:43
      Luke is an Ace
  • HK
    H K.
    24 July 2020 @ 11:10
    Good interview here Much as I like to hear Kyle Bass on his thoughts, Hugh correctly pointed out that 3y, no results would mean a time-out. Early is usually wrong. Also the thing is the $ isn't preferred coz govts say it is, it's that the international banking infrastructure is in place, transaction costs are lower and it is relatively more stable than alternatives. So individual exporters, importers and service providers prefer using the $ for the convenience. Almost like why a meeting of multiple European nationals often takes place in English, which wouldn't be the first language for most participants
    • TB
      Thomas B.
      28 July 2020 @ 04:15
      Also the US Navy keeps the sea lanes open.
  • WB
    William B.
    28 July 2020 @ 03:53
    Great minds. Great interview. Where do you find this stuff? RealVision.
  • HN
    Hoang N.
    28 July 2020 @ 03:25
    Super interesting. Bring these guys back regularly RV
  • IP
    Ivo P.
    25 July 2020 @ 13:59
    Are you convinced that the US was a benevolent hegemon? Or the cheap outsourced product of goods was necessary for the debt/asset fueled consumption expansion since the 70s. A "normal" country would not be able to sustain such de-industrialization and a market driven currency devaluation would stop the process. But if you have the ability to finance the gov with papers you print it is fine until Joe Regular becomes growing majority and the consumption pyramid starts to erode, leading to the quickest solution to print something directly to Joe, which we now is not philosophically acceptable if you do not observe the system as a whole.
    • PU
      Peter U.
      25 July 2020 @ 14:34
      so true
    • GH
      Garrett H.
      28 July 2020 @ 00:18
      1971 was a way to kick the can of global monetary renegotiation 50 years, not an act of great benevolence and foresight.
  • RW
    Richard W.
    27 July 2020 @ 18:05
    8 minutes before the end - effectively commercial banks are doing the money printing for the US Government
  • VR
    Vladimir R.
    25 July 2020 @ 15:31
    Gotta say, this was brilliant. High powered master class on the world economics. Wow!
    • JF
      Jack F. | Real Vision
      25 July 2020 @ 16:39
      Totally agree, Vladimir. Was listening to this as it was being recorded and my mind was blown. When it comes to global macro, Hugh and Luke like to play "above the rim"
    • NI
      Nate I.
      27 July 2020 @ 17:27
      Hugh is a smart guy, but I was shocked when he couldn't see what's wrong with the current system. As I said in my standalone comment, you have to produce in order to consume. I may not be an economic genius, but I don't see how the US can continue buying more and more things from other countries with increasingly worthless money while producing less and less domestically. Why would the rest of the world work its ass off to make things and watch the US sit on the couch? That makes no logical sense to me. Sure, maybe for awhile but not indefinitely.
  • AR
    Andrew R.
    27 July 2020 @ 05:11
    Very interesting indeed! A lot of this went above my head, I am not from a finance background. Was Hugh essentially saying that because the US had benefited from the reserve currency status they were able to become extremely efficient and offshore low cost labor to developing countries (India/China) and in turn increase the population wealth of those countries. In tandem to the wealth increase those countries experienced the US got the benefit of cheap consumption and consumer growth along with the opportunity to focus on new innovation etc. However, now there is an argument for the US slowing down with negative interest rates almost a flip in circumstance for the short to mid term as China and India now have the opportunity to benefit from the population wealth increase and becomes more consumers than producers? Ultimately meaning the price Americans will pay is some short term negative rates?
  • MH
    Martin H.
    27 July 2020 @ 03:54
    Hendry seems to think money and wealth are the same thing. I find some of his approach illogical.
  • AH
    Andrew H.
    24 July 2020 @ 14:21
    One trade idea from this discussion is to buy uranium. With discussion of China moving to a negative current account, which I agree with, and US causing inflation, one thing is clear China can NOT afford to continue to import oil, especially at higher costs. Uranium could/ would be an obvious policy outcome of this dynamic. Would love to hear positive/ negative to this line of thinking.
    • je
      james e.
      24 July 2020 @ 20:27
      I like Ur but can't China import plenty of oil at a cheap price from Iran (maybe African countries too)?
    • mf
      massimo f.
      24 July 2020 @ 23:20
      Perhaps in the short term, long term I think an OPEC for uranium being developed is a very good possibility due to it being similarly concentrated in certain regions and scarce elsewhere.
    • MO
      Michael O.
      26 July 2020 @ 23:09
      Uranium is rapidly heading into a supply deficit (accelerated by covid). China is already a substantial buyer, has 46 nuclear reactors in operation with a capacity of 42.8 GW - 11 under construction and long-term plans for future capacity are 120-150 GW by 2030. I agree uranium is an excellent trade for next 1-4 years regardless of China's oil import plans.
  • PW
    Phil W.
    26 July 2020 @ 20:33
    Well! that hour or so flew by. Great discourse.
  • JQ
    Joseph Q.
    26 July 2020 @ 18:16
    Question Happens when BTC ETH GOLD SILVER go vertical. Feeling devaluing the dollar starts a snowball effect which could in end with a Bang to 50 on DXY.
  • AK
    Andrew K.
    26 July 2020 @ 17:34
    Awesome interview/discussion.. +LGORF, +rare earths, +NG, +BTC, +GLD, +SLV, +QQQ Put Spreads, +SPY Low delta/Long dated Puts. We are at the inflection and, as difficult as it is to build the portfolio in the face of the bubble, it’s conversations like this found only on RV, that give me the courage to move forward. Thank you
  • PJ
    Paul J.
    26 July 2020 @ 14:17
    Hah, more click bait for RV.
  • EA
    Emmanuel A.
    26 July 2020 @ 08:55
    Hugh seems like the kind of guy whose mind will explode once he understands Bitcoin. I wish he'd read The Bitcoin Standard already.
  • JS
    Jerad S.
    26 July 2020 @ 06:36
    My brain grew two sizes. The idea that the the dollar rate was the reason for the dry up in US treasuries was news to me. The lack of elasticity in SDR’s, loved it. Their are many things that could change their narratives, but wow. ... I do wonder though, forcing banks to buy treasuries and having the central bank assume roles branch banks previously held are end game scenarios, are they not?
  • NI
    Nate I.
    26 July 2020 @ 04:22
    In order to consume, you have to produce. It's really not that complicated.
  • CH
    Charles H.
    26 July 2020 @ 03:48
    Thanks for a great discussion between two interesting thinkers. This is the content for which I come to RealVision.
  • RO
    Rodrigo O.
    25 July 2020 @ 22:35
    "What's wrong with the system" is that all the injection of the "magical money" is based on central "planned" spending. That creates a lack of productivity. Bigger and bigger, as time goes by. And this evolving lack was what made the bank system, in its search for profits, change from investing in production to investing in consumption, and then desperately to boost asset prices to support the overstretched consumption. Until you are in ruin. It creates a destructive vicious cycle. By the top 1% for the top 1%. That happened in Europe, Japan, the U.S., and now is happening in China. What you called "benevolence" is actually an act of despair. Because a fiat money system is based on credit expansion. Leverage. And when you get at the top of your capacity, to avoid the fragile system for falling apart you have to export the credit to keep the party going. It's not sustainable. The elasticity of money will never change the fact we live in a finite world. Where capital is scarce. And we have to operate accordingly. PS: The FED will never be able to create more elasticity. Because the greater the debt, the greater the dollar shortage.
  • DS
    David S.
    25 July 2020 @ 20:10
    Mr. Hendry. I agree with your assessment of the US wanting to build a better world with global trade raising all boats after WWII. The US had a great set of leaders who were doing their best for as many as possible. Those days have been gone for a long time. Global trade was developed and intensified in the US as a labor expense arbitrage. This benefited corporate P&Ls and Americans were able to buy all the toys from China at a cheap. The cost was hollowing out American industry. Now with massive deficits even before COVID-19, the US is in the position of rebuilding industrial base from the ground up. Unfortunately for the American worker, corporations will be using robots to arbitrage the American worker's wages for a second time. It is the decline in middle-class jobs that is a major causes of anger that forces politicians to come up with all kinds of conspiracy theories as escape goats. Conspiracy theories are funding political campaigns, television stations, radio host who sell all kinds of snake oil to their followers. There is a direct line from McCarthy Communist conspiracy theories without any evidence or proof to politicians, media stations, and internet personalities of today. The people that yell about fake news are the ones promulgating fake news. The common ground is it cannot be my fault, there must be a huge conspiracy holding me back or trying to make me look bad. This is not the way to run a democracy anywhere. DLS
  • JD
    James D.
    25 July 2020 @ 19:40
    This was a fantastic, one of global macro interviews on RV. I agree on thinking about giving Hugh his own set of interviews on RV - the Dawn of Chaos series? I think he'd be great with a series building/analyzing global macro frameworks and teasing out the n-th order effects and hidden tails on both sides in those frameworks like he did here and did with Raoul. I think him and Ben Melkman would be great, and David Hunter of Contrarian Macro and Hugh would be a wild ride. But really I'd love to see Hugh sit down with experts in certain areas - eg, Jeff Snider on Eurodollars, Mike Green on passive, Lacy Hunt on bonds, etc. - to dive deeply into that area, let Hugh run wild with some of the out of the box macro implications of their theses, and have the expert and Hugh talk through which of those implications are reasonable, possible, or just insane. Thanks for this, RV team.
  • AS
    Andrew S.
    24 July 2020 @ 12:03
    Great interview. I have been a subscriber to Luke's work for 3 years and he has connected the dots better than anyone in macro during that time. I think it boils down to this. The system as it is structured, to Hugh's point, only survives if the US Dollar goes lower. To Luke's point, the FED is going to print until we get a lower dollar. Gold is a no brainer given that it is what you want to own if the system holds together with a lower dollar and if the system falls apart, gold is what you want to own as insurance. Why make it more complicated than that?
    • TO
      Truls O.
      24 July 2020 @ 14:38
      how does his subscription work?
    • SB
      Stephen B.
      24 July 2020 @ 16:10
      You get a newsletter every Friday. Sign up at FFTT.
    • JH
      Jon H.
      25 July 2020 @ 19:36
      Brilliant, Andrew!!! Thanks!
  • OT
    Omar T.
    24 July 2020 @ 15:29
    Hugh Hendry is one of the best interviewers I have seen at pushing and challenging to get more out of the interviewee, great job!
    • CL
      Chuck L.
      25 July 2020 @ 19:00
  • RX
    Robert X.
    25 July 2020 @ 17:17
    One of the best interviews on the platform on a while. I love Luke’s worldview - and I think it’s all the more valuable when given the full proctological by a successful global macro portfolio manager like Hugh. Well done Hugh, Luke & Real Vision.
  • GB
    Gordon B.
    25 July 2020 @ 16:51
    Great conversation. Would be great if RV could invite the two gentlemen back for an encore in a couple months.
  • DY
    Dmitry Y.
    24 July 2020 @ 20:59
    Really? Luke is just adjusting to whatever opinion looks more trustworthy, and I couldn't connect the dots in his repetitive lines around oil, gold, current account deficits and dollar shortage... Give a bigger challenger to Hugh
    • PM
      Paul M.
      25 July 2020 @ 00:02
      Yeah. You're clearly not very bright, are you?
    • PU
      Peter U.
      25 July 2020 @ 14:49
      Dmitry, you are alone on those thoughts!
  • GF
    Gordon F.
    24 July 2020 @ 22:31
    A life-long struggle for me has been to learn to see the world as it is, rather than imposing my own view of how it ought to be. This conversation helped me in this effort. I was especially grateful when it was pointed out that the US did NOT run a negative account balance and hollow out its industry out of benevolence, but because it benefited those in positions of power in Washington and New York, who are not benevolent - neither toward their fellow citizens nor toward the rest of the world. They screwed the rest of the country in order to line their own pockets, while talking nobly of patriotism and US exceptionalism. And I am sure that anything that they perceive as threatening their wealth, position, and privilege, either in the US or elsewhere, will be viciously and violently attacked.
    • PU
      Peter U.
      25 July 2020 @ 14:48
      spot on
  • PH
    Paxton H.
    24 July 2020 @ 23:04
    This was worth watching just to hear “Kyle Bass has been timed out.”
    • PM
      Paul M.
      25 July 2020 @ 00:01
      That was the only thing worth watching for.
    • TP
      Timothy P.
      25 July 2020 @ 14:21
      I wouldn't be so sure. The next action the US could take is to explicitly break the HKD/USD peg by their own hand - which would validate Kyle's thesis.
  • JW
    J W.
    25 July 2020 @ 13:46
    Fascinating interview. Very engaging. I am on my second listen now - real detailed and incisive content, I learned a lot.
  • JH
    Joel H.
    25 July 2020 @ 13:23
    I don't understand how the current system is in any way sustainable. Maybe there's an argument to be said that no system is sustainable, (why cycles are the only actual thing) but, my guess is, the system we have now is bound to fail more spectacularly than any other one. I mean, we didn't even get a cure for cancer or sustainable energy from this wasted credit expansion. I really like Hugh, but sometimes there's things he says that I don't understand, but I'm happy to keep listening to be challenged. He is a great person to do interviews for sure regardless.
    • JH
      Joel H.
      25 July 2020 @ 13:36
      I also don't understand how anyone, no matter how they dress it up, will accept Yuan.
  • GB
    Griffin B.
    25 July 2020 @ 01:45
    Why would the Chinese CA moving to -1% of GDP trigger a currency crisis? That seems a little extreme but I am curious to learn more about why this would be the case. Does anyone know? Thanks.
    • AD
      Antonio D.
      25 July 2020 @ 12:40
      My understanding is the two sides of the CA: - Commodities purchases by China uses the USD vs. exports and chinese corps bring in USD - If China requires more commodities than they have sufficient USD for (from the exports/corps), this is the negative CA - China can't pay for commodities = China can't pay for growth - Don't want to hold CNH/CNY Happy to get clarification from others also
  • JF
    John F.
    25 July 2020 @ 10:38
    The Mad Hatter of RealVision returns.
  • DR
    Danilo R.
    25 July 2020 @ 10:15
    If Hugh was a real RMB fan boy he would be in Hong Kong not St. Barts. China manipulates it’s currency, has a plethora of fake gold, and everything internal is a lie from their GDP, COVID case count and corporate revenue. They can’t lie about their aging demographics, bad geography, massive dependency of raw commodities. On the bright side, it seems Hugh can have a follow up to Princes of the Yen, the Princesses of the Dollar featuring Pelosi, AOC, Warren, Shelton and Kamal Harris and how the US went negative rates because working age millennials should not be bothered with a job.
  • PH
    Place H.
    24 July 2020 @ 07:19
    Still don't understand how China doesn't pay for gold from their vaults when Iran or Russia turns over their Yuan to the Shanghai Gold Exchange. Can somebody explain?
    • PH
      Place H.
      24 July 2020 @ 09:46
      Follow up question. Russia and Iran gets the gold, pays the "unwanted" Yuan to counterparties in Shanghai Gold Exchange. Who are the counterparties? And why the hell would they part with their gold to get Yuan? I seem to remember Luke stating in the past that the gold in Shanghai Gold Exchange doesn't come from the Chinese but is supplied by London and Chicago vaults via LBMA and COMEX. How does that happen? Does LBMA and COMEX get the Yuan? Why would they want the Yuan?
    • cA
      chris@krinocapital.com A.
      25 July 2020 @ 08:19
      China- Russia could use a gold collateral based system with neutral vault in Switzerland. China will pay Russia CNY for oil and Russia comfortable to enter a CNY contract say over a year because it’s ultimately backed by gold in a margin system. So if CNY devalues significantly in interim, Russia as recourse to the collateral gold.
  • JF
    Jennifer F.
    25 July 2020 @ 07:09
    excellent interview. thank you.
  • AA
    Amilcar A.
    24 July 2020 @ 15:53
    0 mentions of 'Bitcoin' It's hard to talk about the coming decade without including that.
    • TP
      Timothy P.
      24 July 2020 @ 16:17
      True. Especially when they were talking about current accounts and SDR baskets. Every banking system depends on a currency that can be inflated at a whim. This addiction to easy (but flawed) solutions to difficult problems underscores the whole problem with Central Banks and the Fed.
    • mf
      massimo f.
      24 July 2020 @ 23:11
      Blockchain definitely but bitcoin’s success is by no means guaranteed.
    • TP
      Timothy P.
      25 July 2020 @ 00:10
      @Massimo - That's like saying "Brown boxes definitely but Amazon's success is by no means guaranteed." The banks and corporates tried "Blockchain not Bitcoin" already, and they don't have much to show for it. You'd know that if you had done any research.
    • GB
      Graeme B.
      25 July 2020 @ 07:00
      Ethereum remains the one to watch. Activity / real usage is exploding: https://decrypt.co/35275/active-ethereum-addresses-growing-twice-as-fast-as-bitcoin
  • JW
    Jason W.
    25 July 2020 @ 05:54
    WOW! Stella quality real vision.
  • jG
    james G.
    25 July 2020 @ 00:02
    firstly, I love Hugh Hendry and watching him and Raoul Pal discuss the "Princes of the Yen" was why I joined Realvision. I think the analysis of Hugh is flawed in that he gives too much power to the economic over the political. The "Benevolent Hegemony" hollowing out it's industrial economy for the benefit of other sovereign countries much poorer then the USA in order to bring them the wealth and prosperity enjoyed by the first world. I think displays a detached world view of the overlord and the serf.... The reality I feel is more that a corporation that makes refrigerators wanted to expand his market so everybody in India and China would buy a fridge. His own market is saturated --- etc etc ... you all know the rest and in the process he sacrificed the working population of his own country. I think if Hugh Hendry came from Maryhill in Glasgow and not Kelvinside he would look at the world though a different window. --- that is both tongue in cheek and a bit of a needle -- sorry . I think Mr Gromen is correct in that politics is going to one of the most important factors and that politics will decide how well or how terribly we navigate the next few years. So. ... when you make the statement "politics aside' I think you have a weakened argument ... right now politics is going to be everything.
    • MF
      Michael F.
      25 July 2020 @ 04:45
      On this I totally agree, the US became the "Benevolent Hegemon" because it suited the rich/corporates AND the politicians playing geopolitics. For the later group trading US jobs for "subservience" from 3rd world countries, Japan and for a while China made great sense while we were finishing up the cold war. So, it was about both money and politics - what happened to the manufacturing base of the US was seen as regrettable and inevitable.
  • TP
    Timothy P.
    24 July 2020 @ 16:15
    Hendry - "You don't have an elastic currency basket ... " - Yes, its a shame that the Central Banks has economies used to inflationary/devaluing currencies that rob savers for short-term gains. I had to laugh when he was complaining about that, its the same line any Fed chair would give you. "But you can't change it, because this system benefits us! (the banks)" Screw the banks. Time for something better.
    • DJ
      David J.
      25 July 2020 @ 04:34
      Right the elasticity only works if the ones pulling the strings are genuinely benevolent
  • MF
    Michael F.
    25 July 2020 @ 04:16
    Luke is Brilliant!!!!! So is Hugh!
  • MR
    Matthew R.
    25 July 2020 @ 03:30
    Good will is not what drove the US to bring prosperity to other parts of the world. The rest of the world will not through good accept the low rates that money print is producing.
  • PS
    Paul S.
    25 July 2020 @ 01:18
    • PS
      Paul S.
      25 July 2020 @ 02:18
      https://www.theatlantic.com/magazine/archive/2009/05/the-quiet-coup/307364/ https://fftt-llc.com/
  • MD
    Matt D.
    25 July 2020 @ 02:07
    Brilliant RV discussion.
  • CX
    Cindy X.
    25 July 2020 @ 01:38
    Hendry is completely right. To think a country that does so much export to run out of $$, it is insane. Kyle Bass is totally timed out. Just look at where the USD/CHN exchange rate. It got to 6.98 a couple of days ago from 7.10 in March. Kyle Bass is waiting for a 10. Next century.
  • CX
    Cindy X.
    25 July 2020 @ 01:20
    Wow, what a great conversation !!! Very eye opening. The US took a big hit for exchanging green paper for cheap goods. Common sense but first time to hear it talked this way. Thank you, Gentlemen.
  • RD
    Ryan D.
    25 July 2020 @ 01:16
    Who wants to Party with Hugh? I know I do.
  • SG
    Skyler G.
    25 July 2020 @ 00:55
    "Continued spending" to get the Dollar down to "where they want it" so the Fed and US banks can step back and foreign demand can step in would bring us to Peter Schiffs point. Hypothetically, if the world didn't want to fund the US deficits, what happens then? Is the fed going to keep monetizing the debt? Last years Jackson hole summit the BoE Governor expressed the need to move away from the Dollar system. Perhaps the world doesn't want to keep the system going.
  • PB
    Paul B.
    25 July 2020 @ 00:00
    Very Good Interview
  • PB
    Paul B.
    24 July 2020 @ 23:32
    You are assuming the Velocity of the USD will increase and the Value of the USD to increase, I dont see it Buddy
  • TZ
    Tibor Z.
    24 July 2020 @ 21:15
    Off topic : is there any good read on how to pick the bottom in stocks? In technical analysis....what to use? Like RSI and the others. And what page or program to use to put everything together? Or maybe it would be a great next video! :) Thanks in advance for your comments!
    • mf
      massimo f.
      24 July 2020 @ 23:09
      Howard marks wrote a book on the topic called mastering the market cycle
  • gj
    gail j.
    24 July 2020 @ 22:44
    Two of my favorite minds in one brilliant confab! I'll sit and think and watch it again tomorrow.
  • NS
    Nigel S.
    24 July 2020 @ 22:05
    Gromen made Hendry's bed for him, great stuff
  • SC
    Scott C.
    24 July 2020 @ 22:02
    Fantastic. Well done gents.
  • CK
    Christopher K.
    24 July 2020 @ 20:55
    Great conversation. I think I've been following Luke's work for 5 or 6 years now, which astounds me it's been that long. That call isn't the only one he made, for sure. Hugh is always a blast.
  • PE
    Paul E.
    24 July 2020 @ 20:55
    This was great! Loved the interview and the energy! Thanks.
  • DL
    Dan L.
    24 July 2020 @ 20:40
    outstanding perspective. omg
  • BN
    Barrett N.
    24 July 2020 @ 20:05
    Fantastic interview! Thanks, Luke, Hugh and RV! You guys were great. Best. B
  • JW
    Joseph W.
    24 July 2020 @ 19:51
    favorite video for a while - would love to see Hugh v Kyle
  • DS
    David S.
    24 July 2020 @ 19:41
    Loved the interview. The positive chaos from Mr. Hendry's mind opens my mind to new points of view. Mr. Gromen is a perfect counterpoint of linear logic. The two together were just fantastic. For me, the FX and commodities markets define value with each trade. For you younger folks digital currency fits the bill also. The days of any long-term fixed exchange rate is dead for good reason – it does not work. This is the new world where each investor in FX and commodities set the market price. Deal with it. - skin in the game - chaotic but better. DLS
  • BB
    Brian B.
    24 July 2020 @ 19:14
    Easily one of the best things I’ve watched on RV! Please ask these two gentlemen to have another discussion 6 months hence! Thank You!
  • PS
    Parminder S.
    24 July 2020 @ 18:33
    I cant see this video; just get a circle going round :(. Is Hugh actually wearing a jacket? :)
  • AP
    Adam P.
    24 July 2020 @ 18:27
    That was f'n rad. Great work, gentz.
  • JM
    Judith M.
    24 July 2020 @ 17:35
    Fantastic interview, thanks for bringing us your insight, Hugh & Luke (and RV)!
  • JP
    John P.
    24 July 2020 @ 17:32
    I agree - give Hugh a regular show.
  • MO
    Michael O.
    24 July 2020 @ 16:53
    Outstanding! Thank you Hugh, Luke and RV
  • DM
    David M.
    24 July 2020 @ 16:25
    These two together... Wow!! I can't even imagine what it would be like to get these guys to sit down and hear them brainstorm a macro portfolio composition together. Awesome interviewing Hugh, thanks for coming on and talking Luke, and thanks RV for hosting!
  • DM
    Daniel M.
    24 July 2020 @ 05:55
    Sound is pretty bad. Would like to see (hear) these guys get a decent microphone setup
    • PH
      Place H.
      24 July 2020 @ 09:52
      Goes for all their shows really. These people make a killing being money managers and should be able to cough up a few hundred for top of the line microphones.
    • SB
      Stephen B.
      24 July 2020 @ 15:42
      It's not the microphone, it is the quality of the internet connection. Don't forget Hugh is on a remote island, with limited bandwidth.
  • SB
    Stephen B.
    24 July 2020 @ 15:40
    Priceless. Pure RV gold.
  • RM
    Russell M.
    24 July 2020 @ 15:32
    Fascinating discussion.
  • DD
    Daniel D.
    24 July 2020 @ 15:23
    Brilliantly done gentlemen! Thank you.
  • JH
    Jesse H.
    24 July 2020 @ 14:45
    Good stuff guys, and I have to say that not only is Hugh becoming a much better interviewer this time around, he also is a riot. Can RV have an entertainment / comedy classification? He is a real character, and I tuned in as much for the substance of his discussion with Luke, who was great as always, as I did for the entertainment value. Well done gents. Many thanks.
    • JH
      Jesse H.
      24 July 2020 @ 14:45
      Two guys I would love to have a beer (or two) with, frankly! :-)
  • PD
    Peter D.
    24 July 2020 @ 14:44
    I listen to anyone with trees in their name.
  • MW
    M W.
    24 July 2020 @ 14:43
    No transcript?
  • SS
    S S.
    24 July 2020 @ 14:26
    Hugh is a fast learner. This is how you interview guests by not interrupting and not calling them 'conspiracy theorists'
    • PH
      Place H.
      24 July 2020 @ 14:43
      Love Richard Werner but to be fair to Hugh, Richard's Twitter is looking like Q-Anon these days.
  • PU
    Peter U.
    24 July 2020 @ 14:42
    Headline . . . . Hendry v Gromen . . . . Gromen takes it by one round. When is the rematch . . . I'll a buyer!
  • MC
    Mike C.
    24 July 2020 @ 14:25
    Hugh, I notice that you often say "putting the politics aside" when discussing economics. What happens to your narrative if the benevolent debtor decides that being benevolent no longer serves its interests because the creditor has bitten the benevolent dictators hand one too many times (I think this is Kyle's point and evidently becoming US Foreign Policy if you follow US Secretary of State Pompeo @SecPompeo)? For someone who loves philosophy and history I don't see you discussing the macro implications of ideological conflicts that are clearly becoming insurmountable differences between the China sphere and the Western democratic sphere. Perhaps you don't think there are any macro/FX implications and you think its just all bluster? What about the growing incoherence between economic and foreign policy? There is irony in the knowledge that the financial system needs a weaker USD to stay alive but democratic society and respect for human/individual rights needs a strong USD. These philosophical issues were not a concern in 2008. There seems to me to be so much more at stake here than would be solved by just having Mr Munchkin and the Wizard of Oz declare DXY at 75.
    • JH
      Jesse H.
      24 July 2020 @ 14:41
      Very well put. Entirely agree with the gist of what you’ve said here. The notion of a « benevolent hegemon » to me seems rather nonsensical. I don’t see the US action of effectively shipping jobs overseas as any sign of magnanimity or benevolence, but actually greed and capital seeking the highest returns via cheap labour. Clearly, this trend is now over and is actually a story from 20 years ago through the early 2010s. Now we are just into a Ponzi US market of throwing good money after bad. Silver and gold are finally pricing in the inflationary implications (expectations) and the incipient (and growing) decline in purchasing power.
  • GS
    Greg S.
    24 July 2020 @ 14:39
    Good right up until the last five minutes. Negative real rates are a function of misallocated capital (using Luke's examples, entitlements). Fed policies keep increasing the amount of capital that does not yield a return and making the system more fragile (at zero % interest rates you can knock down the rocky mountains as Daniel Oliver discussed). The bad capital needs to be cleansed (you know capitalism), not just let the dollar fall to DXY = 75, and we can all play the nominal game for 10 more years, but the reckoning is that much worse.
  • PC
    Paulo C.
    24 July 2020 @ 14:17
    Is the paper that Hugh mentioned at the beggining of the interview accessible?
  • SS
    Simeon S.
    24 July 2020 @ 14:12
    Fantastic, finally an interviewer who has critical questions! Will he be re-invited? I hope so
  • YB
    Yuriy B.
    24 July 2020 @ 13:51
    Phenomenal conversation. Kudos!
  • PG
    Philippe G.
    24 July 2020 @ 13:47
    Fantastic - will have to watch one more time to fully process everything While he may not be everyone's "cup of tea", love Hugh Hendry's energy, personality, and insights! Keep it up!
  • SB
    Steve B.
    24 July 2020 @ 13:13
    Hugh nailed the interviewer role this time. Great work Hugh!
  • EO
    Erk O.
    24 July 2020 @ 12:54
  • NA
    Nicolas A.
    24 July 2020 @ 12:53
    Thanks guys this was fantastic
  • AL
    Aureo L.
    24 July 2020 @ 12:04
    Superb interview. The mutual improvement is evident: Hugh made Luke express some fundamentals of his reason that bridge the difference with usd bulls and the tradition of macroeconomics. Luke estimulate Hugh's mind to focus in an aproach that use his creativite to build a more sistematic analysis. Beautiful!
  • AG
    Audrey G.
    24 July 2020 @ 11:31
    Great conversation! Thank you!
  • RF
    Richard F.
    24 July 2020 @ 09:02
    These two are terrific. They are individually great but something special happens when they bounce off each other.
  • RK
    Rusev K.
    24 July 2020 @ 05:53
    He's BACK!!!
    • AB
      Alastair B.
      24 July 2020 @ 08:57
      And he’s wearing clothes! just kidding.... this interview was fantastic. Good job HH
  • DP
    Daniel P.
    24 July 2020 @ 08:44
    Hugh as an interviewer is really growing on me - it's like he's automatically tuned to the role of devil's advocate whoever he speaks with
  • JF
    Joachim F.
    24 July 2020 @ 08:31
    Just brilliant. Thank you!
  • HJ
    Hassan J.
    24 July 2020 @ 08:02
    Good to see the otherwise rare practice of the host challenging the guest on RV.
  • WL
    Wayne L.
    24 July 2020 @ 07:37
    That was great, Hugh, Luke. Man, the stuff I am learning!