Japanese Debt Wipeout Can They Get Away With It?

Published on
October 25th, 2017
31 minutes

Japanese Debt Wipeout Can They Get Away With It?

The Interview ·
Featuring Bill Fleckenstein

Published on: October 25th, 2017 • Duration: 31 minutes

Bill Fleckenstein runs through the potential impact and fallout of a debt jubilee by a G7 member, suggesting Japan is a more obvious candidate than the US. In conversation with Grant Williams, Bill runs through the likely repercussions of such a move, nearly a decade into the black hole of finance. Plus, we also get to hear the legendary short seller’s assessment of today’s insane markets. Filmed on October 19, 2017, in Oregon.


  • BH
    Bin H.
    10 November 2019 @ 07:40
    Really enjoy it
  • JF
    Jennifer F.
    29 April 2019 @ 01:58
    Look forward to more debate on the debt jubilee thesis.
  • MC
    Mathieu C.
    10 March 2019 @ 22:48
    I think this is way early to guess what will happen when they did it but in my opinion it's indeed in my opinion the only way out of QE due to the pile of debt which makes inflation/rate increase impossible to rise all over the world. So let's wait for another round of QE first to confirm and then we will all know this is it. It's coming as this event is only worth while when you can cancel large holding of debt. I like to think it might from the same magnitude of a recession stock decline; like 30% -40% loss of value. In terms of post fusion event, I am not sure if the market will be prepared or not before hand. The main effect it will have is to rise inflation expectation as government will be able to finally run large fiscal deficit not for paying interest but real tax cuts, this is why rate will increase, not the opposite. However rates can't increase before they do it, otherwise debt goes default; so I would think it will be an unexpected announcement on the back of a crisis and will be marketed as a "new" experiment. I am new here, however I would think you have quite a bias in the gold rise scenario. If they successfully do this, haven't they found the ultimate magic tool to prosperity with infinite printing that makes the gold useless?! We will reach another level of exponentiel growth there. This is the part 2 of Brenton Woods! Can this be replicated, it is hard to see, in this environment it has worked as monetising the debt had not created much inflation. Re the gold price, however more and more people will start pricing this scenario as the final possible outcome and therefore they might just sell the gold once they realise it has not more upside than to rise on the back of a weak dollar, the default premium has gone away. A weak gold will also help to finalise the last part of this process that they will have to manage government expectation in their new consumption of debt as to it cannot be a "regular" tool and probably cannot be reuse anytime soon; that was a rather lucky one historical event which we happened to live, therefore maybe gold standard will be reintroduce for a little while so government can clean up their budget in an orderly manner and not going back in a debt binge as they had done in the past knowing we just have found ourself with a magic tool. Basically to wrap up, the main point you are missing out here is the inflation expectation. Nonetheless thanks for this content!
    • MC
      Mathieu C.
      10 March 2019 @ 22:53
      a few typo there sorry... too bad I cannot update my comment :)
  • TT
    Timothy T.
    19 December 2017 @ 11:58
    Well if Japan does a debt jubilee, it will basically expose to everyone the fiat is WORTHLESS, so aptly put by Bill. And seriously, there are countries where currencies had hard backing. The question will be how it will impact investor AND public psychology on fiat. It would well end the fiat experiment, that was started in 1971. I suspect any debt jubilee will be followed by a return of to a Bretton-woods system.
  • VP
    Vincent P.
    25 October 2017 @ 19:34
    Ha! I knew it. From Schiff to Fleck! These two guys are real smart but they've also been real wrong. At least Bill stepped up and he should get lots of respect and credit for that. I've followed both of them for years and also believe there will be a Minsky moment, debt jubilee or whatever you want to call it, in Japan and other places with signals clearly ignored by the sheeple. As far as Japan's currency, all it's debt and those ETF's??? Well, how about a tender offer for ETF shares not already owned by BOJ, take the COUNTRY private, restructure all companies and issue new Funds as "DETS" (Deceased Exchange Traded Shares). They can also devalue the Yen by at least 50%, restructure debt, issue new long term debt backed by Gold. I'm certain there's a BOJ member somewhere who wants to do this. Thanks Grant and Bill for a good interview. 'Nuff said.
    • dd
      darrell d.
      25 October 2017 @ 21:33
      Both have been real wrong until they are real right.
    • JC
      John C.
      2 December 2017 @ 20:07
      I think Fleck has been wrong on the theoretical side but as he clearly stated in the video and in his daily letter he has not been short for awhile (he closed his short fund in 2009) and has largely stayed away from shorting stocks since the CBs started intervening en masse. In addition, he's a big metals market guy and has done well with gold and silver.
  • JV
    Jason V.
    26 October 2017 @ 00:11
    RVTV is nothing short of brilliant. But I can't help thinking it's currently experiencing a serious bout of 'shrinkflation'. The core product, and previously real strength, of RVTV was its in-depth, hour-long interviews. Recently these have been cut in half! Now when we 'open the box' we literally get 50% less. I'm surprised there isn't more uproar from us loyal customers.
    • GG
      Glenn G.
      26 October 2017 @ 03:25
      I personally do not mind the 30 minute interviews. Let's face it, not all of the people that are interviewed on RV are dynamic engaging speakers and some of them get a little dry. I would like to see more those 10 minute or less "Trade Idea" segments where an investment thesis is described in detail and catalysts provided - those have the potential to be a real hit with subscribers and provide value relative to the annual cost of RV.
    • SD
      Sebastien D.
      26 October 2017 @ 03:43
      I have been thinking the same for a while. A lot of superlatives but shorter videos and only 3 times a week at best. With price increase this is definitely a shrinkflation case. On the bright side the quality of the filming/storytelling has increased.
    • SG
      Sam G.
      26 October 2017 @ 07:00
      Very much agree Jason. One would've thought that with a doubling in the price of subscription, at a minimum the depth, quality and frequency of videos would have remained the same. Producing shorter versions of in-depth, 1+ hour interview videos is a great idea. Why not keep with the in-depth interviews, but provide subscribers with one additional option: an editor's cut or the full length?
    • JH
      Jesse H.
      26 October 2017 @ 07:03
      Completely agree - have been thinking the same lately. Have also noticed a drop-off in quality, unfortunately, with the last few major productions. I wonder if the fact that RV is pursuing many products simultaneously is causing them to be spread thin on their bread-and-butter, high-quality interviews, which is what I believe many of us signed up for. Certainly hope I'm wrong. Hard to safeguard quality as a business increases in scope and size...probably why some businesses choose to stay "lean and mean."
    • RM
      Robert M.
      28 October 2017 @ 17:45
      One of the value of TED talks are that they never exceed 18 minutes. A lot can be said in a short period of time. I am OK with shorter talks as long as they make a point. Rambling interviews just eat up time. But if you have a brilliant guest, an hour is great as long as the conversation is focused.
    • JC
      John C.
      2 December 2017 @ 20:05
      Boy I am on the other side of the timing thing whereby I have lately been thinking that all these hour+ long videos are hard to watch in one sitting and fit into my busy schedule.
  • AG
    Austin G.
    26 October 2017 @ 00:11
    Maybe we are in a complacency bubble that started in the 40's. AS debt got piled on and nothing happened people got complacent. We have entitlement programs, we have central banks that pump liquidity into the system when things get screwed up, debt keeps rising but nothing bad happens. So everybody acts as if things are ok. Precious metals don't skyrocket because people are not worried, besides, for the time being it is all about cryptocurrencies. It makes me think of how the magician distracts people with the left hand while the real action is with the right hand. But people chase bitcoin out of greed and also not being fearful i.e. complacent. Show the big question for me is "What happens when this complacency bubble pops and people become fearful and not trusting others? When they want something they can hold in their hands and hide somewhere." My guess is that when that happens, the charts of PMs will look like the chart of bitcoin. When will the complacency be replaced by fear? I don't know but it can't go on forever
    • JC
      John C.
      2 December 2017 @ 20:04
      We're already there in terms of people starting to not trust each other and the government. And as Doug Casey has said, crypto is a 'gateway drug' to gold and PM so at some point the hard assets that retain value are going to be even more in demand.
  • sm
    sam m.
    26 October 2017 @ 06:59
    Great Interview. In most countries the Government will own the Central Bank so as soon as the CB purchases Govt Bonds it has effectively cancelled the interest burden since it owes the money to itself and pays the interest to itself. If instead of selling the bonds back into the private market the Govt tells the CB to accept a zero coupon perpetual (ie cash) or zero coupon 200 year bond in exchange for maturing or yet to mature bonds then the debt has been cancelled (or imposes no interest burden). The fact that previous money printing has occurred is not the problem (that money has already been created) - the problem is that the Government is then free to repeat this process and re-leverage from a clean balance sheet ... and our problem as investors is predicting how the market will react (e.g. who would buy a government bond at 1-2% yield if the Jap Govt now owed 0% GDP but could re-gear to 100, 200, 300%? My guess is that it would be at a high rate and a lower FX rate since no one would trust that the country's currency is worth anything ... but if all G7 geared up first and did it at the same time ... buy gold?)
    • JC
      John C.
      2 December 2017 @ 20:02
      I agree. Isn't another way to look at it as if the non-governmental bondholders are effectively getting 'diluted' by the government in the form of the central bank whereby the Central Bank is collecting the interest that would have been due to the existing non-governmental owners but at the same time propping up the price so as to keep everyone happy (for a time). However, once the gig is up, at some point interest rates have to reset when nobody outside the government will actually buy the bonds due to perceived credit risk. I guess the biggest question is what happens when this goes down across the globe and the game of musical chairs leaves a lot of people without a seat at the table.
  • RM
    Robert M.
    28 October 2017 @ 07:26
    It is net gov debt/GDP that is important to analysing Japan, not gross. In 2015 these numbers were 132% (not that much more than in the US) and 245%. https://www.forbes.com/sites/mwakatabe/2015/01/18/japans-fiscal-situation-is-not-as-bad-as-many-assume/#5a1c395055f0
    • JC
      John C.
      2 December 2017 @ 17:38
      Er doesn't 'net debt' just mean debt - cash on hand and if so we're back to the vicious circle of XYZ country simply printing gazillions of it's currency to net out it's debt to zero???
  • JK
    Jon K.
    29 October 2017 @ 17:21
    Broken record. I was such a huge fan of Real Vision, the concept was so needed and welcomed. However, they haven't delivered on the "vision"...and someone please put Grant in "Gold Rehab". I intellectually agree with the overall points being made here, but why is so much bandwidth being used to talk about something, which both participants in this interview agree, is so far down the track. Yes, the central bank experiment is ludicrous and has created a huge wealth gap, and "when" the music stops it will be an ugly day, and things will likely get even more ludicrous. However, markets have reached all-time highs again and again and again...which has been the case NOT because everyone outside of the Kyle Bass ranch circle is dumb. There has been a lot of smart investors who understood the lunacy of central banks, weighed the risks, went long, and have been laughing all the way to the bank. Many of them did so with very well-thought out investment themes. Real Vision makes it seem like it is just a bunch of dumb retail buying passive ETF's. The comment "a lot of smart people on Real Vision" is old and tired. These same "smart people" knock the Central Bankers for being nothing more than "academics", yet the majority of what I hear on RV is nothing more than people pontificating about the end of the world...oh wait, sorry "a world on the brink". Investing, I thought, was about making money...not about sounding smart and missing one of the largest bull markets in history. I guess after three years I thought by now there would be some diversity in the Real Vision programming, and I am not talking about BBC style documentaries, I mean people of diverse opinions weighing in on the same subject so the Real Vision community can actually be challenged in our thought process. Instead I feel like I being fed bearish dogma, which has been wrong...early is not a hedge, EARLY is WRONG in the world of investing. In case I wasn't clear, I agree with the general Real Vision sentiment, things are speeding towards a wall, but in the meantime how does one trade that environment, instead of constantly talking about how horrific the wall will be "when" we hit it. I have really tuned out of Real Vision lately, and when I decide to check back in I see an interview with Peter Schiff (really??) and then this interview (I dig Fleck though) which really doesn't provide any actionable insight. Hoping things turn around at RV...soon.
    • IP
      IDA P.
      30 October 2017 @ 06:57
      Yes I totally agree!
    • FM
      Fraser M.
      1 November 2017 @ 06:37
      I've also subconsciously tuned out of Real Vision after avidly following every video/publication - you've just helped me explain why. The Dark Knight is intelligent, witty but not very profitable I'd say.
    • DH
      Dabangg H.
      1 November 2017 @ 06:49
      +1 agree. Fear mongering, gold, and how bad things can be, et al - but we are missing the bull perspective and bull thesis. diversity would be good!
    • TM
      The-First-James M.
      1 November 2017 @ 18:28
      This reads like something straight out of the top of a bull market to me. ;)
    • dk
      dorothea k.
      16 November 2017 @ 04:26
      Investing is about preserving wealth and only then about making money. The timeless truth is that the value of a business is equal to the present value of future earnings. Using this criterion and true discount rates, few businesses survive the analysis. In short, when you place money in the market, you speculate rather than invest. Yes investors have stood at the sideline of a great bull market and the speculators look smart. RV accepts investors to its interviews rather than speculators. Good.
    • ca
      cyavash a.
      17 November 2017 @ 18:04
      Could not agree more.
    • JC
      John C.
      2 December 2017 @ 17:35
      Agree with you BUT we are in completely uncharted waters and it WILL end badly. The question is 'when' not 'if'. Gold is a good play here (price alone is up over 10% this year) at this point as are some of the softer commodities. To think that equities in general are going to continue on this run is not especially in a low-growth environment like we're in now. And when some or a lot of this paper wealth goes away and the average person realizes how poor they really are heaven help us. Whether that's going to happen next year or 3-4 years down the line I don't know but I think it will happen, we're in looney-land and I certainly don't count on the current financial system, fiat currencies or the wacky 'progresive' policies of these economically and often morally bankrupt Western 'Democracies' anymore. You'd be a fool to do that. If anything RV has at least helped me realize all of the above, we're on our own now and I better be prepared 5-10-15 years down the road and beyond. So it's not just about 'the market' at this point.
  • TC
    Tim C.
    2 November 2017 @ 03:13
    To me, it's pretty clear that Japan has no other choice than to eventually do a debt jubilee. Everything points in this direction, when you think it through. So - yes please - let's talk about all the possible ways this could play out. Only 1 or 2 minutes of the interview actually directly explored the possible scenarios. We need much more. For those of you who say: "No! never! It's impossible for them to forgive the debt!", I say: You have lost your mind. Of course they can. If it is in the interest of the nation to do so, they will do it, and nobody can stop them... As Fleck states the obvious, their current debt level is well beyond the point of being serviceable. It broke through that level years ago. They continue with the world's largest QE/money printing program program, not by choice, but by necessity. They are forced to continue printing these huge sums each month - to pay off the exponentially increasing interest on this growing mountain of debt, with an ever-shrinking population and ever-shrinking taxation revenues. If they stop printing, bonds collapse, all their assets collapse, citizens savings and pensions collapse. They cannot possibly stop. The fact that a simple forgiveness of the debt between the Treasury and the Central bank suddenly reduces their debt/GDP ratio from astronomical levels to the best in the developed world seems unfair, unimaginable - but for the same reasons - basically inevitable. They would be crazy or stupid (and the Japanese are neither) if they didn't take this option....But what could the fallout be? That's what we need to explore more.
    • cr
      colm r.
      3 November 2017 @ 06:48
      There has to be consequences/fallout. Put it this way....if there wasn't then there would be no implications for reckless government borrowing by any sovereign state. Japan's situation is slightly different in that it runs a capital account surplus which allows for a higher % of government borrowing to be financed domestically. But ultimately the rebalancing is seen thru a loss of purchasing power of the currency.
    • JC
      John C.
      2 December 2017 @ 17:22
      Well said. But I think the jubilee in whatever form it takes will be highly traumatic to the markets and rates will rise to a very high level at least for a time, killing off growth, the RE market and eventually the equity market. Then the 'reset' will be in play but the citizens of Japan or any country that does this will be in a relatively worse-off position going forward.
  • SS
    Scott S.
    3 November 2017 @ 16:48
    Every single person on this thread is missing the point. Why on earth would they need to do a debt jubilee or wipe-out? Who cares what the debt number is? If you have a debt that you do not have to service, then you do not have a debt! Think about it, when the government makes a coupon payment to the BoJ, the BoJ immediately remits it back to the government. The government is effectively not servicing the portion of the debt that the BoJ owns. Debt is a problem when you have to service it out of income, using income that could be better spent elsewhere. If you don't have to service it, it does not matter. If the BoJ owns 100% of the JGB market, the debt can be 900% of GDP. Who cares! Will they get away with it? They have already gotten half-away with it (owning almost half of the market). Why risk tipping over an apple cart just to make the number go away?
    • TC
      Tim C.
      5 November 2017 @ 00:27
      Your right, they don't have to formally forgive the debt; they can just keep the status quo and enlarge their debt pile forever. The big advantage of forgiving, in my view, is optics - as Moody's, Fitch etc are forced to re-calculate JGB's ratings to much better values based on the suddenly far better debt numbers. That's a big advantage.
    • BK
      Brian K.
      18 November 2017 @ 23:32
      I think it will work, provided there is globalism where goods are relatively cheap and deflationary.
  • DF
    Dominic F.
    18 November 2017 @ 02:07
    You only have to pay off debt if you are Greece or Venezuela? Depends who is calling in the debt ;-)
    • BK
      Brian K.
      18 November 2017 @ 23:31
      Yeah but USA, China, Japan etc have robust private sectors. Their respective currencies have value. Greece is another story being they do not have their own central bank.
  • RI
    R I.
    25 October 2017 @ 11:54
    These 30 min or less segments have become irritating.
    • EO
      Emil O.
      25 October 2017 @ 15:19
      Agree, long format is why I am here.
    • AK
      Anthony K.
      10 November 2017 @ 15:33
      Some speakers only have 30 minutes of interesting content but in Fleck's case.. Cmon... Only 30 minutes... Major Error by RV
  • SA
    Scott A.
    25 October 2017 @ 23:43
    Had I won the RV dinner this is exactly the question I was going to ask. Forget bonds, remember the 1 trillion dollar coin we were going to mint? Great topic.
    • JM
      Jim M.
      26 October 2017 @ 01:04
      What? The RV dinner came and went and I didn't win either? I sent in about 46 entries...damn.
    • AK
      Anthony K.
      10 November 2017 @ 15:30
      @Jim M.... Russian hackers won it.......
  • RF
    Richard F.
    27 October 2017 @ 07:56
    Being a 'legendary short seller' is like being a man who only goes outside when it's raining because he only has a raincoat. It seems unimaginative, decidedly un-legendary and hardly the mark of a good trader. However, it is always interesting to hear Mr Fleckenstein.
    • RM
      Robert M.
      28 October 2017 @ 07:29
      Witty but harsh, we all have different aptitudes. And it's profitability that is the most important mark of a good trader.
    • DH
      Dale H.
      5 November 2017 @ 02:55
      Fleck is a lot more than that.
  • CS
    Chris S.
    2 November 2017 @ 15:46
    Great interview! The Debt Jubilee idea is indeed mind-boggling. I was wondering, what is actually the difference between replacing the existing debt by a perpetual bond with 1bp or just indefinitely reinvesting matured bonds if rates stay at zero anyway? Isn't this basically the same thing? And then, aren't they already doing it already?
  • KJ
    Kyle J.
    31 October 2017 @ 18:58
    Stop the insanity!!!!
  • ES
    Edward S.
    30 October 2017 @ 23:44
    Haha, he called NVDA "some of the kinkier stuff". Indeed, that stock is batshit crazy.
  • JB
    J. B.
    30 October 2017 @ 02:31
    Be written off? In the meantime they will pay interest in decreasing amounts. Might work for the huge debt problem.
  • JB
    J. B.
    30 October 2017 @ 02:28
    Land was returned to the original families. Therefore all prices were set in relation to how close the Jubilee year to any transaction. Question what if BOJ or others said in 50 years these debts wil
  • JB
    J. B.
    30 October 2017 @ 02:24
    Defintion is important. "Debt Jubilee" is an ancient Jewish economic and religious system where once every 50 years ( after 7 Sabbath years) all debts were retired, bondservants were released and all
  • PM
    Paul M.
    29 October 2017 @ 08:11
    Very thought-provoking interview - if that's what RV was after they hit the jackpot! Regarding jubilee idea itself, it sounds kind of crazy but what is the definition of 'crazy' in the world of negative rates and ever-expanding CB balance sheets used to prop up risk assets? The question I have is this: surely if governments 'retire' their debt, this will have a direct impact on Central Banks? In a jubilee scenario, assets on CB balance sheets suddenly evaporate, shrinking them against money supply created for QE purposes. This inevitably leads to local currency devaluation as this excess ("unbacked") money supply becomes instantly inflationary. I doubt the argument for the ability of a Central Bank to destroy the actual currency has merit because the money itself is never returned to the CB and surely has to be booked as a liability on Treasury side. It's an accounting problem. Another potential difficulty with jubilee scenario is a clear possibility of an instant liquidity loss. Since government bonds are benchmarks, any such 'retirement' would have direct implications for a huge amount of structured products. It is also the best collateral there is when it comes to borrowing against in local currency so imagine there is no market for these all of a sudden? Or there is but it is infinitely smaller? Sounds problematic to me.
  • DS
    David S.
    29 October 2017 @ 05:40
    Thanks RV, interviews like this is why I subscribe to your service; apples and oranges difference to the crap disseminated by Peter Schiff that you had on last week
  • TB
    Tad B.
    27 October 2017 @ 20:11
    Great interview.... Has anyone noticed that AdvisorShares have canned the GYEN etf (long gold & short yen) ? This is a big disappointment to me as it was one of the cornerstones of my portfolio, (decoupling is BOUND to happen some day). That aside, the etfs that shorted JGBs & went long their yields were taken off the market shortly before the BOJ announced their 'yield curve smoothing' policy... Perhaps this is a real sign that JUBILEE is about to happen/attempted. Anyone got another way of shorting YEN against GOLD ?
    • wh
      walter h.
      28 October 2017 @ 22:02
      I noticed that GEUR is also gone. I don't think its a sign of JUBILEE.
  • BB
    Bill B.
    25 October 2017 @ 16:52
    Nvidia is a play on AI, machine learning, and self driving cars
    • BK
      Bruce K.
      25 October 2017 @ 21:20
      AI, machine learning, and self driving cars represent a tiny fraction of Nvidia's business. They may help growth in the future, absolutely, but that is out in time. At present, they are mania-friendly keywords that help pump up NVDA's price.
    • KB
      Kreso B.
      28 October 2017 @ 17:06
      To Bruce K. Why don't you check NVDA quarterly results to convince yourself how tiny and what rate of growth automotive and data centre sectors are?
  • cr
    colm r.
    26 October 2017 @ 17:21
    I'm afraid Grant and Bill need to get to grips with what QE actually is and how it works. Once they do that they will arrive at the simple answer as to why this type of policy cannot work. It's a balance sheet exercise by the CB. A CB creates electronic money to buy interest bearing securities from the government's treasury (they buy them via primary dealers). The increased cash (a zero interest bearing security) credits commercial deposit accounts and is the CB's liability. The bond becomes the CB's asset. So yes, the monetary base which is a narrow measure of notes and coins in circulation expands, but the broader money aggregate which includes interest bearing securities etc does not. Effectively the CB is lowering the duration of the broader aggregate by substituting interest bearing securities for zero interest cash. A large chunk of this cash gets deposited back at the CB anyway in the form of excess reserves. The point to understand is this. When a bond on the CB's balance sheet matures or rolls off, it has to be redeemed by the issuer...the Treasury. So the CB receives back it's liability (cash it created) and loses it's asset (the bond it owned)...so there is no net change to it's balance sheet. It may incur some capital loss but let's keep things simple. Now....what happens if, instead of receiving back it's cash, the BOJ says to the Treasury....we don't need it...we're going to forgive it, by creating a 100y or 200y perp bond...so we still technically have an asset on our balance sheet. Then ALL the newly created Yen used to buy the entire bond market stays in the system for the length of maturity of that new bond. This is hyper-inflationary and long before we ever got to that point there would be a complete destruction in the value of the Yen versus harder currencies and gold. Velocity would explode as every owner of Yen and Yen denominated assets scrambled to buy hard assets. Yen rates would explode...the value of the bond on the BOJ's balance sheet would crumble...etc etc etc. Hope this helps...oh,and by the way, it's exactly what's going to happen IMO...can't see any other options for Japan now. Recent Yen strength is a massive fade.
    • ZD
      Zachary D.
      27 October 2017 @ 01:08
      This reminded me of some early zero hedge commentary before their Financial TMZ 180. Very refreshing!
    • RM
      Robert M.
      28 October 2017 @ 07:55
      Yeah but explain why the BOJ will just stand pat in the face of society wrecking hyperinflation. They didn't in the face of deflation. The idea of shorting the Japanese who remain among the most productive and socially cohesive societies in the world is a hard sell. And as I said above it's net gov debt/ GDP that is the key metric and it isn't much more than US levels.
    • TA
      Temporary A.
      28 October 2017 @ 16:58
      Missing in this discussion is that fiat currencies in modern states have an irreplaceable purpose. They are the only medium by which taxes may be paid to states in which government has become an appreciable part of the economy. Currency is also the customary unit of exchange within a national economy. Therefore holders of currency for a purpose , which in modern aging societies is largely retirement will have a natural preference for their home unit of account as it is by definition far less volatile relative to their future spending stream than a foreign currency. In an environment of generally low interest rates that volatility will loom large relative to incremental coupon returns from going overseas , hence further reinforcement of a home country bias. In the case of Japan , which has an immense positive net international financial position and relatively limited foreign participation in its credit markets , it is hard to see what will precipitate a sharp change in Japanese interest rates to very high real rates . The risk of an abrupt withdrawal of foreign capital is low , and the home country bias , reinforced by a generation of little or no inflation remains intact. Finally , the BOJ has about $ 3 trillion of foreign reserves which gives it considerable firepower to cushion abrupt changes and Japan runs a large (2-3% of GDP ) current account surplus with the yen significantly undervalued by Purchasing Power Parity measures. Currency balances are zero coupon perpetuals . If their deposit fuels massive incremental credit creation they can drive sharp increases in inflation but that seems unlikely in Japan . The corporate sector's free cash flow has improved markedly . Japanese demography seems to be restraining household sector net credit demand. So that seems unlikely to be an intermediate driver of inflation. Japan's situation stems in large part from its leading the way on the crystallization of unfunded entitlements burdens given its much older and declining population. Japan's budget deficit in nominal terms in running about 5.7% of GDP although it is declining. It is entirely possible savings preferences in Japan will allow the absorption of that incremental debt into the QE cash for debt operation for some time to come. Finally, Japanese average JGB debt rates remain about 100 bps , so this operation will make the budget deficit look better for some time to come. Japan is on the cutting edge of modern industrial societies" entitlements/retirement crisis ; but I would argue their coping mechanisms are successful thus far and they are unlikely to be the first countries in which macroeconomic policy goes into unsustainable crisis mode.
  • BW
    B. W.
    27 October 2017 @ 03:16
    If the currencies are all worthless, then I will send you my checking account and routing number information and you can transfer me all of your savings, and I will send you a case of beer (which is not worthless), and you win. Sound good? Or maybe on second thought, the currencies aren't all worthless?
    • RM
      Robert M.
      28 October 2017 @ 07:19
      Needed a qualifier: the currencies are worthless over longer periods of time, particularly when inflation really kicks off.
  • SB
    Stewart B.
    26 October 2017 @ 18:51
    l1) Great interview, both questions and answers. 2) I think everyone should ask themselves why a (public) Debt Jubilee is actually required. Currently the yield from QE assets is remitted to the treasure. In physics and economics, part of the analysis process is to draw a boundary around a system. In this case the boundary is to be drawn around the central bank and the government. Let's call this the 'State'. There is no reason why public debt couldn't be 2000% of GDP provided that the central bank had at least say > 1900% of GDP of assets (and continued to pay enough into treasury to cover the cost of servicing the public debt). Sure, there is a nice and warm feeling in a Jubilee, but it isn't necessary. It is worth noting too that QE hasn't been hugely inflationary as the amount of money printed has been relatively small compared with the amount of broad money in the system. Additionally tightening regulation on banking has also added a deflationary force. QE doesn't stimulate an economy (in the most part). It's purpose is to provide assets to offset public liabilities. This is the new 'State System'. 3) We are paying the price of QE through inflation (or forgone deflation) now. Every time you have falling real wages, you are paying for the central bankers assets. In many ways it is debt monetisation (State system: treasure + central bank) by stealth. 4) The real danger is once we get to a situation where they have pulled it off (ie central bank assets are about the same size as public liabilities), the real danger will come when the politicians realise have no incentive to control their spending at all. This will be the end.
    • GA
      Guy A.
      27 October 2017 @ 18:51
      This is my basic view as well. The central bankers understand that gradualism is much better tolerated than shocks. The debt jubilee is not an event. It is a process, and it has already started years ago, though the central bankers will never call it debt forgiveness. Any debt on the CB balance sheet is effectively retired, until they unwind it, which they will only do in small measure, before they eventually expand it again. They can also play with duration. No need to issue a 100 year bond and cause a panic. They can easily extend duration gradually as they roll over maturing securities. I'm not saying this is a perfect solution or one without significant downsides. But in a world addicted to debt and deficits, it seems to be much more practical politically than austerity. Its a sad state of affairs.
  • SD
    S D.
    26 October 2017 @ 18:19
    I found this interview difficult to listen to. This is annoying because the interviewee had some interesting things to say, but they were obscured by poor delivery and a lax interview style. Some people do not speak or communicate well via audio or video, this is simply their mannerism, which means the interviewer has a responsibility to adapt to make sure viewers and listeners actually have an opportunity to hear what the interviewee has to say.
    • JL
      J L.
      26 October 2017 @ 21:26
      I am sure GW has got many weaknesses but interviewing isn't one of them to the point I feel obliged to say so my dear
    • SD
      S D.
      27 October 2017 @ 02:46
      The delivery was so poor it required reading the transcript. I'd bet that at least some of the complaints below about the length of the interview are at least partly rooted in frustration at struggling to hear and understand what the guy was trying to say.
    • SD
      S D.
      27 October 2017 @ 02:48
      And don't call me "dear."
  • LK
    Lyle K.
    27 October 2017 @ 01:20
    Would be cool to see a group of of RV guests like 6 or 7 get together on a macro theme and lay out the theme whether a historic event or one that may happen in the future and dissect it into many pieces and how their job titles would of applied and how the group would of made a trade idea outta it. Like the presidential election of 2016 would be a good one to take apart and try to experiment with the possible outcomes on the markets and currencies. Would be cool to have people like Nancy Davis,R.P. Eddy,Kyle Bass,Michael Green,Raoul Pal all come together for it :)
  • MW
    Matthew W.
    26 October 2017 @ 22:53
    One of the factors I always struggle with regarding the debt jubilee idea is that the liability side of the central bank balance sheet is private bank reserves. So, if you wipe out the government debt (central bank asset), you would also be wiping out bank reserves (private bank asset). At any rate, someone would have to take the capital hit. Either central bank or private banking system. I guess central bank could technically operate with negative equity, and no assets, in order to maintain reserves. But not sure how that actually solves the problem.
  • SD
    S D.
    26 October 2017 @ 22:38
    It's not adequate to raise the issue of a debt jubilee and just say the currency might get schmucked. If central bankers - not the most credible bunch at the moment - are seriously considering this, it'd be helpful to have a better understanding of potential consequences. I guess that's why the speaker is encouraging feedback on the idea. Ultimately the risk is that such a move would shred any remaining credibility from the group that have dragged through the looking glass to a place where actions and consequences seem to bear no relation to each other.
  • RA
    Robert A.
    26 October 2017 @ 21:00
    David Zervos, I believe, was one of the first to articulate the debt jubilee thesis?
  • CL
    César L.
    26 October 2017 @ 20:21
    I really like the interviews with Bill. I think that listening to his and Russell Clark's short selling framework adds a huge amount of value. The only question that I have is why not take advantage of the dynamics that Chris Cole and Nancy Davis discuss and use options to structure bearish trade ideas. You know your maximum downside beforehand and keep the asymmetric payoff. Maybe is the usual negative carry, or the lack of longer term options/liquidity...
  • TK
    Thomas K.
    26 October 2017 @ 19:19
    Two smarts guys in a room talking in depth about an interesting topic - debt jubilee in this case. That's all I want from RVTV, not showy productions, international locations or hyped up trailers. This sort of interview is what has kept me with RVTV from the start but the recent content up until this one has left me scratching my head as to why RVTV haven't realised that "if it ain't broke, don't fix it". I have turned off most of the recent content within minutes so although this one is far from RVTV's best at least it is in the right area.
  • GS
    George S.
    26 October 2017 @ 19:03
    Extremely clear, honest and engaging interview. Incredible!
  • MS
    Matt S.
    25 October 2017 @ 11:12
    On gold vs. cryptos................... You can't fork gold.
    • JL
      J L.
      25 October 2017 @ 13:14
      Don't forget the owners of crypto receive both coins at every fork, therefore they are investing in all future arms of the coin and their aggregate value. Some argue that buying early reduces the risk of having to guess which fork/tech will be successful as you get them all.
    • AS
      Andrew S.
      26 October 2017 @ 18:56
      Owning both gold AND Bitcoin is a no-brainer..... I can't understand why anyone thinks they have to choose one or the other.
  • EM
    Emre M.
    25 October 2017 @ 14:48
    I think Gold part is too short. Every RealVision interview should have a mandatory 25 minute part about how gold is going up.
    • TP
      Tom P.
      26 October 2017 @ 18:51
      I know right, RV just don't talk about gold enough
  • TM
    Todd M.
    26 October 2017 @ 08:53
    Huge fan of RV - please keep a perspective of the difference between this deep thoughtful reasoned interview and the Schiff Gold palooza you recently aired in 3 full technicolor episodes! Agree with Bill or not - the quality of thought, intellectual integrity and depth makes your Schiff videos look like pitiful hack discourse. As you increase content the risk of chumming the water increases. Rock On!
    • TP
      Tom P.
      26 October 2017 @ 18:27
      Agree on the Schiff videos. Who needs a paid platform to listen to Schiff? His words are available for free everywhere and haven't really changed much over the years. Apart from that misstep, RV does great work.
  • CB
    C B.
    26 October 2017 @ 15:57
    Imagining how the central bank QE conundrum ends or unwinds is a fascinating exercise. RV should make this question a staple of every interview. My take: In the case of Japan, if the market knew that the BoJ wanted to buy all debt, JGB owners would hold out and refuse to sell until the price went much, much higher. This would also drive other yield bearing assets through the roof in the pursuit of real yields. The question then becomes does this asset inflation work its way into the real economy? Is the outcome stagflationary? I would be wary of anyone predicting a free lunch here. There has to be a cost to tinkering with the soundness of a currency. If citizens start questioning the soundness of the yen (or dollar, or euro), there will be a scramble for other currency-like instruments (bitcoin, gold, etc) that can hold their value.
  • JH
    Jesse H.
    26 October 2017 @ 09:53
    Great - self-effacing Fleckenstein, yet some fascinating commentary on future scenarios and his approach to short-selling. Very important point, it seems to me, about getting the micro environment right on the short side (e.g. Apple), yet losing out due to other factors in the macro environment.
    • JH
      Jesse H.
      26 October 2017 @ 09:55
      Absolutely loved watching this...thanks RV.
  • PJ
    Peter J.
    26 October 2017 @ 08:46
    Cracking interview, always worth listening to Bill
  • JH
    John H.
    25 October 2017 @ 17:49
    Whether you write-off the debt or exchange it for something longer-dated, it doesn't change the fact that you print a ton of yen to acquire that debt. Those printed yen remain. Now, how do rates rise? The central bank says "rates shall be higher." No, still a ton of yen out there with everyone stepping on themselves to lend them. So, the central bank has to pay the higher rate if rates are to rise. So, if you consider the central bank and the government all as "the government," then it doesn't really matter -- the "government" still owes a bunch of debt, whether bonds, bills, or currency. Right? Will someone smarter than me tell me how that ends up?
    • sm
      sam m.
      26 October 2017 @ 06:43
      My take is that if the Govt/CB decide to reduce their debt by the amount on the CB balance sheet the Govt is then free to gear up again ... that is a whole lot of future debt issuance (and stimulus to build bridges, boondoggles etc) that they would struggle to issue at low interest rates given they just wrote off the debt they owed themselves. I don't think they are talking about short term interest rates ... the government would have to issue longer duration. If they couldn't get an issue away and the CB had to buy it then it would be "ALL OVER" because the message would clearly be they can print what they want and then we are wheeling our wheelbarrows ...
  • RM
    R M.
    25 October 2017 @ 15:12
    Good question, worthy of a panel discussion, please invite Steve Keen as part of it!
    • MF
      Martin F.
      25 October 2017 @ 16:06
      CBs buy govies through debt, not equity. They borrow the money from commercial banks (= credit them reserves). If govies on the asset side of the balance sheet are wiped out, the liability side has to decline also. Either bank reserves become worthless or CB equity goes negative. The former crashes banks bc they have to take a hugh loss. The second can not be resolved by the printing press bc cash is a liability to CBs, not an equity.
    • sm
      sam m.
      26 October 2017 @ 06:36
      Matin F. - in the interview I believe the interviewee's suggestion was that the CB was going to be given a 200 year zero coupon bond or similar by the Govt in exchange for current debt on the balance sheet? So there was no reduction in CB asset, just a maturity extension at zero interest. Why not make it a perpetual zero (cash) and be done with it. Once the CB owns the asset you just need to look at consolidated accounts (Govt + CB) to see the debt has already been wiped out. All we are seeing is the absence of less inflation/more deflation than would have occurred without the money printing.
  • BL
    Bruno L.
    26 October 2017 @ 06:04
    Broad noney doesnt change. Currency gets hit most and like past EM money printing episodes, equities stay elevated due to this currency debasement
  • BL
    Bruno L.
    26 October 2017 @ 06:00
    Government ends up financing itself thereafter. If Bond holdings convert to cash then balance sheet of central bank stays intact (as does liability side due to excess reserves or deposits) and broad
  • BL
    Bruno L.
    26 October 2017 @ 05:58
    The question of what happens in a government bond debt jubillee can only be answered by thinking about what the central bank does with the money already created thats in the system and how the governm
  • JG
    John G.
    25 October 2017 @ 17:28
    If the Japanese Central Bank swapped the JGB's with the Japanese government for much longer maturity (like 100 year or 200 year) JGB's, where is the debt jubilee? There is still debt outstanding. It just has a much longer maturity, which substantially lessens the risk to the budget from higher interest rates in the future. The government could make the debt callable to have the flexibility to reduce it if they choose. In this case, there is no cash from the Central Bank money printing paying off the debt and that cash flowing into the banking system and, possibly, into the economy where it could cause a rise in inflationary pressure and downward pressure on the currency (yen). I actually think the lengthening of the bond maturities with much longer-term callable bonds makes some sense in a historically low interest rate environment, especially when we are only taking about the bonds help by the Central Bank. To me, a debt jubilee is the government paying off their debt with cash, either on hand or freshly printed. That is the scenario where I see inflationary and currency risk. What am I missing?
    • OD
      Octavian D.
      25 October 2017 @ 21:31
      The way I see it is that debt is by definition a deflationary instrument/force. Let's take the commercial/retail side first: once debt is created and the money used up and introduced in the economy, it is non-productive after a while; You have to pay the principal + interest, which (outside of NIRP and ZIRP) is a higher amount than that which is borrowed. The result is that inflation is created in the short-run, by introducing more money (in the form of credit, in this case) in the economy than would have otherwise happened. Since this money changes "hands" multiple times and passes by the commercial banks multiple times (the money multipliers in the economy - through fractional reserve banking), the inflationary impulse lasts quite a while. With this inflationary impulse, people's wages should rise accordingly (unless companies are in the same over-leveraged boat, where they may not want to raise incomes as fast as inflation would require - ring a bell?), the debt should stay relatively constant to pay out in terms of earning potential, but when most players are leveraged to the gills, this dynamic changes, as there is less and less you can squeeze out of any additional debt (as we are seeing now). There are no more "low-hanging" fruit for serious gains in the short-run to pay off the high amounts of debt: most opportunities have already been chased and stock markets are generally overvalued, real estate is overvalued, private equity becomes less attractive, venture capital goes absolutely nuts in valuations (Uber, etc.) and the only real growth lays where very few are willing to participate, which is hard, innovative, brain-wrecking business endeavors (not low-hanging fruit by any means). All of these things are a depiction of human nature, we go for the low-hanging fruit first, and we are running out of them at the moment. When we reach this point, people realize that there is only so much more they can get individually, and as such, they start directing most of their income towards repaying the debt, they become fragile to any adverse conditions (rising rates, exogenous sources of inflation, etc.) and therefore less productive. Debt, in the aggregate, is always used for sub-optimal decisions, it is human nature. Very few are those that use it wisely - and some of them also get lucky in various ways. When the banks start feeling that the debt is less and less productive, they traditionally increase lending standards, hike interest rates in a protective manner for their own books. This is a general summary of the precipice towards debt deflation, where debt becomes a vacuum for peoples' incomes and therefore slows down sales in the economy (people have less excess cash to spend, retailers who were leveraged to the gills go under, people chase cheaper and cheaper goods because they can't afford what they used to - sounds familiar?). And then, when interest rate manipulation can't squeeze any additional dollar out of the economy, full-on deflation happens. Now, if people can get NIRP loans individually, that's a different story, but that doesn't happen, especially not on a large scale, because it's impossible, or rather, feared by CBs. This implies that the bank gives you a chunk of money, which you can introduce in the economy, while getting paid to do it. This naturally raises the question: where does the bank gain the money to pay you if everyone is being paid to take out loans? If individuals are being paid to take out loans, it means corporations will have already gotten that deal (individuals are always last on the scale for the financial system). The only source is the central bank actually printing money, which in effect is a way to do the oft-referred to 'helicopter money'. This will lead to a massive inflation scenario and debasement of the "currency", which could fight the deflationary force already built with all this excess debt, but I'm afraid the consequences are unpredictable, with chances of hyperinflation being very real. Now, onto central banks: the central bank buys up the government's bonds and can make a deal whether to repay the interest right back to the government (essentially making the bond a 0% bond, since the interest payment the government gives with one hand comes right back in the other hand) or it can keep the interest as cash on its balance sheet and either use it to increase the money supply (re-investing the interest in additional bonds, effectively giving money to the commercial banks or other large holders of government bonds or even subsidizing new bond issuance by the government) or reduce the money supply (by effectively reducing the liability-side of its own balance sheet - remember, the CB "prints" cash by making it both an asset and a liability while exchanging the 'asset' part of it for another asset - bonds in this case). Reducing the money supply in this way, by effectively writing off some of its liabilities, gives the central bank more future "easing power", but none of them have opted for that, as they have focused on easing in the present. There is a combination of re-investing the interest in bonds, partial repayment of interest to the government and putting some of the earned interest in the commercial banks, via IOER (interest of excess reserves). All of this is essentially buoying the government and the commercial banking system by forcing the allocation of money where the CBs see fit. The government is known to be poor at allocating capital, the commercial banks have not had much success either, so the net effect is a prolongation of this stagnant status quo. With NIRP, the government gets paid to issue debt, which generally doesn't improve the capital allocation (imagine being paid after making years of mistakes investment-wise, does that force you to make better decisions?). Where does the excess cash come from to pay the government? Unless it comes from CB-printing, it is actually deflationary somewhere else in the economy. If you as an individual bought this bond, you'd have to keep paying the government with your income to hold their bond, effectively reducing your buying power or ability to invest elsewhere. The key here is again that the government has run out of low-hanging fruit to stimulate the economy and the easiest thing to do at this point is to play these "magic tricks" to keep things afloat. Eventually, something always happens in the economy and 1 or more significant players can no longer pay off their liabilities, which sets off a chain-reaction towards deflation, as people who still can control the interest rate they require (any outstanding bonds held by an entity other than the CB) will ask for higher interest rates (for their own survival - no one wants to go broke, except the CB, for which such a concept does not exist). But, if most of the outstanding bonds are in NIRP, the government is effectively reducing its nominal debt load, by receiving money. That is, if the government allocates this extra money to re-paying its bonds, but they haven't really done that - they've just mal-invested it in the economy and have issued more debt in the meantime. So, nominally they have more debt, when they could have reduced it through some form of fiscal austerity (but who likes austerity?). The end result is this trap, from which no one will willingly get out of, because the alternative is too damn hard (no low-hanging fruit left in terms of economic growth). To your point, if they issue a 100 or 200-year bond, the debt has not been cancelled, but its maturity is so far off and (if the interest rate is in ZIRP-land) then the government can theoretically ignore it as they don't have to pay a dime and the principal will have to be re-paid when everyone will be long gone. This will keep the nominal debt the same for the country, but the debt servicing will be reduced (and the CB will not re-price the bond to make it have a positive interest, CB's don't like to mark-to-market, just remember who they work for). This means that the government will be free to allocate capital and new bonds to "jump-start" the economy, but there is a high chance that it won't work, as they have not been punished for their mistakes and will likely keep making sub-optimal decisions and investments (to Bill's point that insanity can last so much longer than anyone thinks, especially if a system is riddled with perverse incentives). And, since there still is debt in the system after all, the government will still want inflation, but 1-2% inflation compounded for 100 or 200 years will essentially make the outstanding debt a joke (peanuts) when it has to be repaid centuries later. So, in effect, the 100+-year bond can be ignored. But the headroom created for fiscal movement will only re-invigorate things if very smart policy is put in place - highly doubtful. The debt-jubilee happens when the central bank says "you don't have to pay this back", essentially reducing the nominal level of debt for the government (but doing the 100 or 200-year bond at ZIRP is essentially similar, since this nominal debt will only matter when it is not worth anything anymore). What people think of as helicopter-money is what creates the risk for inflation, debasement of the currency and the mechanism for the most overt form of debt-jubilee. It is like the example for the commercial/retail case: money is created out of thin air to cancel debt. Now, it is debatable if the money created to cancel out the debt is net inflationary in the end or not, because the debt instrument has become deflationary at that point, given that it is mostly poorly allocated and not sustainable without an increasing cost to the bearer of the debt. I think the key questions to ask are: where does the printed money ultimately end up? And who will get to benefit from debt-cancellation in this way. People forget that if the printed money never enters the economy (stays in bank vaults with minimal returns, i.e. not lent out to people and businesses) it isn't really inflationary - it only has the *potential* to be inflationary. If people end up benefiting from personal debt-cancellation (highly doubtful), then we can start worrying about hyperinflation. Because people will now have a large part of their income available to be spent, with a lot of money chasing goods. If governments are the ones to have their debts cancelled, then the central bank will have essentially cleared the future liability of the government (not handed it cash - because the cash was already received by the government when it issued the bonds and has already been spent). All this does is reset the government's ability to issue new debt to make new investments, as stated previously, and it allows it to use taxes by citizens for more than paying interest (in some cases there is almost no interest to be paid, since the government bonds are at ZIRP/NIRP on the aggregate), so it makes no significant difference. If this is all it is limited to, then the inflationary impulse may come from a renewed debt-cycle from the government, as it has more room to issue new debt. In the end, what kills this is that there are no more low-hanging fruit and this will postpone making hard economic decisions that are necessary. The same structural problems will persist and it will only be a temporary "reset". The song stops playing when people will refuse to post a bid for government bonds, having had enough of the story, forcing higher and higher rates to get some willing buyers, at which point it will also force bureaucrats to face the harsh economic realities and start working on longer-term, sounder investments - the only ones that can potentially pay off high-interest rate debt. The solution ultimately does lie with high interest rates in my view, as it forces discipline. This is an extremely long post, but I thought I would lay out my thoughts and see what others think, this is not by any means a predictable dynamic, but these were the nuggets I found to be somewhat understandable. A lot of perceptions will change if this happens and the market may price things wildly based on perception, but I don't know that anyone knows exactly what the end effect is economically. Ultimately, lessons need to be learned, and this will not happen with fairy-tale asset prices, guaranteed.
    • SP
      Steve P.
      26 October 2017 @ 05:58
      Whats the name of ur book Octavian?
  • AD
    Anthony D.
    26 October 2017 @ 03:59
    Please people relax. This was a delightful, fun and informative chat between friends. Non-stop quantum mechanics lectures will fry your brain. I look forward to a similar format when Grant asks the next "smart person" to address his/her notion of a Sovereign debt jubilee.
  • CR
    Chad R.
    26 October 2017 @ 02:47
    The obvious question here is if Grant Williams doesn't watch Real Vision why the hell should you? Apparently, he missed the David Zervos interview. Is it too much to ask for some continuity with respect to topics discussed?
  • JM
    Jim M.
    26 October 2017 @ 01:10
    I love the new bumpers for the videos (although they're really not that new) but now we have new DP's too? Dirty singles!
  • SS
    Steven S.
    25 October 2017 @ 18:59
    Thanks for the tip Grant - I never saw this CNBC clip until now - gotta love our non-bias media experts offering Fleckenstein some first world wisdom! have a watch: https://www.cnbc.com/video/2017/10/25/watch-cnbcs-andrew-ross-sorkin-interview-a-lifelike-robot-named-sophia.html
    • SS
      Steven S.
      25 October 2017 @ 19:23
      sorry my internet browser got me - this is the proper clip :) https://www.cnbc.com/video/2014/09/16/fleckenstein-on-missing-the-rally-so-what.html
    • GH
      Gary H.
      25 October 2017 @ 20:02
      A perfect example of why nobody watches CNBC
    • JH
      John H.
      25 October 2017 @ 20:30
      Actually, got to respect CNBC for that interview. He *was* wrong and they called him out. Everyone agrees on almost everything in real vision interviews. Suggestion: at least once in every real vision interview, the interview should leap out of his chair and say, "I think you are wrong!" Too much being "comfortably wrong" here with no one called out. 8 year expansion and massive bull market missed. Wrong!
    • SS
      Steven S.
      25 October 2017 @ 21:23
      John H. - empirically Bill was wrong as he missed the bull run & left chips on the table - but morally he was soooooo very correct....there will be a price to be paid by all for CB policy & future generations that will be most affected have no voice. Politicians and central bankers have failed us all. This right here, right now -is borrowed time.
    • IC
      IAIN C.
      25 October 2017 @ 22:05
      @John H: If Fleck was/is a long or hedged-long player, then yes, he would have been wrong to sit out. But if he is a short specialist, then he is right to sit on the sidelines in a bull market where he cannot see any good short opportunities. He called the market correctly - it would go up. That's what he was saying at the end. "I don't have to play every day".
  • AH
    Andreas H.
    25 October 2017 @ 17:35
    well, if the environment is not for shorting (Fleck said that on all his last interview), maybe its the environment to be long ;-)
    • AM
      Alonso M.
      25 October 2017 @ 21:08
      Or maybe it's an environment to be long-short.
  • pa
    peter a.
    25 October 2017 @ 20:53
    Thanks for another interesting interview! Question: is it not so that The CB’s liabilities are the banks reserves so that a debt jubillee would cause another banking crisis?
  • CG
    Chuck G.
    25 October 2017 @ 19:08
    With all the rehypothecation, isn't gold just a sentiment game as supply (thanks to rehypo) isn't really all that limited?
    • VP
      Vincent P.
      25 October 2017 @ 19:56
      Sure until it cost too much to lend it.
  • AH
    Andreas H.
    25 October 2017 @ 17:17
    Its going to bee even much more extreme, Central Banks will simply buy and let those bonds disapear. If you can print money, you can let bonds disapear (0 Percent, 200 Years). The new god is money, people believe in it as long there is no hyperinflation... They will print money, they will make bonds disapear until we are all red and blue in the face because they can and they can because deflation pressure is huge (globalization and tech revolution...)...
    • SS
      Steven S.
      25 October 2017 @ 19:16
      you are conveniently forgetting the populous movements kicking dirt in the face of globalization - The wave of Populism is the 'Mark To Market' gauge for a Corrupted Economy. IMHO
  • JG
    Joseph G.
    25 October 2017 @ 19:06
    Can't beat Bill and Grant debating issues! World class conversation with some valuable insights.
  • HJ
    Harry J.
    25 October 2017 @ 18:50
    What will us cash be worth if we go down this road?
  • NB
    Nils B.
    25 October 2017 @ 18:41
    Super interesting topic but I would really like a Keynesianist perspective on this, since ultimately Keynesianists are the ones making these decisions at the moment and I would like hearing why they think it would or would not work. I also feel like comparing this to negative rates isn't really fair at this point since negative interest rates since contrary to what Fleckenstein said, there isn't anyone in Norway (or anywhere else for that matter) who gets paid to have a mortgage. If you google it I think you'll find some Danish family but they're rare exceptions and IIRC they're charged some fees making it a net cost. I'm not an expert so someone please tell me if I'm wrong, but my view is that the only reason negative rates work is because only banks and governments are able to take advantage of them. And why does that make a difference? Well, banks make money from the net interest spread between borrowing costs and lending revenue (which means it really doesn't matter to them how low rates go as long as the spread stays the same, if we're being simplistic), and governments are responsible enough (well...) for it to not get out of hand. Had any consumer been able to borrow at negative rates it would be a whole different story.
  • CY
    C Y.
    25 October 2017 @ 18:31
    Ignore the summary crowd who wants sound clips. I love the longer interviews. I could listen to this guy for hours..
  • NI
    Nate I.
    25 October 2017 @ 18:05
    Piling on to what others have said. If RV disintegrates into sound bite conversations like the mainstream media, then it's really no better. Please restore the 60 or 90 minute format to retain depth in the topics.
  • GF
    George F.
    25 October 2017 @ 17:54
    FWIW Bank of Japan is supposed to be privately owned. Although 55% is owned by the government. The Bank is capitalized at 100 million yen in accordance with the Act. About 55 percent of the capital is subscribed by the government. The Act states that "of the amount of stated capital set forth in the preceding paragraph, the amount of contribution by the government shall be no less than fifty-five million yen." The Act does not grant holders of subscription certificates the right to participate in the Bank's management, and, in the case of liquidation, only gives them the right to request distribution of remaining assets up to the sum of the paid-up capital and, if any, the special reserve. Dividend payments on paid-up capital are limited to 5 percent or below in each fiscal period. https://www.boj.or.jp/en/about/outline/index.htm/ https://finance.google.com/finance?q=TYO:8301
  • AC
    Andrew C.
    25 October 2017 @ 17:47
    For a more precise description of debt monetization and the mechanics of a "debt jubilee" watch Ian Laming's interview with Lord Adair Turner from the FSA on RVTV dated November 15, 2016. This was also openly discussed at last year's Jackson Hole boondoggle.
  • WS
    William S.
    25 October 2017 @ 16:58
    It occurs to me that whoever pulls the trigger first on a debt jubilee will not only set in motion a global move in that direction, but their currency is likely to end up the strongest the soonest. Which countries are currently positioned the best to effect a debt jubilee? It seems to me Japan and China are the answers to that question -- and in many ways, China may very well be positioned such that it can not only effect a wide-ranging jubilee, but do so while yet insulating the RMB against the bulk of the consequences.
  • PM
    Patrick M.
    25 October 2017 @ 16:56
    Thanks for the recap of Fleck's thoughts at what was a great conference. The content was superb. The potential for Jubilees was a hot topic at all of the dinner tables even if you didn't get to sit with Fleck. Running through the short selling checklist was invaluable. Other speakers echoed, and deferred to, Fleck's ideas of having the story right and still getting killed while trying to be short. Great conference, excellent speakers, timely content, wonderfully disciplined recap video. Thanks again.
  • DM
    Daniel M.
    25 October 2017 @ 16:44
    The Black Knight!!!
  • GH
    Gary H.
    25 October 2017 @ 15:58
    Excellent conversation. This is the most interesting question in finance. What is the ultimate consequence when bankrupt goverment central banks essentially fund the government as is happening everywhere in DMs and get to the point where they essentially own everything? The BOJ owns 75% of Japanese ETFs now and is the furthest along the ponzi road where the central banks essentially nationalize the economy. I always just assumed the currency would be worth less or worthless. Maybe not. Please continue to discuss this question RV
  • RM
    Richard M.
    25 October 2017 @ 14:32
    Wow, fantastic discussion! But please take the hints from the earlier comments and get back to your really informative deep-dive segments that are an hour long (or at least with your super star guests such as Fleck)! Many thanks, Rick
  • JS
    John S.
    25 October 2017 @ 12:37
    Restricting Fleck to 30 mins is nuts!
  • DS
    David S.
    25 October 2017 @ 12:09
    David Zervos has talked about JGB debt jubilee as well fwiw
  • MS
    Matt S.
    25 October 2017 @ 10:43
    I haven't even watched this yet but I just wanted to be the first to comment. : )
    • MS
      Matt S.
      25 October 2017 @ 11:28
      OK, I watched it. And it was good.
  • JS
    John S.
    25 October 2017 @ 11:15
    Look forward to many more conversations about the potential for a debt jubilee.
  • PU
    Peter U.
    25 October 2017 @ 10:44
    I will be joining this conversation