Not in Kansas Anymore

Published on
November 17th, 2020
Duration
67 minutes

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Not in Kansas Anymore

The Interview ·
Featuring Hugh Hendry

Published on: November 17th, 2020 • Duration: 67 minutes

Hugh Hendry, founder and former CIO of Eclectica Asset Management, joins Real Vision CEO, Raoul Pal, to re-imagine the future of money, credit, currency, and interest rates. The great predicament of the past decade, Hendry argues, has been the tendency of central bank lending to become "trapped" in the commercial banking sector as reserves rather than being funneled into the real economy to fund productive activity. To fix this problem, Hendry envisions a world of ultra-negative rates in order to funnel the liquidity out of the financial sector. Short-term rates would have to go to -3% -- perhaps even lower in order to accommodate a steep yield curve -- is needed for banks to not go out of business. Pal investigates the profound consequences that this paradigm shift in monetary policy would have on the dollar, inflation, and creation, asking Hendry about alternatives such as perpetual bonds and modern monetary theory. Pal and Hendry then consider the optimal portfolio for this brave new world, including assets such as gold, calls on Eurodollar futures, and even Bitcoin. Filmed on November 12, 2020. Hugh Hendry's YouTube channel can be accessed here: https://www.youtube.com/c/HughHendryOfficial/videos Key learnings: A move to ultra-negative interest rates might be necessary to force liquidity out of the banking system and into the real economy. Such a paradigm shift in monetary policy would drench most assets in unprecedented liquidity and make cash a very unattractive asset to hold.

Comments

Transcript

  • GR
    George R.
    23 November 2020 @ 12:18
    Raoul at this point in the video 12:25 what if it's the millennials that have the idle cash and not the "Baby-boomers"? Have you guys factored that in? Why is the model always leaning towards Millenials as borrowers? What if millennials are scared and are sitting on cash?
    • JC
      J.P. C.
      28 November 2020 @ 06:36
      this is exactly what's happening. X-ers and boomers don't understand how frugal millenials are.
    • JC
      Jason C.
      29 November 2020 @ 19:31
      Aren't millennials in massive student debt though?
  • BA
    Bob A.
    22 November 2020 @ 03:11
    I always enjoy Hug and his insights. I also have to say that I enjoy Raoul's facial expressions as he tries to figure out where the conversation is going.
  • Sp
    Scott p.
    21 November 2020 @ 22:55
    I think hyper-bitcoinisation actually starts to look possible in this situation. It's simple, everyone and their grandma stop's saving in cash, in a more extreme way then we see now. Cash will be so bad, you won't even want it in you're chequing account. You will convert every piece of fiat you convert instantly to bitcoin and you will spend it instantly on goods and services with essentially 0 fees on lightning. You get the utility of cash, without the debasement and the added benefit of programmable money.
  • Sp
    Scott p.
    21 November 2020 @ 22:16
    Epic
  • DB
    Dave B.
    21 November 2020 @ 18:18
    CBD or not, Hugh, you are on a the higher cloud of comprehension and you master it. Thanks to you and Raoul for making this available to fellow Canadians.
  • JG
    John G.
    21 November 2020 @ 03:09
    Hugh - Nice Wu-Tang Clan reference...
  • DM
    David M.
    20 November 2020 @ 15:26
    Hugh's interviews are truly unique.. they are always SO thought provoking... It's always a privilege to hear what he has on his mind, thanks for bringing him on!
  • DS
    David S.
    17 November 2020 @ 20:03
    It is constructive to compare Mr. Napier's clarity with Mr. Hendry's opacity. I know who I would prefer to try to help the Fed. DLS
    • JF
      Jack F. | Real Vision
      17 November 2020 @ 20:12
      DLS I have a great deal of regard for you but respectfully disagree... both Hugh and Russell bring so much to the table. But yes I agree they come at it from different angles
    • JH
      Jesse H.
      17 November 2020 @ 20:36
      Completely agree, David. While I love RV's work, I honestly felt this interview was a waste of time - lacking in rigor and clear thinking, with too many implicit and explicit assumptions. Napier's thinking was much clearer and more rigorous. I am no expert, of course, but my read on things is that both Raoul and Hugh are probably both wrong on the DXY. Lyn Alden's work is also another one to follow for clearer thinking on the Dollar vs. other currencies and Dollar vs. Gold, BTC, and other "hard" assets.
    • DS
      David S.
      17 November 2020 @ 21:45
      Mr. Farley - I have a great deal of regard for you as well. The key words are ..."try to help"... Socrates was a philosophical gadfly. Mr. Hendry is a financial gadfly it the best since of the term. The problem is we are in the biggest modern financial mess ever worldwide. It will take a steady hand on the tiller. Mr. Napier is believable, quiet and competent. His ideas would be much better respected by the current members of the Fed, Congress and the Administration. To implement new policies, they must be sold to the above with all their respective problems. In my opinion Mr. Napier could make a difference if allowed. DLS
    • LS
      L S.
      17 November 2020 @ 23:53
      Hugh's lack of regard for his appearance is insight into his scatterbrained thought process. Occasionally he stumbles on genius but mostly he proves his naysayers correct. I think the reason this came out in him is that he's a particular personality type that "won the game" but didn't know what to do after he still had won (financially) but went belly up in the hedge fund business.
    • MD
      Matt D.
      18 November 2020 @ 08:33
      An analogy to me is the current state of physics. There is a disconnect between the two best theories - quantum and relativity. There is an impasse - in the past there used to be a philosophical fringe to physics to take the intellectual leaps that convention wouldn't allow. That is absent these days (since the early 1900's with Quantum mechanics discovery) - yet necessary. Hugh is quite philosophical, but to me, this is what is required to make progress. He says it well with his imagery of bringing the patient back to life.
    • SB
      Stewart B.
      18 November 2020 @ 18:22
      I agree David. The feeling I got was one of, 'Look at my success. I own these properties and just at my life on this beautiful island. I would love to play God with markets. No really Raoul - I would. And all I can do is laugh at the thought of hard working people and savers losing their savings. Ha ha ha! I'm Hugh Hendry (aka God).'
    • LS
      L S.
      18 November 2020 @ 19:55
      Stewie, I commented on your post above too, great stuff. Do you think he is still combating the demons of getting his ego blasted after professional failure? I'm being serious, not mean here. He still has the loot so it retards him a bit from truly coming fully back to his right mind. Also, for the men that don't have families (and I understand it's not for all) I don't see how when you've "won the game" like these two have, playing markets and discussing XYZ day in and day out isn't analogous to being a gamer who is competitive and interacts with others online? If you aren't cultivating eternal things or striving for virtue, what's the point? Dying with money that no one, or a spoiled person might inherit? It seems pointless to me.
    • DS
      David S.
      20 November 2020 @ 00:21
      Mr. Hendry is an excellent thinker especially outside the box. I think of him a little bit like Robin Williams in the finance world. I have not read his papers, but I am sure there is a smoother presentation. It is essential to listen and learn from as many finance/business minds as possible. DLS
  • JT
    John T.
    19 November 2020 @ 19:53
    I hope our central bankers really are questioning their models. My suggested solution is a combination of higher interest rates to encourage productive investment, while allowing the fed to make direct monetary transfers to all citizens on an equal basis to combat deflation. If much of this money is used to pay down debt, that is a good thing as it gets us out of this debt trap. This tool would actually be capable of causing CPI inflation, which the Fed is required to respond to, so it would not be overused like the current non-fuctioning policy response.
  • JS
    James S.
    18 November 2020 @ 18:19
    Raul and Hugh, as a commercial banker who worked on the PPP program you have no idea what you are talking about here. The main problems with PPP loans were related to clarity on the forgiveness portion: For example, on pg. 1 of the application, there was a certification from the owner/manager that the economic uncertainty from the current environment made this loan necessary. Guidance from the SBA and Treasury for this opaque certification threw off some potential borrowers because they didn't know what would be required for forgiveness. For instance, at one point they were saying you may potentially need to have to have a negative revenue impact of X%. A lot of companies weren't affected that badly. Then they weighed the idea of saying that you could only make this certification if you didn't have access to other forms of capital. Most small businesses had access to other sources of capital via lines of credit, etc. Then they had an affiliates test on the initial version of the application that excluded many private equity companies from qualifying because they would have had to many employees and not been considered small businesses.
    • JS
      James S.
      18 November 2020 @ 18:23
      Lastly the initial repayment term for the loans was around a 24 month amortization. This was later increased to 54 months only after borrowers returned the loans out of fear that if they did not qualify for forgiveness it would create too much of a burden on cash flow. Even at a 1% rate of interest this short an amortization could have been bad for a lot of people.
    • jh
      jason h.
      19 November 2020 @ 02:06
      James thanks for responding with real boots on the ground intel! Did you watch the Napier Johnson interview recently and do you agree with Napier’s view on commercial lending?
  • KD
    Kelley D.
    18 November 2020 @ 20:36
    I always totally enjoy every episode of "Fast Times at Real Vision High" with Spicoli
    • jh
      jason h.
      19 November 2020 @ 01:56
      Lol good one....and spicoli has a supercharged IQ. Thoroughly entertaining and thought provoking content from the Caribbean think tanks
  • CS
    Christopher S.
    19 November 2020 @ 00:02
    Bring back Werner. Hugh was too excited in the last interview and we did not get to hear Werner out. Interesting to see Hugh fully converted after his epic curmudgeonly interviews post-2008. This MMT is coming and of course it will just bring a different kind of pain and not solve anything. Without sound money and responsible local banking everything will continue to get worse.
    • CS
      Christopher S.
      19 November 2020 @ 00:10
      "No sympathy from me. Suck it." Holy shit Hugh. This is insanity. And I am Gen Y. This is Fall of the Roman Empire shit. This is why I own lots and lots of gold.
    • CS
      Christopher S.
      19 November 2020 @ 00:18
      Do you know what would bring back responsible risk taking? Sound money, free market interest rates, and zombie companies that go bankrupt instead of getting more credit to buy back their own shares.
    • CS
      Christopher S.
      19 November 2020 @ 00:20
      Raoul, the same central bank that can give you a digital currency directly can also confiscate it from you directly when they decide they do not like you. Everyone has gone mad. Buy guns.
  • LS
    L S.
    17 November 2020 @ 23:56
    Whenever I see Hugh I want a return to Werner. He is the most cool headed, intelligent and convincing professor regarding the current world conspiracy politically and financially.
    • CS
      Christopher S.
      19 November 2020 @ 00:00
      Bring back Werner. Hug was too excited in the last interview and we did not get to hear Werner out.
  • SL
    Stuart L.
    18 November 2020 @ 23:22
    Hugh is correct that broad money (M2) is usually created by the commercial banks when they make loans and extend credit. As pointed out by Raoul in the last segment of the interview, MMT (whether or not financed by central bank debt monetization) goes around the commercial banks and injects broad money directly into the main street economy. I highly recommend everyone (who is interested in money creation) read a fantastic article by Lyn Alden titled " Banks, QE and Money-Printing" dated November 1, 2020. It is on her home page and it is free. Just Google Lyn Alden Investments to get her home page. See walks through several examples of money creation. It is a must read in my view. She builds upon the work of Richard Werner in my view.
  • AP
    Antonio P.
    18 November 2020 @ 23:10
    He is indeed a sociopath...
  • CN
    Clifford N.
    18 November 2020 @ 22:50
    Feels to me like negative rates will force more and more wealth into real assets and the average Joe who can no longer afford said assets will be left having to rent the means of production. Sounds like a feudal system.
  • RD
    Robert D.
    18 November 2020 @ 20:37
    Wouldn't materially negative interest rates just push more money into tech stocks? There is no reason to take business risk when the Fed has engineered a financial market that only has upside. Haven't we essentially reached a point where financial markets are cannibalizing the real economy?
  • LS
    L S.
    18 November 2020 @ 19:57
    Boy do I need a dose of Richard Werner.
  • AS
    Alexander S.
    17 November 2020 @ 22:15
    Both Hugh and Raoul, IMHO, remain stuck in monetary policy discussion when the real price is unprecedented fiscal policy (spending, equity, guarantees et al) finally creatING the credit central banks where unable to create for two decades (reserve requirements, Basel III etc). A good example is the UK Coronavirus Bounce-back Loan schemes. It guarantees credit to banks and forces them to lend. Was taken up in 3 months. GBP 40bn. Small example of credit creation, using banks as utilities and taking credit tests off the table. Again, this already happened. More programs are ongoing and will come. Not big enough? Check out IMF numbers on Covid response page to get a craps for OECD size: think $17 trillion or 22% of OECD GDP! Some of it will fix past problems, keep overcapacity in place and thus remains deflationary. But other will not. The size only gets bigger and is likely changing everything in combination with vaccine rollout and normalization. By then, credit has been newly created and will lead to transactions, thus increase velocity. With 17% more M3 in system, not considering inflation as an option is negligent at the very least. anchoring effect?
    • LS
      L S.
      17 November 2020 @ 23:49
      This is what Napier is referring to, correct Alexander?
    • AS
      Alexander S.
      18 November 2020 @ 00:51
      Yes LS
    • TN
      Tim N.
      18 November 2020 @ 01:01
      Spot on. The velocity will pick up but there will be lag - once a vaccine arrives the reflation may happen a lot faster than anyone expects . Bounce back is indeed an apt phrase. The ball is just hitting the floor now.
    • LS
      L S.
      18 November 2020 @ 19:50
      Tim, does that mean our BTC positions skyrocket at that time, too?
  • SB
    Stewart B.
    18 November 2020 @ 17:18
    Looking at the velocity of money is really misleading. Velocity of money is not measured but calculated by dividing the GDP by the money supply. For the same GDP, it should surprise no one that if you double the money supply, you will halve the velocity.
    • LS
      L S.
      18 November 2020 @ 19:48
      This is why I couldn't get my mind around it yesterday - it seems like an awkward back calculation with little predictive anything, Stewart. We're on the same page here. Plus, GDP is also infested by a government spending number! LOL
  • RS
    Roger S.
    18 November 2020 @ 18:49
    Just like MMT, another idea of how to hand out the money to the right people to make things sing. The problem is always who gets to decide who gets it. It always ends up with the politicians or other central planners none of which are knowledgeable enough to know where the money should go. In addition giving politicians and central planners this kind of power inevitably leads to crony capitalism, corruption, waste and unproductive uses.
    • LS
      L S.
      18 November 2020 @ 19:40
      When a woman comes to you as Bernie Sanders main cheerleader and MMT promoter, you have to be a fool to think anything else than what you just stated Roger. People who haven't figured that out are in for a rude awakening. The problem? They'll take us down with them and it won't matter that we told them all the while what a scam someone like Kelton was pulling with Bolshevik Bern - they'll be in their mansions still.
  • DS
    David S.
    18 November 2020 @ 19:30
    Finance meets #microdosing story telling. Going to fix a BIG T&T
  • JL
    Jake L.
    17 November 2020 @ 10:44
    Here's an idea for the Central planners, leave the free market to work.
    • SB
      Stewart B.
      18 November 2020 @ 18:19
      The problem with central planners is that they believe that everyone else's central planning doesn't work except their own. IMHO historians will view Jerome Powell and Janet Yellen with the same distain as they did Chairman Mao. Of course we don't know exactly how the chickens will come home to roost, but I do suspect we are on the path. If I were an evil genius, I would hold rates as low as possible for as long as possible, in order to get everyone indebted as I could, and asset prices as high as possible, then I'd wait for a supply shock (such as Covid) then do everything I could to unleash inflation. Given we haven't been there recently, most economists will be surprised to learn that long end interest rates tend to follow inflation expectations higher. Generally creditors want to get something approaching the level of inflation back, otherwise they simply more to real assets. Any attempts by central bank to put a ceiling of rates means more printing, which is likely to fan the flames. People will say, 'But how come central bankers couldn't see the problem they were creating? It's as plain as day.'
  • PT
    Peter T.
    18 November 2020 @ 17:44
    Cant help but to think that a massive deflationary event is close everybody is always on the wrong side. They will print 30 trillion but not without blood flowing deeply in the streets.
  • OP
    Oren P.
    18 November 2020 @ 17:24
    Reading the comments I see that most people loved it. I struggled. Its really hard to follow. Would be great if Steven V M does an explainer.
  • Jo
    James o.
    18 November 2020 @ 16:03
    That was epic, my mind is exploding. Main take aways...1) sell a kidney and buy dec 2022 100 strike call options. 2) Grow my hair and start rubbing in CBD oil, as there is a chance it could increase my intelligence to a minuscule fraction of Hugh's 3) Casually approach my dad to "Persuade" him to switch his life savings into Bitcoin. Thanks for the great content, always brings a smile to my face watching Hugh "Man-Splain" topics that would normally go totally over my head! Well done
  • CW
    Corey W.
    18 November 2020 @ 15:12
    "Bobby Bobby Bobby, Digi Digi Digi, stuck to your a$$ like a Victoria Secret wedgie" ... classic
  • gr
    graham r.
    18 November 2020 @ 13:26
    I'd say Boomers have Gen X children more than Millennial.
  • CR
    C R.
    18 November 2020 @ 13:10
    Absolutely loved that! The finance rock n' roll pide piper! Playing the tune of the realm with such eccentricity and flamboyance you can only either be dazzled or appalled. The former here!
  • NA
    Nicolas A.
    18 November 2020 @ 12:26
    The problem statement is that despite negative/low yields banks are not lending enough and the proposed solution is shock and awe more negative rates? I take issue both with the problem statement and the proposed solution. I think Raoul is closer to an answer than Hugh, digital is the way to go. The issue is not rates themselves, they are were they are and it’s not really up to the Fed. The issue is the liquidity is not targeted enough. Either you bet on technology and go digital. The other option not discussed is political, which we probably all don’t want, but China tells it’s banks when, where and how much to lend and that’s the end of it. Banks provide a public service, and perhaps elements of this model are not dumb, since banks are just facilitators of money at the end of the day not get rich quick without skin in the game machines.
  • MP
    Michele P.
    18 November 2020 @ 11:53
    The Cayman Sultan and the Mad Hatter! Loved that!
  • DF
    David F.
    18 November 2020 @ 11:31
    Hugh, it is called chaotic thinking. The real buzz is when the pieces fall into place.
  • SS
    Steven S.
    18 November 2020 @ 06:13
    I'm pretty sure Hugh is the love child of Robin Williams and Kate McKinnon who decided to go into finance. Endlessly entertaining while intellectually captivating.
    • SR
      Suds R.
      18 November 2020 @ 10:10
      I want to be Hugh when I grow up!!
  • JC
    John C.
    18 November 2020 @ 09:15
    Hugh is a hoot, as always. The CBD seeping into his scalp as the interview wore on was perhaps my fav distraction.
  • MD
    Matt D.
    18 November 2020 @ 08:36
    Loved it ! I like the top comment below and wanted to regurgitate it. What would happen if the free market set interest rates?
  • LO
    Luke O.
    17 November 2020 @ 07:11
    Seriously though, why not just give people $2000 each month?
    • LO
      Luke O.
      17 November 2020 @ 07:13
      It will cause inflation and give money to people who desperately need it.
    • PP
      Patrick P.
      18 November 2020 @ 03:31
      Luke ...BINGO !!! They just tried this in April and the politicians can't wait to do it again soon (another Covid relief bill)... And what is really funny is the Fed is cheering them on.....Again debt has two possible outcomes ...debasement (inflation) or default.... 100% of the time they will choose debasement.
    • MW
      Michael W.
      18 November 2020 @ 05:19
      I think some version of this is what’s needed. Low interest rates perpetuate mal investment which leads to over capacity. Just look at shale - never would have happened with 5pct interest rates. And the plumbers, teachers etc of the world, aren’t going go taking out sophisticated loan products - they’re already levered and have recent scarring (gfc) from over leverage. So, what’s lacking here’s is aggregate demand - especially when considering demographics. UBI is extreme but this can be metered - what about a stipend instead of a whole income? $150 / mo would boost median incomes by 3pct - a tidy sum when battling 2pct inflation. And behavioral work shows people are more apt to spend when it’s a recurring benefit as opposed to a one time windfall.
  • PA
    Pat A.
    18 November 2020 @ 05:07
    Take away Hugh’s inflating houses and see if he still likes his negative 3% world.
  • DF
    Douglas F.
    17 November 2020 @ 17:26
    For Hugh's interviews, I would suggest subtitles.
    • GH
      Gloria H.
      17 November 2020 @ 23:32
      I always have captions on, maybe check your settings?
    • AI
      Andras I.
      18 November 2020 @ 02:21
      Hopefully better ones than the transcript :) society's general = Société Générale tie right = tirade I know what to do = I don't know what to do [?] = Saudi Arabia screening = screwing [?] = inertia [?] = Stan bloody digital = Bobby Digital
    • WT
      William T.
      18 November 2020 @ 04:33
      Or better yet, a translation to english :)
  • dl
    donald l.
    18 November 2020 @ 03:50
    This is why I own Gold and sleep at night.
  • AA
    Alberto A.
    18 November 2020 @ 03:40
    Who said finance and macro was boring! Hugh is like an artist of finance...thanks for this interview...he was at his best...thanks Raoul for making this happens....btw...it was much easier to follow his thoughts and ideas versus the tweet thread! :))
  • DD
    David D.
    18 November 2020 @ 03:30
    I think Krugman would agree.
  • GF
    Gordon F.
    17 November 2020 @ 21:52
    It's way beyond my understanding of the world financial system to think out what the consequences of such a policy might be, but my intuition tells me that making a change like this would likely break a lot of things, and possibly in devastating ways. I already feel like our situation is rhyming with the 1930s, and if this time around ends with another world war, money and banking may be the least of our concerns. What Hugh is proposing is a different take on "Move fast and break things," and as fragile as the monetary and political systems are, I would caution against such a radical step. Just remember: The unforeseen consequences are nearly always more powerful than those we foresee.
    • AI
      Andras I.
      18 November 2020 @ 02:30
      Exactly. The second recent interview after which I felt quite anxious about the future. So it's either a very convoluted way of shilling Bitcoin (jk) or we're heading to somewhere not nice.
  • GV
    Gerard V.
    17 November 2020 @ 22:51
    So...moving forward. If the Fed will look to charge negative interest rates to savings, would this hurt bitcoin and ethereum since they are listed as securities. This may be a dumb questions, but as securities would they be put in that "savings" bucket.
    • AF
      Alan F.
      18 November 2020 @ 01:59
      No, the digital asset space would likely benefit from such policy. In fact, Jay Clayton has mentioned that the SEC doesn't view either BTC or ETH as securities and they are treated more like commodities in their present state. Let's see though how the US decides to ultimately regulate this as US regulation of digital assets is still unfolding.
  • GR
    George R.
    18 November 2020 @ 01:44
    This guy is fun and different really enjoyed this interview. We need to see more interviews with Raoul and his guest.
  • MJ
    Marcus J.
    17 November 2020 @ 23:05
    Very entertaining, please have Hugh on often, he makes me laugh out loud. Good discussion too
    • JF
      Jack F. | Real Vision
      18 November 2020 @ 00:56
      I’m glad you enjoyed, Marcus. I did as well 😃
  • AM
    Alexander M.
    17 November 2020 @ 23:46
    No way the idiots who got the world into this mess are going to turn it around. They can only make it worse.
  • MJ
    Marcus J.
    17 November 2020 @ 23:05
    Very entertaining, please have Hugh on often, he makes me laugh out loud. Good discussion too
  • JK
    Jack K.
    17 November 2020 @ 22:50
    The Fed didn't extend the PPP loans. The SBA did. It's not a perpetual debt. They will be forgiven. The cost to those borrowers will be not writing off the expenses attached to the loan and the social credit they will lose when the private information is published.
  • SD
    Stephen D.
    17 November 2020 @ 22:29
    Please do part 2, 3... inf (as many as it takes) of this line of reasoning until you, me and Hugh all have a good common understanding of his idea. Very good discussion.
  • JG
    Johan G.
    17 November 2020 @ 21:32
    Well, very interesting discussion gents! But; The problem with banks not lending is that there is no good collateral in the banks view, so they do not lend, and the public have no appetite for more debt, because they do not have enough income to serve the debt even at todays low rates. Since the 1980's the central banks had the job of stimulating the economy out of any doldrums by lowering the interest rates going all the way down the long slope created by Volckers 'mad actions'. We got the 'independent central bank doctrine' because it delivered the goods. Now they ran out of ammunition, they are now just trying to 'push a string'; creating idle bank reserves instead of stimulating real High Street borrowing. And we all know there is now little they can achieve in the real economy without fiscal assistance. IMHO there will be no reflation unless money is placed in the hands of the people who would actually spend the money, i.e. the lower income percentiles. Perhaps a negative tax rate for the lower income would work? That would stimulate both demand and labour participation. Combine it with VAT to raise tax income and increase prices, and then we are on our way to reflation. Today the income and wealth inequality kills any attempt to reflate. I do not buy into massive negative interest rate. It would only increase the wealth and inequality gap in the US,put more resources into unproductive finance industry and potentially destabilise society even more than we see today. I do not mind that some make more money than others, but today it is so uneven that it makes the economy dysfunctional. That must be corrected before the US can succeed to grow out of this mess. as for the mercantilist states, they just respond to the system that was set up by the US at Bretton Woods when the US dollar was set as the new world currency. That mandated that the US 'produce' USD(at zero cost) to the rest of the world and the rest of the world produce real goods(At a real cost) for the US. Those who understood this 'division of labour' did well(Germany,Japan,China and others) those who did not did badly.(Argentina and others). This implies a trade and budget deficit for the US, and ditto surplus for the 'mercantilists'. The system served the US well until recently, the question is if the US no longer covets this system, what will replace it? Does the US really want a change?
  • JT
    Joseph T.
    17 November 2020 @ 20:12
    Hugh always stretches my mind---great stuff.
  • JM
    John M.
    17 November 2020 @ 19:47
    Interesting conversation. Always entertaining to listen to Hugh and I learn something!
  • TS
    Theodoros S.
    17 November 2020 @ 19:20
    For those wondering about the USD power and its ability of staying the world reserve currency, just know that USD has been, is and will remain the world reserve currency!
  • NR
    Nicolas R.
    17 November 2020 @ 18:58
    ahhh... Now hugh is sitting infront of the outhouse! allways interesting! hahahaha ;-)
  • dw
    douglas w.
    17 November 2020 @ 18:48
    "I had a inventory of timelessness in my mind."
  • TP
    Timothy P.
    17 November 2020 @ 18:18
    The "real answer" is this shambling hybrid chimera of a banking system needs to be entirely replaced. Negative rates, Trillions in debt, Holding reserves back from the people who really need them, all the rest. Bankers seem to be so clueless that they think using the same tools will save them this time. It won't. No more rigged markets (LIBOR anyone, and probably Gold and the Yield Curve), no more accounting tricks, no more rolling losses into perpetuity. Crash and burn, and I can't wait to see it happen. Its in process now.
  • PB
    Paolo B.
    17 November 2020 @ 17:33
    Truly enjoyed this. I have great respect for Hugh brain. His thoughts are 10 miles ahead exploring what if. Btw Volcker was a crazy m... indeed and very effective too (historically appointed by Carter and Reagan was trying to get rid of him - you would think the reverse no?)...
  • JE
    John E.
    17 November 2020 @ 16:20
    Such an interesting discussion. I think this discussion needs to include what Kiril Sokoloff refers to as malinvestment. (I think his gentle term for 'mistakes' which includes fraud.) The recent Kodak fiasco would be a small example. The 'system' often has a hard time differentiating between Steve Jobs and Kenneth Lay in the present moment. Increasing the velocity of money may be part of the solution but I don't think it is sufficient.
  • DZ
    Dan Z.
    17 November 2020 @ 16:04
    If a proposition to sail to an undiscovered land was put together today Hugh would be the perfect proponent for it. "Just imagine the opportunity to find new seashells." Waves his hands around "small shells and enormous shells. What If we find bananas? what can we do with a billion more bananas? "
  • IM
    Indranath M.
    17 November 2020 @ 15:51
    Raoul and Hugh - bravo!! This is one of those videos where i don't need an explainer , but just need to watch / hear this over and over again to digest this and think about all the implications ...
  • SS
    Stephen S.
    17 November 2020 @ 15:47
    “The Nameless Depression”...
  • SS
    Stephen S.
    17 November 2020 @ 15:36
    I love that Hendry has referenced Steinbeck and Kerouac in a video on economics and we are only 15 min in.
  • AV
    Alexander V.
    17 November 2020 @ 15:25
    Mr Hugh Hendry for next Bond villain, please. No script necessary: it will flow naturally.
  • DM
    Dom M.
    17 November 2020 @ 14:52
    capitalflows
  • JA
    John A.
    17 November 2020 @ 14:51
    Hugh really does have a unique way of looking at the world. But I wonder if I should be scared that he sounds more like Jeff Snider now than I have ever heard him sound before. TSLA is going into the SP500. My spider senses are tingling lol.
  • JF
    John F.
    17 November 2020 @ 13:41
    The Mad Hatter of RealVision strikes again.
  • OA
    Obai A.
    17 November 2020 @ 13:15
    Hugh as always exceptionally genius and charismatic. Those moments of enlightenments that comes to him is funny. Greetings for both of you from the aforementioned Saudi 🤣
  • MS
    Mike S.
    17 November 2020 @ 12:51
    Raoul. As always a great chat with Hugh. When might we see the next episode dealing with your closing remarks: “Implications of Fractional reserve banking vs CBDCs...”
  • TS
    Thomas S.
    17 November 2020 @ 12:01
    Enjoyed the conversation, and it certainly seems like a big binge/boom is coming soon, although I think it's more likely to take the form of what Russell Napier said a few days ago - huge fiscal stimulus rather than the huge monetary stimulus Hugh fancies. Will be a very interesting year though! As a funny aside, Hugh reminds me of the second Scotsman from the Harry & Paul sketch. Skip to 1:47 in this video: https://www.youtube.com/watch?v=rv2BcBZan2A
  • DO
    DIOGO O.
    17 November 2020 @ 11:29
    Excellent interview... However... if I have to choose between the financial history brought forward by Russell Napier and the Caribbean dreams brought by Hugh.... I stay with Russell... :)
  • MC
    Mike C.
    17 November 2020 @ 10:33
    Hi RV team, Can you please ask Steven Van Metre to do an explainer attempting to reconcile the disinflation narrative that Raoul and Hugh agree on in the first part of the video (which is also Steve's narrative) ie "banks don't want to lend, therefore there is no inflation" with Russell Napiers u-turn on inflation ie "banks are already lending more because governments are offering banks principle guarantees".
    • MC
      Mike C.
      17 November 2020 @ 10:55
      ... and he already did it. Thanks
  • PV
    Peter V.
    17 November 2020 @ 10:12
    Great talk. But is revolution not the thing that collapses this system? Seems like revolution is coming closer and closer?
  • NB
    Nicholas B.
    17 November 2020 @ 09:51
    I constantly seek out Hugh vids, always delivers a head twist. Be great to get his take on Australian situation.
  • FC
    Frederick C.
    17 November 2020 @ 09:42
    Understand the mixed ratings, Hugh shows his usual flashes of brilliance and annoying randomness... almost got interesting when Raoul asked « and what about the pension system? » and then Hugh just went off a tangent again... Ask Mike Green instead: won’t interest rates go negative anyway if Vanguard has to keep rebalancing its target date funds and buy more bonds every quarter stocks outperform bonds?
  • DB
    Dan B.
    17 November 2020 @ 09:26
    Hugh always a good time
  • TW
    Tom W.
    17 November 2020 @ 08:02
    Yes Hugh! Mega negative rates + MMT mean one thing for Bitcoin. Number. Go. Up.
  • DY
    Dmytro Y.
    17 November 2020 @ 07:32
    Regarding the Eurodollar trade - any concerns about the Eurodollar rates being Libor-influenced, rather than directly following changes in official rates? I see Hedgeye have many countries forecast to be Quad 2 or 1 next year, (until approx Q4) including the US. What would compel the Fed to go to negative rates if Hedgeye are right in 2021?
  • GR
    Gabriel R.
    17 November 2020 @ 07:07
    Wow... That was great interview. Made me think in a completely different way about negative interest rates and a reason for taking rates that direction. Educational and super entertaining. Thank you!
  • sp
    spencer p.
    17 November 2020 @ 06:05
    love these guys! Hugh has def done some shoomies over the years with these amazing ideas! hah
  • NL
    Nikola L.
    17 November 2020 @ 05:32
    on hold.. forgot my beer. Can't watch this without a drink.