Russell Napier: Growing Wealth in an Inflation Avalanche

Published on
February 10th, 2021
Duration
62 minutes

Mark Cuban: What the Fed-Driven Bubble Means for the Financial Establishment


Russell Napier: Growing Wealth in an Inflation Avalanche

The Interview ·
Featuring Russell Napier and Stephen Clapham

Published on: February 10th, 2021 • Duration: 62 minutes

If central banks and governments unite to debase their money and depreciate their currency, will the long-awaited inflation finally arrive? And if it does, how can investors position themselves to not only protect their portfolio—but in fact grow their wealth—in this inflationary environment? Russell Napier, preeminent investment strategist, joins Stephen Clapham of Behind the Balance Sheet to answer these two critical questions. Napier makes his case for why inflation is indeed on the horizon, discussing everything from rent controls and yield curve capping to credit rationing and pricing power, and then he and Clapham explore the various investments that have a favorable risk/reward profile should Napier’s thesis prove correct. Filmed on February 4, 2021.

Key learnings:
Napier sees favorable opportunities in companies that can secure easy debt financing, value stocks whose pricing power varies with inflation, and countries with low debt-to-GDP ratios such as Singapore.

Comments

Transcript

  • BP
    Brian P.
    21 February 2021 @ 09:25
    I'm going to rewatch this interview at least a couple of times. I've always said that we're turning into China out of necessity. We're essentially going to start financial repression in the western banking system. Cash will be trash in that sort of environment.
    • SC
      Stephen C. | Contributor
      25 February 2021 @ 12:27
      Glad you enjoyed it!
  • DS
    Dimitri S.
    19 February 2021 @ 18:23
    Thanks Russell and Stephen for the amazing video! Small question, toward the end, there was a discussion about 5Y government bond yields. What is meant by European Union bond yields in this case? Is that some kind of average of sovereign bonds in the Euro Area? Is there a ticker for it?
  • LB
    Lorenzo B.
    12 February 2021 @ 11:16
    This makes it top 5 all time content on RV definitely; potentially Best ever
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:37
      Thanks Lorenzo, so glad you enjoyed, wish I could take some of the credit
    • LB
      Lorenzo B.
      18 February 2021 @ 16:57
      Well I guess you should indeed. Russell might be doing a lot of the heavy lifting, but you're steering the discussion wheel impeccably, with not a bit of fuzzy digression
  • NT
    Nic T.
    13 February 2021 @ 23:56
    Oh, just how far RV has fallen ... LMFAO !! Not just 1, but 2 clearly intentionally placed copies of his new book on the shelf behind his head ... never even heard of the guy before (probably with good reason ...), just thought it was odd so I checked it out. Raoul probably has a MLM deal on trendy pool tables and leather chairs! Honeslty , I've been falling away from 'the flock' here for a while, but this seals the deal on sub renewal ... have a hard enough time avoiding product placement on regular TV. Not that many reading will care, and I'm sure I will take some flack, but I'm basically just riding my sub out now, watching the occasional piece, but after being here from the start, to me this has turned primarily into a marketing site for washed out traders, book writers and newbies looking for a break. Very little value added *except* if you are very new to finance and looking to understand some of the basics. Just remember though, almost all of these guests are here trying to sell you a story that suits their portfolio ... plus Raoul shouting 'FIRE' whenever he gets nervous or wants some attention ... Caveat emptor - you are the product here guys 'n girls Not denying there is the occasional gem in here, but hey, thats what keeps us coming back isn't ;) But 99% of this can be found on various sites free online. We are paying the same price now for dubious quality video calls vs professionally produced pieces. Someones laughing ... at us ... Oh, and did I mention that this next thing is FREE !! <barf>
    • PB
      Patrick B.
      14 February 2021 @ 00:43
      I presume the Real Vision guests come on for free. Surely their book on the bookshelf and one or two snippets on it is a fair return for them? Note that the Real Vision Pro membership of about $900 pa is about what it costs to speak to one of these guys per hour... All in all, I think it's pretty good value, and petty to be slagging them off for having their book on the shelf
    • NT
      Nic T.
      14 February 2021 @ 03:16
      @Patrick B Well, 1 copy, yeh might have let that pass. 2 positioned completely differently to all others - lame. Just tell me if you got a book to sell and tell me about it. 'want to watch a video that will change your life?' 'Want some RV merchandise for free?' First 2 things i was faced with on logging in ... bucket shop stuff ... always sell, sell, sell. If it's so good it wouldn't need the pushing ;) You *presume* the guests/interviewers come on for free, but if their real motive is to push an unspecified product/agenda, it ain't really free is it? Just another venue to promote views to a paying audience who could get most of it for free elsewhere. Would be very wary about trusting that ... As I said, didnt expect this to be a popular post, just disappointed with the way RV turned out, had high hopes a few years ago :/ So, a bit deeper stuff than just 'petty' going on here, but your obviously free to view it that way ;)
    • AF
      Andre F.
      14 February 2021 @ 05:16
      Nic T Your comment is so ridiculous and childish (on multiple levels), it is nearly beyond. belief. You Bruce Wayne level detective you! Wow, you are so clever, you "thought it was odd, so [you] checked it out"!? What an impressive high level smarty pants you are. Your wondering monkey mind couldn't stay focused on what was being discussed and you put in squint eyed effort to look through the sub par visual quality of Stephen's feed and type in what appears to be the title in the background behind him and then you found out the evil scheme-gasp!- that it was Stephen Clapham's own book! Da-Da-Daaa!!! So goddamn what?! Stephen Clapham is a goddamn Warrior. He had to reinvent himself in the market place after he had seemingly reached the end of employability. And he took his skills and his energy and went into business for himself and became successfully self employed. I remember this (hopefully mostly accurately) from his first RV interview. It isn't "product placement". It's his OWN book, in his own house, in his own room where he does his computer calls from. If we were watching a Grant Cardone interview, Grant would have mentioned or displayed one of his books a dozen times during the interview, absolutely nothing wrong with it. Is it "product placement" if Robert Greene has The 48 Laws of Power behind him in his OWN home as he does a zoom interview? These people are in their own space showing product of their own making pertaining to the very business that they are in and known for and being interviewed for. Get your head out of your backside man! Actual product placement is cutting a deal with Pepsi to show the "heart throb" actor of the moment gratuitously drinking it. Dude, this isn't a cheap movie, this is real life. Russel Napier has written books. Stephen Clapham has written a book(s). Many in the RV audience are lacking in finance education (myself included). Clapham has his books behind him? I never would have known if not for your stupid comment. Did you notice how the interview went in to stock picking? That is what Clapham's book is about, it would probably benefit me to read it. Nic, are you an expert stock picker? Are you super skilled at doing that? Are you beyond any need to read something like Clapham's book? I'm not. I'm in need of learning when it comes to stock picking. Hey Nic, business men promote there own product. Were you born yesterday and didn't know that. Business' promote their own product. Were you born yesterday and didn't know that? Potential customers have needs to fulfill and can't do that if they don't know that the product that fits with them exists. They only know that the product exists if the business promotes it. Were you born yesterday and didn't know that? By the way Nic, due to your dumb comment, I did some google searching of my own and I now know that Stephen Clapham also has a course on Udemy. I just might take the course. Thank you for bringing him another customer! You, of course won't need to take it though, either because you're excellent at stock selection or you're excellent at finding what is in Clapham's course elsewhere, "on various sites free online". *Vomit* The one thing I agree with you on is that I get pissed when I see an RV video go up to their free YT channel. But, again this simply speaks to the promotion that a business MUST do to increase it's customer base and increase revenue. We live in the REAL WORLD, not the private fantasy utopia that each of us carries around in our own personal wishful mind. Would I prefer that RV go out of business, because they didn't promote on YT and elsewhere? Of course not. Anyway, Nic T., you're a man of your word aren't you? When does your sub run out that you say you will not renew? I want to know from what point forward I can look forward to not seeing your comments. Thanks!
    • NT
      Nic T.
      14 February 2021 @ 10:41
      @Andre You put so much effort into that, I had to give you an upvote Have a nice day, and thank you you for starting my day with a good laugh :)
    • PB
      Patrick B.
      14 February 2021 @ 11:34
      Quality chat Andre F! Steve Clapham is an absolute legend
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:27
      Actually, there are 3 books on my bookshelf - depends on how I am sitting. But you will be pleased to know that I have turned my desk round. I think you realise that neither Russell nor I received any payment. Russell is now making his newsletter available to private investors and I sell online courses (and a book). If you don't like that, by all means go on YouTube. You get what you pay for.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:29
      I just read some of the replies - thanks for the kind words. Really appreciate your support.
    • DO
      Darragh O.
      18 February 2021 @ 12:58
      Hey Nic, a wise man once said: "Its better to remain silent and be thought a fool than to open your mouth and remove all doubt". To Russell and Stephen great interview I will be watching this one more than once!
  • AP
    Antonio P.
    10 February 2021 @ 18:33
    One of the best interviews I have listened to in RV. Both interviewer and interviewee were excellent: no unnecessary exchange of flatteries and pleasantries. Thought-provoking points of view in spades...
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:51
      thanks Antonio - we are good friends so we don't indulge in pleasantries.
  • BV
    Benji V.
    11 February 2021 @ 00:30
    One of the best rv interviews. Two highly knowledgeable people having a conversation. It's like I'm a fly on the wall. Keep it up!
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:49
      thanks Benji
  • JH
    Jesse H.
    11 February 2021 @ 01:28
    Excellent - best RV video I've watched in a long time. Well done. Thank you.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:48
      thanks Jesse
  • jg
    john g.
    11 February 2021 @ 05:47
    Steve, you asked the right questions! I downloaded the transcript to break the discussion down into a cause/effect decision tree. Thanks to both!
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:44
      cheers John, easy when you are talking to someone with Russell's intellect tbh
  • DL
    Diana L.
    11 February 2021 @ 05:48
    A fascinating and most enlightening discussion, thank you.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:44
      thanks Diana. glad you enjoyed
  • PR
    Peter R.
    11 February 2021 @ 13:10
    This was classic RV at its best. Wide ranging, but with an incredible depth of info. Having heard Russell’s high level thoughts on crypto in the past (maybe on Grant’s podcast), I understand why they didn’t cover it. But his thesis here really lays out an incredibly strong argument for owning some crypto.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:43
      That's my fault - I avoid crypto just like Tesla, opens a can of worms and a never-ending chain of abuse from both sides
  • IW
    Ian W.
    11 February 2021 @ 13:44
    This was mind blowingly awesome. Steve and Russell at their best.
    • AF
      Andre F.
      13 February 2021 @ 23:17
      It isn't for entertainment my friend. It sounds like a very serious warning.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:42
      thanks Ian, appreciate it but it was really all Russell
  • DR
    Derrick R.
    11 February 2021 @ 17:41
    Presumably this credit surge Mr Napier talks about is visible in some chart somewhere....? I cannot find data to support this, looking at FRED charts and various charts on Europe credit...
    • AK
      Andrew K.
      12 February 2021 @ 23:05
      Yeah, seriously. He seems to have a lot of faith in his own speculation that this is a continuing framework. I'm not sure he understands the culture of american commercial banks. The idea that the Fed is going to tell them where to lend or that the government is going to guarantee all green energy loans is fairly absurd. The government already does that with the agencies and all they did was crowd out banks. Furthermore he completely ignores how our overindebtedness renders fiscal policy impotent. Once again no one actually addresses Lacy Hunt's fundamental thesis.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:41
      I think if you look at the BIS data it's very clear
  • PB
    Paolo B.
    11 February 2021 @ 19:27
    Very interesting conversation by two of my very favorites thinkers. I have a question though. Speaking about countries, the focus on GDP and debt is of course important to find a less restrictive financial environment. But isn't as well political and governance stability? I.e. China, India were mentioned. These are nowadays both authoritarians intrusive (to a different level) regimes. That is a massive risk to factor an exit strategy in my view. True that we might see this risk coming to even the most solid western civilization directly or via their central bank. Why this factor is not mentioned? Thanks in advance.
    • AF
      Andre F.
      13 February 2021 @ 23:13
      My guess is that there is simply too much to cover in 60 mins. Given the time they had, I am glad they stuck to economics and finance.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:40
      thanks Paolo - we could have gone on but these interviews are quite intense and I felt we had covered enough ground - perhaps we should do a return match
  • TS
    Tim S.
    11 February 2021 @ 23:23
    These types of discussions are what make RV the exceedingly valuable resource that it is to the single investor out in the world, working to learn from the greatest minds in the business. Cheers.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:39
      Cheers Tim
  • MB
    Marc B.
    12 February 2021 @ 00:01
    Never heard such an intuitive thinker coupled with tons of knowledge. Amazing interview. This interview alone is worth my membership.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:38
      Hey Marc, thanks for those kind words. Russell is indeed an amazing thinker.
  • DS
    David S.
    12 February 2021 @ 07:38
    This was a great interview. I learned and enjoyed hundreds of RV presentations. I would like to thank the RV staff, presenters and everyone who took the time to comment. At 75, it is time for me to focus my attention in other directions. I tried, but as long as great material is presented, it is too difficult. To help me move forward, this will be my last comment. I wish everyone the best of luck in their investments and full lives. Be safe. DLS
    • DR
      Derrick R.
      12 February 2021 @ 19:24
      You’ll be missed! I’ve often found value in reading your comments!
    • DS
      David S.
      12 February 2021 @ 22:47
      Derrick R. - Thanks. DLS
    • AF
      Andre F.
      13 February 2021 @ 04:47
      Hope there's a lady in the picture who is part of those focused attentions. Be well.
    • DS
      David S.
      13 February 2021 @ 18:09
      Andre F. - There is always a lady. DLS
    • RA
      Robert A.
      13 February 2021 @ 22:57
      You will be missed David. You and I have been in this thing almost since inception and I’ve always found your comments to have been engaging and meaningful. All the best David.
    • DS
      David S.
      14 February 2021 @ 00:32
      Thanks to all. Keep up the good work. DLS
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:38
      David thanks for the kind words and hope you get equal satisfaction from those other directions.
  • JJ
    Jerry J.
    12 February 2021 @ 15:34
    spectacular interview!! Covers all of the real and likely possibilities. But they also talk about the real world and how it works - not how we want it to, but how it does. The choices politicians and Fed Governors make when under duress.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:36
      Russell has thought this through deeply. Thanks for your kind words.
  • JA
    John A.
    13 February 2021 @ 02:35
    The Fed wants to protect asset prices, and they want inflation. They will let it run for a while before they blindside the market and try to take it away. But if yields get out of control in 2021 before the economy and unemployment has recovered from COVID, you can bet your ass that they are going to do YCC. The alternative is massive deflationary pressures that will offset any inflation the fiscal stimulus might have produced. They won't have a choice. They have to fight the problem that is in front of them at the time. Russel is brilliant, but he overestimates the Fed's desire to pull back. If the Fed even hinted that they weren't going balls to the wall, the equity market would sell-off in a panic trying to beat the others to the exits. They are all in now, there is no going back. The only way is forward to the eventual conclusion when it collapses, and they decide how to restructure the system from the ashes.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:35
      Interesting - certainly a lot of truth in what you say. Who knows how it resolves itself. In your scenario, the stockmarket keeps going up which is fine but who buys the bonds?
  • KZ
    Konrad Z.
    13 February 2021 @ 19:16
    Can anyone tell me whether in the US there are actual plans to implement the "government bank guarantee schemes" that Russell mentions in this video? So far I haven't even heard about any mainstream politician contemplating it. Also, with regard to the UK scheme mentioned in this video: could anyone post a link to specific details, what is its financial size?
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:33
      The schemes are huge - I don't know the size of the programme and we won't know the exact size until the UK Government has to honour the guarantees but it will not be small, for sure - not my area of expertise but sure you can find out more.
  • AF
    Andre F.
    13 February 2021 @ 23:07
    RV, can you have Russell and Stephen do a part 2? There's more that needs to be elaborated on, much more.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:31
      I would like Real Vision to film Russell having a pint and me having a large glass of red in my local. Even more fun!
  • RM
    Ryan M.
    14 February 2021 @ 18:01
    One of the best RV interviews! Thanks gentleman for sharing your knowledge.
    • SC
      Stephen C. | Contributor
      17 February 2021 @ 17:21
      pleased you enjoyed it, thanks for the kind words
  • AK
    Andrew K.
    12 February 2021 @ 23:01
    Here's what I need to understand. I understand that in the old QEs, the Fed was basically just recapitalizing the banks with reserves. Got it. But now the key question seems to be, are primary dealers allowed to "credit themselves" at the auction by using warehouse accounting before they simply pass the treasuries on to the Fed? If so, then this is basically direct deficit monetization with a middleman skimming inbetween. Effectively the private capital stock is not depleted in that transaction if that's what's happening and the Treasury is indeed just spending new money. Sure, the debt still exists but it has been swapped to reserves which pay 5-10 bps, and the government can just keep punting endlessly. Lacy Hunt insists that we already tried this in 2014 but is it different this time, if only due to sheer magnitude or the fact that it's a continuing framework?
    • PH
      Place H.
      16 February 2021 @ 23:33
      This is why capital controls won't be needed. There has been a paradigm shift in the way governments fund their operations. In the post-war period, capital controls became de facto because taxes are needed to balance budget deficits. Moving capital overseas means the capital can't be taxed, which results in higher government deficits. Deficits were seen as bad in the post-war years just because it was the paradigm. But now, government budget deficits just get moved to central bank balance sheets. Japan started the trend and now that the US has done it, the rest of the world will follow. Big central bank balance sheets will become the norm. Some countries may even experiment with reducing or indeed eliminating income taxes given that deficits can just be moved to central bank balance sheets. In this paradigm, the government won't care if you move your money to the Carribean or Russia or Indonesian or Indian stock markets. The government has all the money it needs thanks to the central bank printing press. In effect, what could result is the Weimarisation by all central banks/nations. In this environment, inflation could indeed manifest and gold and any commodity and hard asset will be bid.
  • MW
    Myles W.
    14 February 2021 @ 11:39
    How can the government force savings institutions to buy yield capped govvies? (Statement by Napier in last 5 mins)?
    • AF
      Andre F.
      16 February 2021 @ 21:06
      Nic, You had a great big "LMFAO" (with two exclamation marks just to let everyone know what an uproarious time you're having) right at the start of your first comment. And my comment gave you another great belly laugh. That's great Nic, It's nice that you're so happy you can't stop laughing. :) Thank you for your generosity with the upvote on my effortful scribble. Right back at ya, I gave you one too. Take care.
  • AF
    Andre F.
    13 February 2021 @ 23:03
    For those who have read The Forth Turning: Is what Russel describes and predicts here (negative interest rates, non trivial inflation, massive credit demand that is rationed, rampant seeking of and buying of assets because of the negative interest rates, leading to further inflation) talked about in Neil Howe's book as well?
    • DN
      Damon N.
      14 February 2021 @ 00:25
      not with this level of detail from a finance view. But they are similar themes, taxes, inflations, rates will all increase as we move into the future
  • HR
    Humberto R.
    10 February 2021 @ 23:28
    Can we get Steven Van Metre to do a follow up on this where he breaks down Russell's interview and explains certain concepts that Russell goes through quickly, but went over some of our heads?
    • AF
      Andre F.
      13 February 2021 @ 23:43
      No. No Steven Van Metre explanation. Simply a part 2 with Russel and Stephen.
  • MS
    Martin S.
    11 February 2021 @ 01:37
    Having lived in Argentina, I don't understand how people can think that inflation can be good for equities. In the developed world, there's this idea that, for instance, producers of commodities will do well because their prices rise. Wrong. The price of commodities rise because producing them is not profitable and scarcity ensues. What people don't get is that as inflation destroys money, coordination and specialization, hence productivity disappear. That's why inflation means unemployment, contrary to common belief, and companies tend to integrate, rather than outsource. Under inflation, all you want to own is stuff with zero counter party (i.e. collection) risk. The other thing nobody ever mentions is the quasi-fiscal deficits (i.e. deficits of central banks) that are born out of these processes. People tend to think of hyperinflation as inflation with a high number. Hyperinflation is loss of control, or quasi-fiscal deficits. And with them, there's interest rates rising. So...no, Russel: You don't want to own real estate.
    • AK
      Andreas K.
      11 February 2021 @ 11:38
      interesting. so what to own then?
    • HY
      H Y.
      11 February 2021 @ 14:27
      Good points Martin. On real estate thought, what about getting it at a 30 year fixed rate?
    • AF
      Andre F.
      13 February 2021 @ 23:39
      MartinS. If you as the owner of the real estate have locked in the interest rate, then yes you do want to own real estate. If (a big "if") you can own real estate without debt, then again you do want to own real estate. My worry with real estate isn't interest rates (due to what i said above). My worry with real estate would be whether your tenants are going to go bust, if they do go bust can you get new and richer tenants into your building. Lastly, the general neighborhood of my real estate would also be my concern.
  • KZ
    Konrad Z.
    13 February 2021 @ 16:56
    38:12 OK, but where are the "Hong Kongs" of today? Russel gave the example of India. But he also ackowledged a few senteces before that its goverment can be unpredictible. They are far from being a second "Hong Kong", why doesn't he mention places like Estonia?
  • MW
    Matthew W.
    12 February 2021 @ 18:18
    Great interview. Can anyone recommend ways to access the US residential property market/ suitable REITs for investors from the UK. What do US investors go for?
    • PB
      Patrick B.
      12 February 2021 @ 23:50
      Also, any ways to access Aussie residential? Thanks
    • RC
      Robert C.
      13 February 2021 @ 06:09
      Have you looked into mulitfamily syndications?
  • AA
    Andrew A.
    11 February 2021 @ 00:23
    Can someone please explain what is meant by the statement that gold comes out of the ground very briefly and then goes back under the ground? (at 15 minutes left). Capex in miners?
    • DW
      David W.
      11 February 2021 @ 00:34
      Into vaults
    • PB
      PHILLIP B.
      11 February 2021 @ 03:27
      Effectively, it goes back to a place that is hard for it to be surfaced again, e.g., vaulting by "strong hands."
    • AA
      Andrew A.
      12 February 2021 @ 18:08
      Thanks
  • JC
    Joshua C.
    11 February 2021 @ 17:14
    I am from Singapore. On surface the Singapore's debt to GDP on paper is high, but in reality it is government bonds are issued in exchange of citizens' savings which are then indirectly invested either into global investments or local infrastructure to protect household wealth. As a result, Singapore has some of the largest sovereign wealth managers (Temasek and GIC) and virtually no ongoing foreign currency or USD denominated debt. If the financial repression thesis play out and cryptocurrencies become a safe haven, I would not be surprised if majority of offshore wealth custodians of your Bitcoin sit in Singapore in the end state. I haven't even started to share how our banking regulator is a driver for innovation globally in Fintech since 2016 (https://www.centralbanking.com/awards/4006816/central-bank-of-the-year-monetary-authority-of-singapore). I also haven't started to share how all Singapore males are conscripted into military service with a reserve army manpower of 2.1 Million people to protect our reserves and your offshore assets. If you had to give advice to a young kid starting out his career in Singapore, what would you recommend?
    • AP
      A P.
      12 February 2021 @ 09:42
      Inherit money and get an RV subscription.
  • MR
    Michael R.
    10 February 2021 @ 22:20
    Taxation - "Extract the most amount of feathers with the least amount of hissing." Love it.
    • JF
      Jack F. | Real Vision
      10 February 2021 @ 22:34
      I loved that quote, and am glad you did too!
    • gc
      guillaume c.
      12 February 2021 @ 00:59
      Attributed to Jean baptiste Colbert, finance misiter of Louis XIV in the 17th century. On the subject of taxation France has always been a leader.
  • CD
    Charles D.
    11 February 2021 @ 21:26
    Disagree with the ability of governments to even have half a chance to implement capital controls. I am from South Africa. S.A. has capital controls in place, everyone uses crypto to circumvent the controls. Should the government try and ban or get more aggressive it will only further the off market and peer to peer markets which are already booming.
  • MF
    Matt F.
    11 February 2021 @ 14:28
    this was great, im super interested in understanding how EU life insurance companies get killed on inflation with YCC. Can anyone elaborate on this more? thank
  • PD
    Peter D.
    10 February 2021 @ 20:58
    Russel Napier, as always, provides fantastic out of the box thinking. This time he is really out on a limb. He may be correct: the CPI may might touch 4% for a month or two, due to the base effect. (Apologies for the length of the text). ***** Longer term, the inflation argument has major weaknesses. 1. Governments have been growing personal, business and government debt, at a faster face than economic growth for five decades. Likely more. Even with credit guarantees, banks are unlikely to be able to move the needle enough to finance major global reflation. People and businesses are tapped out, borrowed to the hilt. Injecting heroin into a corpse does not do much. 2. US systemically important banks are essentially insolvent. They require regular bailouts (1987, 1994, 1998, 2000, 2008, and 2020). However governments will likely send interest rates well below zero during the coming months/years. This completely upends the banking sector 3:6:3 business model (Borrow at 3%, lend at 6%, out to the golf course by 3:00 o’clock). Deutsche Bank provides a clue where this is headed. 3. A Eurodollar short squeeze, caused by massive global demand for dollars, which could come at any time, will run half the planet into insolvency. Profoundly deflationary. 4. Demographics, falling birth rates, and growing depopulation are deflationary. 5. Most important: all global economies are already experiencing massive, hidden inflation and financial repression. As most RV viewers know, official CPI and GDP deflator numbers are constantly understated so that governments can cut social security payments and overstate GDP growth. (Asset prices left out of calculations, tax increases understated, hedonistic adjusting, etc....) 6. TIPs break-even yields over 10 years project only 2.2% inflation. Bond markets aren’t always right. But that is a good way to bet. 7. Nominal economic growth has been jigged for at least a decade by overt central bank juicing of asset markets. CPI is wholly dependent on the wealth effect. Trouble is the process is not self sustaining. ***** Anything can happen. But the way to bet over five years, is deflation.
    • rm
      ryan m.
      10 February 2021 @ 21:22
      Agreed! Btw you posted this twice
    • PD
      Peter D.
      10 February 2021 @ 22:25
      Apologies for the double post. Typos in the original. Too bad you can't delete bad posts.
    • RS
      Riki S.
      10 February 2021 @ 23:38
      Thanks for a very interesting contrary perspective! What asset classess will win using your thesis?
    • PD
      Peter D.
      11 February 2021 @ 02:19
      Riki S.: Allocation for a disinflation/deflation scenario depends on the time period. But let's say the following "deflationary" scenario takes hold: 1. U.S.: 2-3% average annualized nominal growth over the next five years, half real GDP/half inflation, coupled with the emergence of Zombie banks. 2. Governments would have to continue to foster massive credit creation, just to keep the system afloat, by directly funding the bond markets, government spending, and would likely have to start buying equities in the open market. 3. CPI inflation remains low in this scenario, business profits get hit from sluggish demand, bond yields go negative. 4. That suggests a rough position, over roughly five years of: underweight equities, overweight long bonds, underweight real estate, market weight gold, and heavy overweight bitcoin (because bitcoin would be very sensitive to credit expansion). This of course is theoretical. Not investment advice. Position would have to be monitored closely as assumptions and timings change.
    • DS
      David S.
      11 February 2021 @ 02:34
      You print and give enough money away, you will get GDP inflation DLS
    • GG
      Gordon G.
      11 February 2021 @ 09:06
      Agreed, and I don't see loan growth apart from the first spike where (mostly large) companies drew on their credit lines. Looks like it is coming down fast now https://twitter.com/SantiagoAuFund/status/1359757497028866056
    • PD
      Peter D.
      11 February 2021 @ 13:52
      How High Inflation Swindles the Equity Investor Warren Buffet, Fortune Magazine, 1976. Pages 2-15. http://csinvesting.org/wp-content/uploads/2015/01/Buffett-inflation-file.pdf
  • NC
    NATHAN C.
    11 February 2021 @ 02:40
    If you buy "residential real estate" as a way to live by collecting rents, be aware that it is a constant hassle, that it is almost impossible find a competent manager, and that you must have cash to maintain the property and prepare for disasters. It is a nightmare if you are not local and able to fix things yourself. I didn't make a dime from rents. All my profits came from appreciation. I never hated an investment the way I hated that stuff.
    • DS
      David S.
      11 February 2021 @ 04:50
      A lot more folks will agree when back rents are not paid. DLS
    • JM
      John M.
      11 February 2021 @ 06:00
      Absolutely!
    • AM
      Alonso M.
      11 February 2021 @ 13:51
      Well if you're lazy as I am, you can just buy a well managed residential REIT. This way you also get better geographical diversification to minimize the vagaries of rent controls. Note that even if you are local and able to fix things, you probably still want to pay yourself something for being your own handyman. So from an accounting perspective, the profit is roughly the same and you still don't make a dime.
  • RS
    Ruben S.
    11 February 2021 @ 13:50
    the "our type of money" created by gouvernemnts and spend around is coming to compansate ppl asked NOT TO work, NOT to go out and consum.... its not coming on top of normal circonstances.. so how can you be sure that it is "enough" to not only compansate the lack of activity due to the pandemic but also push us towards such suppply / demand imbalance that prices will go up?
  • JL
    James L.
    11 February 2021 @ 03:42
    Do you think developed commodity economies like Australia or New Zealand, might have some advantage over Europe, the UK or US and might not need the capital controls since they will have an inflow of capital to purchase commodities, and so not suffer the same degree of currency devaluation as well as low economic growth which are what leads for the need to capital controls.
    • TN
      Tim N.
      11 February 2021 @ 12:20
      To some extent but political and economic forces will lead to development of alternative sources for these resources so over the longer term these countries will end up in the same situation as other developed nations - I note both have now joined the QE/MMT club and government debts are spiralling - their private sectors are already highly indebted.
  • WT
    WILLIAM T.
    11 February 2021 @ 10:34
    Apparently neither have any understanding of crypto as an asset class. Not one mention that I heard. Maybe age of both participants? (But I'm 76, LOL)
  • BC
    Barry C.
    10 February 2021 @ 09:28
    This was an amazing interview, definitely worth a second watch. Just some random points: Russell Napier introduces an important real world concept that Nassim Taleb has also talked about...cause and effect. Do unions cause wage inflation or does inflation create a union movement which causes wages to rise? Russell Napier sees a 3 pronged investment boom in the years ahead. 1)Green/ESG revolution 2)Buying stuff not made in China 3)Shorter distribution chains The ESG movement is bullish for above ground gold because more gold will stay in the ground. The history of inflation is a history of commodity inflation. When the public realizes their savings are better off in consumables that is a major turning point, especially for food inflation. Weimar Republic...farmers were the big winners because their debts were paid off by inflation and they could sell their produce at inflation adjusted prices. (I am sure all on here realize how many wealthy people are buying agricultural land) Also, look at the interview Max Wiethe did with Shawn Hackett last fall to see how weather could be nitroglycerine for food prices in the years ahead. Politicians make the same mistake over and over but give it a different name. That communist Richard Nixon (sarcasm) instituted wage and price controls, and in Canada, Fidel Castro lover Pierre Trudeau did the same thing....message here, political ideologies do not matter, politicians will do what they have to do whether left or right of the spectrum. In the last few minutes Russell Napier explains how the yield cap will be implemented and it may not be pretty for stocks. Also Russell Napier recommended a novel for the literary out there by Graeme Greene ...'Travels With My Aunt'. Finally, google a 1970s article by Warren Buffett 'How Inflation Swindles the Equity Investor'
    • SC
      Stephen C. | Contributor
      10 February 2021 @ 15:28
      Its an article from Barron's - it's in the library on my website https://www.behindthebalancesheet.com/ you just have to sign up. Well worth reading.
    • DS
      David S.
      10 February 2021 @ 20:23
      Great summary. I would like to add most governments will be broke from COVID Times. Many new and creative tax regulations will be promulgated. DLS
    • LS
      Lemony S.
      10 February 2021 @ 21:34
      Great post. That Hackett interview was outstanding mainly because it sets straight the hoax of global warming which was always political and fear mongering, not reality based (proved by changing language to climate change, an indisputable reality of life). But we are indeed living in a clown world of (political) energy stories, another one being the dirty, carbon based "investment" required to get "green technology" which is anything but when you consider it as an entire process, not 1st order leftist thinking. It would be refreshing for more people to call this out and say, "Yes, that is correct, but political realities force us to adapt our investment strategy". Movements of the left (likely because of the predisposition towards population growth and thus collectivism when competition is even fiercer) are those that "make the same mistake". That's my only issue with your post. The proof is that we have not seen governments or politicians move right, they (even if supposedly Republicans like Nixon, ha, or whatever you want to call them) always move with the collective to greater and greater size governments. This happens to be anti-American and against its foundations and Constitution, which is why after a small period of pay me now, the whole system is a chaotic mess of payback later (coming soon to a theater near you). The right wing movements have produced greater efficiency and saved countries, Pinochet proved this in a sea of marxism in South America, as the only viable recuperation of a people and its economy, only to be labeled a murderer by leftist propaganda news sources - while Fidel and Che are praised, Hugo and Nicolas murder even more and starve their whole population, etc. But yes, it is commodity time. Let's hope it's not war time soon with the incompetent US traitors/"leaders" we have currently.
    • LS
      Lemony S.
      10 February 2021 @ 21:35
      LOL David S, stop selling the lies. They were broke pre-COVID and then made things more chaotic as a plan to get bailed out, which might work ... for a year. Thankfully we have bitcoin while the planned "solution" will also fail after the planned non-pandemic.
    • KH
      Kevin H.
      11 February 2021 @ 04:20
      No need to sign up to Stephen's site if you don't want to. Here's a direct link: https://www.hollandadvisors.co.uk/cms/resources/how-inflation-swindles-the-equity-investor.pdf
    • DS
      David S.
      11 February 2021 @ 09:12
      Lemony S. It is getting warmer! I recall sailing off of Molokai. The relief captain knew everything about sailing with a shore map in hand. I said it is getting shallower. He said look at the map. Look at the shore for landmarks. I said it is getting shallower. Impossible he said. You are not a sailor. We ran into the reef full speed. Boat completely disabled. You do not need to know everything to be right about one thing. DLS
  • DS
    David S.
    11 February 2021 @ 08:41
    Thanks for the transcript. DLS
  • DM
    David M.
    11 February 2021 @ 06:38
    Great interview, really enjoy hearing from Russell. Russell has suggested in other interviews that we might still see a bout of mild deflation first, before we see this higher inflation scenario unfold. Nevertheless, I think Russell is painting an accurate picture of the end game. Thanks RV!
  • MZ
    Matthew Z.
    10 February 2021 @ 16:08
    The last 4 minutes are the most important part - his point on YCC are so important. I've been searching for the levels that this actually happens and he tells us (2.5% on the US 5 year - ways to go). But more important is how it's implemented. We are in a pickle - Russell thinks we force institutions to do it - this while they're just starting to buy bitcoin seems like it will be difficult. Everyone thinks the fed just writes the check - this is the path to hyperinflation. Which will it be!?
    • PV
      Paul V.
      10 February 2021 @ 18:11
      Exactly, to do YCC, Jay will have to sacrifice the USD and cause a cycle of inflation->currency devaluation->more inflation. Not to mention, he will have to buy all corporate bonds, not just UST's since inflation expectations will just start to price into the credit spreads.
    • DS
      David S.
      11 February 2021 @ 05:04
      It depends on how many countries do yield curve control. FX is a relative game. DLS
  • DJ
    Dennis J.
    11 February 2021 @ 01:22
    Great discussion. Aren't these forces fighting the tide...falling birth rate? It's trended down alongside inflation for decades and estimates are that we lost 5million births (US) since 2008 and dropping even faster due to covid. EU. Japan. China. All similar. Japan has one of the lowest birth rates (early to the game) and they were first to experience the downward trend. Short term...sure with demand explosion following reopening. Long term...reducing and aging pop is a seismic shift.
    • DS
      David S.
      11 February 2021 @ 04:39
      Japan has falling birth rate coupled with rising elder population. With internet efficiencies many western economies will have problems keeping citizens employed. We just have to wait to see how it plays out in each country. DLS
  • CU
    Christian U.
    11 February 2021 @ 03:48
    get some %$# proper gear. please fix your sound
  • rm
    ryan m.
    10 February 2021 @ 15:09
    Napier has gotten a bit ahead of himself. Should have stayed a deflationist. Can't wait to hear Dr Lacy Hunt
    • SC
      Stephen C. | Contributor
      10 February 2021 @ 15:24
      Let's see - Russell in my experience is often way ahead of the curve
    • DS
      David S.
      10 February 2021 @ 19:05
      Mr. Napier also gave you sign post to watch. Dr. Hunt is excellent also, except he places too much value that banks will make reasonable loans. I am referring to all the hedge fund loans banks made to leverage the stock markets. Of course if you are an investment bank, it may all be done in house. DLS
    • rm
      ryan m.
      10 February 2021 @ 21:24
      I'll take Lacy Hunt's 40 year record of being correct on the bond market over Napier everyday of the week.
    • DS
      David S.
      11 February 2021 @ 03:05
      ryan m. - Dr. Hunt is excellent and a gentleman. The bond market has been a one-way street for many years. It cannot continue down the same road. The ground is shifting under our feet. I need to add different thinking to my outlook. Mr. Napier explores a new dimention for me. IMO it is time for multiple views in the short, medium and long term while watching the market like a hawk. I am glad I am only betting my money. DLS
  • MR
    Michael R.
    11 February 2021 @ 00:53
    Debt based growth VS Savings based growth.
  • MJ
    Marc J.
    10 February 2021 @ 08:41
    3:45 "that leads us down a rabbit hole for a generation of government control mechanism to try and force savers to own an asset they don't want to own". Can anyone expand on this?
    • WD
      William D.
      10 February 2021 @ 08:58
      it means the working age population is declining, and therefore real economic growth will turn negative, and to stop things becoming nasty, central banks force people to take on risk assets / a risk profile they'd rather not, but have to in order to avoid guaranteed negative real rates of return
    • AP
      A P.
      10 February 2021 @ 12:48
      Yield curve control (bonds mispriced below market), capital controls (no access to foreign assets / foreign borrowing) ... my guess.
    • CD
      Colin D.
      10 February 2021 @ 15:18
      Russell believes that in order to keep interest rates down when inflation rises, governments will resort to macroprudential regulation in order to ensure an adequate supply of forced buyers for their debt.
    • MJ
      Marc J.
      10 February 2021 @ 16:20
      Thanks for the replies. What does macroprudential mean?
    • CD
      Colin D.
      10 February 2021 @ 16:46
      The government will require banks, insurance companies, pension funds and the like to hold more safe assets such as USTs or UK gilts under the pretence it makes the system safer. That in essence is what macroprudential regulation means. What it does is to create a ready market of buyers for government debt, which no sane person would want to own them. https://en.wikipedia.org/wiki/Macroprudential_regulation
    • WG
      Wade G.
      10 February 2021 @ 19:20
      I didn't go back for another listen, but I honestly thought he was referencing something different: forced purchases of Treasuries, presumably having negative real, and perhaps negative nominal, yields. In other settings where this issue has been raised, it is assumed the tactics will be regulatory and institutional: pensions, certain 401K/IRA structures, etc. would be required to purchase.
    • WG
      Wade G.
      10 February 2021 @ 19:24
      Umm... I guess I hadn't refreshed... my remark above was meant to be in response to William D.; i see its been covered already by others.
    • AC
      Alvaro C.
      11 February 2021 @ 00:36
      For details on that rabbit hole go to Grant Williams' Interview with Russell Napier on The End Game Series (Episode 5 on August 2, 2020) or to Macrovoices #256 (Jan 28, 2021); both are available for free via Apple Podcasts.
  • MJ
    Marc J.
    10 February 2021 @ 16:15
    Repeatedly listened to this all day today. Mmm, could Steven Van Metre do a deep dive on this conversation please?
    • JF
      Jack F. | Real Vision
      10 February 2021 @ 16:42
      That's a good idea, Marc...
    • DR
      Derrick R.
      10 February 2021 @ 23:46
      Pounding the upvote button
  • JK
    John K.
    10 February 2021 @ 23:39
    See I understand why Russell thinks there’s gonna be inflation and I think he will be right short term due to the basis effect but lots of data has come out of the states showing that the lending schemes were barely touched. I think 3% of funds for small businesses actually got distributed.
  • JB
    J B.
    10 February 2021 @ 23:29
    Fascinating knowledge of financial and economic history. More please.
  • MR
    Michael R.
    10 February 2021 @ 22:27
    Capital controls actually bolsters Bitcoin use case. Expect the crackdown from high debt governments. In the end, Bitcoin will win but there will be rekage.
  • JS
    John S.
    10 February 2021 @ 22:07
    Is the transcript going to be available not easy to follow Mr Napier for me. He is enlightening but I need to read a text of what he says I think
  • AR
    Anthony R.
    10 February 2021 @ 18:07
    Another reference to farmland and ag commodities. I have been in this business for 30 years of primary deflation with a couple spurts from a supply squeeze. The American farmer that owns farmland and grain storage facilities is watching his income and net worth explode. Grain storage facilities are a great example of a long term asset that could have been built 30 to 50 years ago and are now producing much higher returns with a multiple for replacement cost. A great conversation-from a guy that started in his father's butcher shop-I can relate!
    • MB
      Michael B.
      10 February 2021 @ 20:27
      Can you suggest a public company that is in that business?
    • AR
      Anthony R.
      10 February 2021 @ 21:57
      Michael B.-there are your agriculture related companies-DE, IPI, etc., but the inflation hedge is to directly own farmland. Farmland partners is a farmland RIET but they trade at a discount to book value-there is a reason for that. I own and manage myself through an LLC.
  • PD
    Peter D.
    10 February 2021 @ 20:36
    Russel Napier, as always, provides fantastic out of the box thinking. This time he is really out on a limb. He may be correct: the CPI may might touch 4% for a month or two, due to the Longer term, the inflation argument has major weaknesses. (Apologies for the length of the tesxt) 1. Governments have been growing personal, business and government debt, at a faster face than economic growth for five decades. Likely more. Even with credit guarantees, banks are unlikely to be able to move the needle enough to finance major global reflation. People and businesses are tapped out, borrowed to the hilt. Injecting heroin into a corpse does not do much. 2. US systemically important banks are essentially insolvent. They require regular bailouts (1987, 1994, 1998, 2000, 2008, and 2020). However governments will likely send interest rates well below zero during the coming months/years. This completely upends the banking sector 3:6:3 business model (Borrow at 3%, lend at 6%, out to the golf course by 3:00 o’clock). Deutsche Bank provides a clue where this is headed. 3. A Eurodollar short squeeze, caused by massive global demand for dollars, which could come at any time, will run half the planet into insolvency. Profoundly deflationary. 4. Demographics, falling birth rates, and growing depopulation are deflationary. 5. Most important: all global economies are already experiencing massive, hidden inflation and financial repression. As most RV viewers know, official CPI and GDP deflator numbers are constantly understated so that governments can cut social security payments and overstate GDP growth. (Asset prices left out of calculations, tax increases understated, hedonistic adjusting, etc....) 6. TIPs break-even yields over 10 years project only 2.2% inflation. Bond markets aren’t always right. But that is a good way to bet. 7. Nominal economic growth has been jigged for at least a decade by overt central bank juicing of asset markets. CPI is wholly dependent on the wealth effect. Trouble is the process is not self sustaining. ***** Anything can happen. But the way to bet over five years, is deflation.
  • DS
    David S.
    10 February 2021 @ 20:34
    Great dialog with different perspectives. I will listen a couple more times. I hope a transcript will be avaliable. At ophthalmologist. Eyes getting blurry. Sorry. DLS
  • GA
    Gerald A.
    10 February 2021 @ 20:12
    Fantastic!
  • PE
    Paul E.
    10 February 2021 @ 20:08
    This was a great conversation, pure gold on both sides! Thank you!
  • SD
    Sam D.
    10 February 2021 @ 17:45
    Great interview! I am going to listen to it again because there is so much to absorb. Thank you both!
  • he
    hanni e.
    10 February 2021 @ 17:44
    Waiting for the subtitles :D
  • PU
    Peter U.
    10 February 2021 @ 17:27
    superb
  • AB
    Alastair B.
    10 February 2021 @ 13:30
    I love Mr. Napier’s study. I dream of having such a room to read (and drink scotch) in.
    • MJ
      Marc J.
      10 February 2021 @ 16:17
      He sounds Irish to me, maybe a nice, smooth, triple distilled Irish whisky?
  • GC
    Gregg C.
    10 February 2021 @ 15:55
    Boy this is confusing. I finished Jeff Mott's book last night that argued persuasively for disinflation and now Mr. Napier is arguing just as eloquently against that position.
  • DO
    DIOGO O.
    10 February 2021 @ 10:29
    SUPERB!! Prof Napier awesome as always! Cheers!
    • RK
      Robert K.
      10 February 2021 @ 13:15
      As is Clapham!
    • SC
      Stephen C. | Contributor
      10 February 2021 @ 15:26
      so true and thanks Robert K!
  • BD
    Barry D.
    10 February 2021 @ 13:16
    Russell Napier is so insightful and clear. Kudos to Stephen for the great interview. Bullish BTC!
    • SC
      Stephen C. | Contributor
      10 February 2021 @ 15:26
      I wish I had his recollection and ability to express complex ideas with such simplicity - he is super smart
  • MB
    Michael B.
    10 February 2021 @ 14:19
    Did anybody catch the name of his retail website? He mumbled just past the Russellnapieruk.... part
    • SC
      Stephen C. | Contributor
      10 February 2021 @ 15:25
      https://russellnapier.co.uk/ I am doing this because I know Russell won't!
  • MO
    Master O.
    10 February 2021 @ 10:27
    Transcripts as soon as possible pleeeeeeeese! Besides Singapore and Switzerland people should also have a look at the UAE to avoid capital controls.