Comments
Transcript
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BPI'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.
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DSThanks 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?
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LBThis makes it top 5 all time content on RV definitely; potentially Best ever
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NTOh, 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>
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APOne 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...
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BVOne 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!
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JHExcellent - best RV video I've watched in a long time. Well done. Thank you.
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jgSteve, you asked the right questions! I downloaded the transcript to break the discussion down into a cause/effect decision tree. Thanks to both!
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DLA fascinating and most enlightening discussion, thank you.
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PRThis 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.
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IWThis was mind blowingly awesome. Steve and Russell at their best.
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DRPresumably 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...
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PBVery 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.
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TSThese 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.
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MBNever heard such an intuitive thinker coupled with tons of knowledge. Amazing interview. This interview alone is worth my membership.
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DSThis 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
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JJspectacular 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.
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JAThe 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.
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KZCan 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?
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AFRV, can you have Russell and Stephen do a part 2? There's more that needs to be elaborated on, much more.
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RMOne of the best RV interviews! Thanks gentleman for sharing your knowledge.
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AKHere'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?
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MWHow can the government force savings institutions to buy yield capped govvies? (Statement by Napier in last 5 mins)?
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AFFor 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?
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HRCan 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?
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MSHaving 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.
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KZ38:12 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?
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MWGreat 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?
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AACan 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?
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JCI 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?
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MRTaxation - "Extract the most amount of feathers with the least amount of hissing." Love it.
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CDDisagree 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.
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MFthis 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
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PDRussel 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.
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NCIf 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.
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RSthe "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?
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JLDo 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.
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WTApparently 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)
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BCThis 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'
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DSThanks for the transcript. DLS
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DMGreat 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!
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MZThe 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!?
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DJGreat 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.
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CUget some %$# proper gear. please fix your sound
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rmNapier has gotten a bit ahead of himself. Should have stayed a deflationist. Can't wait to hear Dr Lacy Hunt
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MRDebt based growth VS Savings based growth.
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MJ3:45 "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?
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MJRepeatedly listened to this all day today. Mmm, could Steven Van Metre do a deep dive on this conversation please?
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JKSee 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.
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JBFascinating knowledge of financial and economic history. More please.
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MRCapital controls actually bolsters Bitcoin use case. Expect the crackdown from high debt governments. In the end, Bitcoin will win but there will be rekage.
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JSIs 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
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ARAnother 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!
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PDRussel 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.
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DSGreat 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
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GAFantastic!
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PEThis was a great conversation, pure gold on both sides! Thank you!
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SDGreat interview! I am going to listen to it again because there is so much to absorb. Thank you both!
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heWaiting for the subtitles :D
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PUsuperb
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ABI love Mr. Napier’s study. I dream of having such a room to read (and drink scotch) in.
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GCBoy 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.
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DOSUPERB!! Prof Napier awesome as always! Cheers!
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BDRussell Napier is so insightful and clear. Kudos to Stephen for the great interview. Bullish BTC!
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MBDid anybody catch the name of his retail website? He mumbled just past the Russellnapieruk.... part
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MOTranscripts as soon as possible pleeeeeeeese! Besides Singapore and Switzerland people should also have a look at the UAE to avoid capital controls.
Chapters
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Is Inflation on the Horizon?
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Capital Controls and Forced Re-equitizations
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How Can Investors Grow and Protect Their Wealth In This Environment?
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Alternatives to Bonds: Commodities, Energy, and Other Hard Assets
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Residential Real Estate, Rent Controls, and Price Controls
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Yield Curve Capping and the Equity Endgame