Financialization of the Economy

Published on
August 13th, 2018
Duration
28 minutes

Financialization of the Economy

The Exchange ·
Featuring Grant Williams, Simon Mikhailovich, Dan Oliver

Published on: August 13th, 2018 • Duration: 28 minutes

Does cheap capital and its misallocation lead to a financialization of the economy, in a process that is detrimental to consumers? In this second installment of their Exchange series, Grant Williams, Simon Mikhailovich and Dan Oliver tackle some increasingly thorny issues such as the inevitability of cycles and their distorting effect on capital and ask if the central banks are now the last stop in the march of excess credit. Filmed on May 8, 2018 in New York.

Comments

  • CH
    Charles H.
    19 April 2019 @ 00:13
    For some reason, I now feel like eating some cold meats with cheese...
  • TM
    Tom M.
    6 April 2019 @ 05:33
    "...The fact that this economy has been gutted-- and this economy, I mean the United States-- has been gutted, because it was more efficient and cheaper for the companies to outsource their production abroad. I mean, this is a consumption-based economy. So you've gutted your customers, right? Your consumers..." Those who did it still don't get it. It's an atrocious lack of foresight and awareness.
  • JW
    Jason W.
    14 November 2018 @ 21:43
    Superb and right to the point! No messing!
  • CA
    Craig A.
    2 September 2018 @ 07:59
    Loved this video type. Brilliant discussion and elaboration/extrapolation of ideas. Want more of this type of content. Upvoted.
  • RW
    Raymond W.
    27 August 2018 @ 23:19
    This is exactly the kind of discussion I wanted to hear.
  • PM
    Pierre M.
    26 August 2018 @ 11:01
    I love how Grant isn't fooled when they say something that isn't backed up by data, while managing to rebuttal in a very eloquent way. Professionalism at its best.
  • MZ
    Mike Z.
    24 August 2018 @ 00:25
    Hi Simon, at the very end of this discussion you claim that there is no one to bailout the gov't next time, what about the IMF and their Special Drawing Rights? Isn't the IMF the central bank of central banks so to speak?
    • SM
      Simon M.
      26 August 2018 @ 14:11
      Dear Mike, it is Jim Rickards' thesis that the IMF can and will bail out the governments with SDRs in the next crisis. I am not sure how or if this could work but, even assuming it did, the USD would have to cede its global reserve status in favor of the SDR. This, in turn, would mean that the US would no longer be able to finance over consumption by creating and/or cheaply borrowing virtually unlimited amount of the USD that remain in high demand because of the reserve status. In the end, the US will lose its unlimited source of funds, the economy will have to contract in line with the organic (not debt-subsidized) demand and the USD will have to devalue, which will diminish the purchasing power of the USD denominated financial assets.
  • WM
    Will M.
    18 August 2018 @ 19:34
    Very good indeed. Great discussion. Although at least make it look like you are eating the food between segments.....
  • JA
    John A.
    18 August 2018 @ 01:00
    Minutes 13:30 - 17:00 blew my mind. Simon and Dan were able to articulate their views so clearly, and convincingly, that my jaw hit the floor...and Ive been a RV subscriber since day 1! Many things make much more sense now. Grant plays a wonderful devil's advocate. I will be downloading this transcript for both my education and future reference as this all unfolds.
  • BM
    Bryan M.
    17 August 2018 @ 04:48
    Brilliant? You bet! Wonderful? Absolutely! Educational? Very. Entertaining? Very again. Like, it doesn't get better when ya put 3 smart people in a room and let'em think out loud. Kudos to you all!!!
  • KE
    Kathryn E.
    17 August 2018 @ 02:47
    The best sentence was "In the next segment..." Keep them coming!
  • PD
    Pat D.
    17 August 2018 @ 02:25
    One word for this series ......... Brilliant! Grant is getting so good at steering these discussions that one only notices if you look for it. Can't wait for the next one!
  • GO
    Gary O.
    16 August 2018 @ 04:38
    The casual group conversation is another Real Vision winner. Real Vision is real, that is what makes it the best! I love it! Give me more!
  • JO
    JOHN O.
    15 August 2018 @ 22:09
    The Exchange is one of my favorite features on RV. Wouldn't it be great to join these three over a few beers and continue the discussion. You guys should do a road show. Bloomberg had a good piece today on CLOs and the fact that we are starting to see, or have been seeing for some time if you were paying attention, both technical and fundamental indicators that this sector of the fixed income space is getting way overcrowded. Once again the packagers of complicated financial instruments are applying lipstick to a pig and too many investors are falling for the pitch. Is it time for a Big Short, Round 2? maybe not quite yet, but think we're getting close. And its going to be the little guy that gets hurt again.
  • FM
    Faris M.
    15 August 2018 @ 21:08
    loving the exchange, three people in open discourse is very insightful. RV brilliance!
  • BT
    Brian T.
    15 August 2018 @ 11:56
    Well said Dan - great point! "The reason I think this could be the last cycle is because this time the bubble is really in the government bond market. Right? And those are the assets that sit directly on the Fed's balance sheet. The other assets that blew up were in other private players, and the Fed ran and rescued them through guarantees and so on. This is the actual-- the core assets that fund the government and that keep the Federal Reserve and all the other central banks functioning. And so when that asset blows up, they really will have very little authority or power do anything. And the way the market will liquidate the Federal Reserve, which I talked about last time, is it will send the gold price up to a level that backs Fed liabilities. And the day that prices around, it depends on how you calculate it, but $8,000 to sort of $16,000 an ounce. If the Federal Reserve prints money to forestall the liquidation, the way John Law tried a few times, and the way we tried before in the '20s, that number could get materially higher. But right now, I do think that sovereign bond markets are leaking. And when they go, that's it. Lights out for this whole supercycle."
  • SS
    Steve S.
    15 August 2018 @ 05:32
    So the only way for the USA to solve its debt issues is to sell its Gold reserves once gold goes above 8000USD? Is that right? Won't the price of Gold go down once it tries to sell such a large amount?
    • CD
      Colin D.
      15 August 2018 @ 10:36
      The gold will not be sold. Market action will lead to the gold price being driven to £8,000 or more per ounce thereby dramatically inflating the dollar value of the US's gold reserves (believed to be around 8,000 tonnes if I remember correctly).
    • CS
      Clay S.
      1 September 2018 @ 04:23
      Ax
  • RM
    Ralph M.
    14 August 2018 @ 21:16
    Love this format - keep it up RV!
  • PJ
    Peter J.
    14 August 2018 @ 12:27
    Really enjoyed the Vid, great format and all three contributors are first rate (Dan waiting for your next article on the Myrmikan website :)). I don't know if its just me but there appears to be a general uptick in clamour around the $64K question of 'When' the markets are going to role over and 'When' the Reset is going to begin. Maybe it already has but just hasn't hit the USA yet.
  • MM
    Mike M.
    14 August 2018 @ 11:58
    Excellent. 1% of us know the direction. We have cannibalized the financial system. The trigger event whatever it is will occur in the early a.m. the 99% will be trapped like rats, and at 0935 limit down will be imposed closing the equity markets. Limit down will happen daily for an indefinite period, maybe for a month or more. Pitchforks will be sold out. Civil unrest? Who and what do they tell the employees of public/private sector pension funds?The remaining question begs who has this turd put in their pocket. Does the FED. Res. get it or does the Twitter in Chief? Booyah
  • vt
    vadim t.
    14 August 2018 @ 08:53
    Hi Simon, this is my reply to your question from the last "the exchange". I saw it just yesterday, felt it needs to be replied for, not sure you see it there, so just post it here. Simon, it has to be a long conversation, because the idea of the gold as an insurance is misleading in different ways. as short as possible: 1) Insurance From What? Today is 13.08. full blown EM crisis. What is going on with Gold? Don't bother answering, and it's not an accident or some "JPM manipulation" nonsence. First of all: gold couldn't be an insurance where the dollar is. Period. It doesn't mean however that gold couldn't rise or fall with the dollar, it's just doing so as any other asset class. In an Armageddon scenario gold as an insurance is even bigger nonsense. As far as I understand you and me are both originated from USSR (correct me if I'm wrong), and you should have known more than anybody else that although you could change your gold for bread and coal, it doesn't worth trying to buy gold beforehand, you aren't gonna like the rate, if you wish to prepare - buy "tushenka" (tinned stew) and ammunition instead. So there are some very specific class of failures of the system which could be considered for gold to be an insurance for. It's not very difficult to show, one by one, that it doesn't work this way either, although it could be decent investment (there is a huge difference between an insurance and investment, isn't there?) but it'll take a lot of space and effort, so let's assume you are right and there are such cases, which brings us to 2) Insurance For Whom? That's where my strongest disagreement is. You guys (goldbugs) are constantly promoting a product which is maybe fine for big institutions but for retail it brings a disaster over and over again. It's not the same to have a 5% cost insurance of $2bln+ book and $100k savings, it's as if it's not the same to owe a bank 2b vs 100k. There will be very different needs and outcomes when THE day comes and there is much smaller probability that the little guy is able to hold your insurance through all those waiting years. I'm sure your intentions are pure and you are trying to do your best to help them, but the great irony is it's the same old game - just a different "contrarian" herd going into a different slaughter-house. 3) Last. Out of personal curiosity. You guys, spend so much time saying the same things over and over again, and it looks like the Gold theme is of much interest of you, why the hell don't you spent this time to discuss/investigate for example 95% correlation of Gold/usdjpy, or take a look at XAUCNY weekly, esp. monthly and try to think it over before tell the crowd how amazing the gold insurance is, or take a deep look into what is going on inside (deep inside) goldminers space, you will discover an amazing stuff, I guarantee. If you keep asking, you even could come across some taboos which are avoided at all cost everywhere, even here on RTV. Just couple of thoughts on very complicated subject, With real huge respect for your efforts and intentions, Vadim.
    • SM
      Simon M.
      14 August 2018 @ 14:30
      Hi Vadim, Thank you for a detailed response. Clearly, we have different ideas about the nature of the risks and about the utility of gold as insurance. It isn't possible to properly debate the issue in this forum but I am happy to comment very briefly on the three points you made in your reply. 1. Insurance from what? From a systemic crisis (financial, economic, political, currency, sovereign default, capital controls, etc) in the US and EU. Over the past 40 yrs, the USD (EU and CHF) have played the role of gold for investors in the emerging markets. There has been less need to hold gold (although many in the EMs do) if one could maintain a hard currency deposit in a "safe" bank within a "safe" Western jurisdiction. This tried and true approach would not work if the key hard currencies devalue and/or the financial systems in the previously safe jurisdictions get disrupted. I believe that both are highly likely within the foreseeable future, which is why my interest in physical gold. It is not JPM that has been holding gold price down but lack of physical demand from the Western investors, who control the bulk of financial wealth and are not yet concerned with systemic risks. In regards to our personal histories, during the very difficult 1930s in the USSR, one could buy almost anything with gold at a Torgsin (https://en.wikipedia.org/wiki/Torgsin). My mother still remembers good food and presents her grandparents bought there with the family jewelry. Also, three of my four grandparents have survived the siege of Leningrad and I know from them that bartering for food with quality jewelry, gold and antiques helped save many people's lives. Facts. 2. Insurance for whom? Anyone with savings to protect. What is wrong with not being 100% invested in the markets? Why is having something on the sidelines in physical gold such a bad idea? What if the system reorganizes and wipes out a good deal of financial wealth, including the purchasing power of cash? Can anyone, small or large, afford losing most of their purchasing power? Whatever it may be worth, physical gold will still be there and have value whereas many companies and financial contracts may not. 3. Gold derivatives' trading is not of a major interest to me, although Dan Oliver runs a gold equities fund and is an expert on the miners. My interests in systemic risks and physical gold are focused on gold's properties as insurance against systemic disruptions, not on gold derivatives used in trading strategies. Until systemic risks rises to the forefront of Western investors' thinking, gold will remain a trading commodity, its price will be set in the derivatives' markets and we will continue to see correlations to which you refer. I am not sure to which taboos you refer but I have no taboo topics and am happy to address any relevant issue. Best, S
    • rc
      random c.
      15 August 2018 @ 02:59
      2 is a great point!
    • rc
      random c.
      16 August 2018 @ 00:43
      2. is a great point that nobody talks about
  • DS
    David S.
    14 August 2018 @ 08:20
    CNBC reported $US 1.4 billion from 3/23 to 7/16/2018 on imports of foreign steel and aluminum. Congress would not pass a border tax so tariffs are the next best thing? It would be terrible if a worldwide trade war were started by a surrogate border tax. DLS
    • DS
      David S.
      15 August 2018 @ 07:37
      Tariffs are a very inefficient border tax because of the trade war aspect. DLS
  • DH
    Daniel H.
    14 August 2018 @ 08:05
    So, why do we not just follow in the path of Japan and keep kicking the can down the road? Saying it is a sovereign debt bubble does not answer that question. If Japan can simply go to zero on rates and stay there, why can't we?
    • BM
      Bryan M.
      17 August 2018 @ 04:57
      Japan is not the world's reserve currency.
  • NI
    Nate I.
    14 August 2018 @ 03:58
    You hit it out of the park Grant. The everything bubble is no secret, but the one question that matters is how much longer can it go on? Indeed, the growing demand on the Treasury to pay out more benefits combined with a bond market that's not likely to go much higher could be the infinite force meeting the immovable object. Perhaps that finally sounds the death knell of the everything bubble. This question really deserves a big chunk of RV air time with all of the experts weighing in.
    • BM
      Bryan M.
      17 August 2018 @ 04:58
      Great idea!!!
  • RI
    R I.
    14 August 2018 @ 03:54
    Good ole fashioned gold porn.
  • CT
    Christopher T.
    14 August 2018 @ 03:09
    This was filmed in may, why is it being released in aug?
  • my
    markettaker y.
    14 August 2018 @ 02:41
    Holy smokes. This is intense. Um. Please do this more. Do it all again, but differently. From every angle. What the heck. This is bananas. Real Vision is like the best financial media in the world?
  • MS
    Mark S.
    14 August 2018 @ 02:38
    Watched it twice already. Mom always said I was slow.
  • TE
    Tim E.
    14 August 2018 @ 00:44
    Excellent segment gentlemen. Really nailed it.
  • PD
    Peter D.
    13 August 2018 @ 23:58
    This format was priceless content on a variety of levels. 1. The best line since Gretzky, Anderson and Kurri suited up for the Edmonton Oilers in the 1980s. 2. It showcases Grant's personal brand as an interviewer, which raises the quality of any debate by 50%. 3. It provides long-term gold investors with a way of rethinking and re-integrating their long-term investment/hedging strategies (which are essentially to sit and wait) in light of current economic and market events. To attract new viewers much of the newer RV content is naturally targeted at a lower common denominator. But give us one or two of these shows a week, and we in the old guard RV base will get more than our money's worth.
  • SS
    Steven S.
    13 August 2018 @ 23:43
    Simon, Grant or Dan - do you remember a fellow named Denis Karnoski of the Federal Reserve?? - Featured here in 3 local St. Louis television interviews, Mr. Karnoski stated that "we fool the public into thinking that they have wealth, when they do not" and that "whatever a dollar is, I do not recommend people hold onto it". I've read Mr. Karnoski was fired by the Federal Reserve soon after this interview. Any comments? Would love to hear your view on his comments ;) His direct comments on video starting here: https://youtu.be/sGsFK52L0lk?t=15m6s
  • BM
    Beth M.
    13 August 2018 @ 21:48
    The greatest exchange that I have seen. The writing is on the wall...our credit "super cycle" (as Simon noted) is nearly done. I have a serious question for my viewing colleagues...does anyone know of a relieable source to buy gold coins? I am very serious.
    • RS
      Roger S.
      13 August 2018 @ 22:02
      Beth, I have done business with Hard Asset Alliance https://www.hardassetsalliance.com/ They do not sell rare coins but sell currently minted gold and silver coins and bullion of all sizes. They also provide storage in multiple countries as well as delivery. Their pricing is competitive and clearly quoted.
    • DR
      David R.
      14 August 2018 @ 21:30
      Avoid gold storage with ANY U.S. based company. In the case of HAA, doesn't matter where it's stored, at the end of the day it's a US based company subject to US laws and seizures - as are its clients. Avoid. Even some of its founders don't use it whatsoever, as they know better, nuff said. Beth, you're better to use any of the Singapore or Swiss based firms. I prefer Singapore because Europe is headed down the drain while Asia is rising.
    • DR
      David R.
      15 August 2018 @ 14:15
      IF you trust Australia (I don't but it might be slightly better than USA), then Perth Mint has a new exchange listed product which is 100% exchangeable for gold coins & bars of your choice. And at much lower denomination values than Sprott or others.
    • MZ
      Martin Z.
      16 August 2018 @ 07:21
      Having some gold coins for emergency spending in a financial crisis is a good idea, provided you have a safe & secure place to store and access it, and can keep a low profile in a crisis - although silver is probably even better. But for any substantial amount of savings, you need to be able to store it with a reputable vaulting company outside the banking system. I recommend Goldmoney because it allows you to easily spend or cash out your holding incrementally via a debit card. But there are other options, and interesting new developments (for example, ANX/Kinesis's gold-backed blockchain system) will no doubt appear as the impending crisis becomes more obvious and the demand for insurance against systemic risk becomes more robust.
    • WM
      Will M.
      18 August 2018 @ 16:02
      Beth do a lot of reading on this first before jumping in. Some good comments below. There is also the SWP group in the Cayman Islands. Now regarding Martin Z's comments below, they are fine if you are a significant wealth player. However gold coins at home have more risks and frankly in the worst case they won't do you much good as an exchange resource for living. Better to go with silver which would become "poor man's gold". Silver Eagles would be more exchangeable for goods than a gold eagle. Also keep some cash in dollars though, mixed bills, 3 months expenses minimum for a period where credit cards and checks may not work. Low chance of the worst happening but why take the risk?
  • VE
    Viktor E.
    13 August 2018 @ 20:28
    Fantastic, thanks!
  • Sv
    Sid v.
    13 August 2018 @ 20:26
    excellent!
  • DR
    David R.
    13 August 2018 @ 20:09
    Any reason why it's ten weeks between filming and posting?
    • JC
      John C.
      14 August 2018 @ 07:48
      Especially with gold & gold miners taking a bath right now. Don't get me wrong I'm long-term bullish, but precious metals in for a rough ride the next few months I think. Technicals bad, sentiment at near all time lows (yes I know that can be contrarian, but it's not a 'buy' signal all on its own, and sentiment can stay very bearish for some time before things reverse). Very good video nonetheless. Really like this format as well. But why don't they ever eat/drink anything?
  • DS
    David S.
    13 August 2018 @ 19:59
    Timing? The politicians will do everything in their power to delay the crisis. IMO, I think a possible Fed. move is to issue massive 100-year interest free bond to the Treasury with or without annual principal repayment, i.e., budget problem solved. I know that this is way out there, but no one loses power without trying all the tricks. Even worse the Fed may be absorbed into the Treasury. There is no fundamental knowledge here, just human nature. This could happen in Japan even earlier. DLS
    • DR
      David R.
      13 August 2018 @ 20:11
      Yeah, something like that. Before too long, even Joe Sixpack will get that it's all just a big sham. Thus Armstrong's excellent thesis (he's been right on everything big for 5 decades) that by 2030, China will be financial capital of the world and the dominant industrial, technological and military power globally too.
    • DR
      David R.
      13 August 2018 @ 20:13
      In 2032 actually. Per his AI computer, Socrates. His lengthy detailed report came out just last week.
    • RI
      R I.
      14 August 2018 @ 03:55
      David R - I’ve got a secret AI computer named Plato I’d like to sell you for a bargain price.
    • DR
      David R.
      14 August 2018 @ 21:25
      R.I., institutional investors pay $1-million per year for access to Socrates, and consider that a bargain for its accurate analysis. Take the other side at your own financial peril.
    • WM
      Will M.
      18 August 2018 @ 15:54
      R.I. best look into some of Martin Armstrong's history before joking about his Socrates model, its got quite a background and not really marketed to the public as of yet.
  • BC
    Burton C.
    13 August 2018 @ 19:11
    Great conversation... keep em coming... but get rid of the food, its a distraction
    • PD
      Peter D.
      13 August 2018 @ 23:47
      Maybe ... or else put two bottles of wine on the table too.... A couple of Quebec shows use this technique and it improves the atmosphere and the creativity and tone of the comments significantly....even if none of the commentators actually drink....
  • BG
    Bruno G.
    13 August 2018 @ 18:28
    When does gold rise? Please lay out the framework for this to happen. What will the market looks like prior to the gold reset
    • ns
      niall s.
      13 August 2018 @ 20:21
      It sounded like an after hours spike, a binary event , no gradual ramp I'm afraid , so be there early.
  • JK
    John K.
    13 August 2018 @ 17:59
    Grant... you are a master of creating the "cliffhanger" moment... eagerly awaiting the next episode!
  • DS
    David S.
    13 August 2018 @ 17:21
    August 13: Turkey is in a serious fiat currency crisis. Turkish investors with gold instead of the Turkish lira are protecting themselves. Can someone explain to me, however, why my gold in $US is down 1.5% today and down over 5% YTD? DLS
    • RK
      Robert K.
      13 August 2018 @ 17:41
      USD strength. Hold on to your gold and cumulate. If you want to hedge out USD from your gold position GLDW is a convenient vehicle. But I am speculating that we get a meaningful move in GLD only in the second leg of the coming storm. The first leg (interest rate shock + inflationary surprise = hawkish FED) is USD positive so GLD might suffer short term. But use this to scale in properly.
    • DS
      David S.
      13 August 2018 @ 18:18
      Robert K. - Thanks.
    • SD
      S D.
      13 August 2018 @ 18:55
      Robert, tell me more about your gold forecast. It's below $1200 US now, how low do you think it can go and what's your take on silver?
    • RK
      Robert K.
      13 August 2018 @ 19:58
      S D: No clue, sorry! Look at major technical levels (on the weekly chart) and put your limit buy orders in there and wait. FYI I am 50% in now building a target allocation of 15-20% of my NAV.
    • vt
      vadim t.
      13 August 2018 @ 21:09
      If you are a Turkish investor you don't need buy gold to protect yourself, it's a false idea, buy yourself some dollars instead (2%+ yield) with no risk and you'll be just fine.
    • DS
      David S.
      14 August 2018 @ 07:07
      vadim t. - You are correct about the benefits of holding dollars vs. gold. The government may take either gold or dollars away from you; but if you have dollars they may take you away also. DLS
    • JC
      John C.
      14 August 2018 @ 07:56
      Simple 1) gold is a store of value and inflation hedge. We are heading back into a global deflationary slowdown (that will eventually be followed by higher inflation a few years down the road, when gold will once again shine 2) When the crisis hits Turkey and their currency devalued significantly, what do you think gold holders do there to stay liquid/keep the lights on/stay well fed etc.? They sell and buy hard currency - mostly USD. Hence USD strength and gold weakness 2) Chinese-backed shadow backed gold loans. With the Renminbi continuing to fall, loans defaulting and lenders securing their collateral (gold) they also sell it to buy hard currency. Yuan has followed the price of gold over the past year or so (less of a rationale, but seems recently it has held true). 4) Paper gold hypothecation. It's something like 60x for gold and ETFs, versus 1.2-1.3 for oil, for example. Easier to create gold ETFs as gold is easy to store, small in size, etc. Not sure how this plays out but eventually think that it will become much less of a hypothecated market once gold rises a few years down the road.
  • SL
    Seth L.
    13 August 2018 @ 17:04
    I'm sorry to say this, but despite the intellectual brilliance of the guests they are significantly off-base with their pessimism. Yes, there are real and BIG problems. But those are largely due to the mixture of politics in with the economy. The explosion of the ABS market was a response (IMHO) to the real need of USD-denominated assets to fund the mandated fiat-USD monetary system (ie a private sector response to a publicly created problem). Also, to act like we're living in dreary, dystopian, homogenous world is just wrong. There has never been more choice in the US economy - just walk into a mall or a supermarket, or log onto your computer to buy something, go car shopping. Not only has choice has never been greater but cost has never been lower meaning choice has never been so accessible. Furthermore, the creativity in jobs have never been greater. Netflix, Amazon, YouTube, iTunes, etc. have made it possible for more people to work in creative jobs (more actors, musicians, podcasters, bloggers, freelancers, artist, Real Vision employees, etc.). Data tools have also made people more productive, freeing them to either focus more on the intellectual aspects of their jobs or take more leisure time. As a securities analysts my coverage universe has never been larger, but I'm also equipped to handle the load since I spend less time mindlessly inputting data into models; hence I have more time to focus on the intellectually rewarding parts of the job. Stop blaming the banks. Stop pretending that finance isn't a productive endeavor that makes modern economies and all of their benefits possible. Both exist because of their life affirming benefits. Focus on the real issue - the incursion on politics into the economy. Politicians crave power and our cultures have for some reason been all to complicit to oblige. With the greater influence of politics comes the homogenisation as a handful of central planners call the shots: how much capital a bank must hold and what businesses they are allowed to conduct and with whom; how many slots an airport can have; why type of material a house must be made out of and where it can be located. It's easy to be pessimistic because there are real and big problems. The issues are complex. But look (more closely) at history. Whenever and wherever economic freedom has improved so have lives and prosperity. Focus on that and drop the hate for bankers. For the record, I never was nor have any relationship to bankers.
    • EF
      Eric F.
      13 August 2018 @ 20:56
      What a load of drivel!
    • EF
      Eric F.
      13 August 2018 @ 20:57
      The post that is, not the video.
    • MM
      Mike M.
      13 August 2018 @ 22:39
      I haven't even watched the video yet but......But what you wrote above...What does that have to do with the staggering debt that has been accumulated around the world. And the Criminality of the banks Lol.
    • my
      markettaker y.
      14 August 2018 @ 03:33
      Yes - in other words what you're saying is that all this is great for highly intelligent people who can harness and thrive off this change, who are able to leverage capital and technology to excel in this economy. Guess what? That's not most people, and we're not 'normal' people. Great for us, not great for everyone else. That's the issue (or, one of them.)
    • SL
      Seth L.
      14 August 2018 @ 12:30
      markettaker x, I disagree. Nearly everyone is capable of performing a higher level than what they currently are. Everyone is capable of growth, it's part of human nature. To be sure, there's a spectrum. My point is first that things are definitely not bad, even if there's a debt a crisis (which there is). That is a real issue (as well as other runaway government liabilities), but its is also THE issue. So let's focus on that and not get distracted on the secondary ones (like the over-financialization of the economy) which are in a large part effects and would resolve themselves once the debt (and currency wrt the latter) are addressed. Restructuring those liabilities won't end western civilization, in fact it will strengthen it. The issue with the banksters is that they're cronies, not that they're bankers. If that's that case, let's rail against cronyism, which is only made possible by the mixture of politics and economics. Without the possibility for commercial payoff from political favors there'd be none. Keep a cool head and work through to the primary issues. It's the only way to progress.
    • DR
      David R.
      14 August 2018 @ 21:50
      Seth L, you overlook that the US is on the fast track to socialism and history has proven that socialism always leads to failure and economic collapse. Over 80% of US millennials self-identify as socialists (the opposite in Asia which has already suffered its age of socialism) and the US is about to lurch hard left via the Democrats that are rapidly embracing radical socialist doctrine and likely to win Congress in November and possibly the presidency in 2 years too. Indeed their new party darling from Queens says, "When you stop and think about it, Fidel Castro and Karl Marx had some really good ideas.".
    • AC
      Andrew C.
      15 August 2018 @ 03:57
      David R. President Bush in 2008 (Republican, right?) took the US done the socialist road by putting government money into a capitalist system, the banks! Yes, Obama continued it, but now the ground-root democrats are saying let's be socialist all-around. Just imagine where we'd be if those banks were allowed to go bang. For sure, some hard yards in 2008-to-2014 (6 years at a guess?), but damn, imagine 2018-19 if those hard decisions were made ! I'm with the OP, get government outta businesses and let the capitalist system kill-off those that can't survive. (PS I ain't from the US)
    • SL
      Seth L.
      15 August 2018 @ 14:37
      David R., I don't disagree, per se. Politically and culturally we are moving very much in the wrong direction. A fast track? I think that's debatable, but I agree with you directionally. I would also argue that both Dems and Reps are moving us in that direction, sadly. But this is exactly my point. We are in a cultural war between individualism and collectivism. The latter is winning (and has been for decades). As a result we have more incursions of the public sector into the private sector. This leads to a greater scope of government, greater government debt loads, less private investment and growth (due to crowding out), and MUCH greater cronyism. Without standing up for individualism - morally - the politics will continue to move towards collectivism, and the trend will continue. Let's not get sidetracked by the effects. But also, we still enjoy tons of freedom in the west and as a result there's never been a greater time in history to be alive. I wouldn't trade my lot today (which is upper middle class, for sure) with JP Morgan himself. That perspective, I think, is important.
  • CB
    Charles B.
    13 August 2018 @ 15:58
    This was the best interview so far. Very clear thinking.
  • TS
    Tyler S.
    13 August 2018 @ 13:41
    This is like waiting for the next game of thrones to air... Pretty much this is a repackage of the same info I've heard over and over the past 4 years, no need to break this up and spread it out in 27min chunks
    • my
      markettaker y.
      14 August 2018 @ 03:33
      yeah but it gets better every time. This was like, the best version.
  • KS
    Karen S.
    13 August 2018 @ 12:52
    Grant at the end asks the same question all my friends ask. Great question.
  • BD
    Bruce D.
    13 August 2018 @ 12:20
    That was simply fantastic! To breakdown such complex interconnected positions into a simple explanation is just beautiful.....Thank You!
  • NG
    Nick G.
    13 August 2018 @ 12:04
    Excellent discussion, thank you. The conclusion is also correct, imho: it all hinges on confidence. When the magician runs out of tricks, the audience start throwing tomatoes.
  • AR
    Alex R.
    13 August 2018 @ 10:44
    I like analytical conversations like this but it would be great if these analysts would put up a timeframe. Then videos like these would be actually useful. Without a timeframe this remains just a interesting tidbit of the same theme people have been talking about on and off for years now. Just my 2cts.
    • ST
      Simon T.
      13 August 2018 @ 11:49
      it's very hard to give an exact timeframe but i think they have mentioned 1998 2008 ... 2018 ? or another year perhaps ? Surely the party could continue a few more years but when it stops it will be very very fast and too late to adjust, this i m convinced ...
    • NG
      Nick G.
      13 August 2018 @ 12:12
      They are giving you a map. It is up to you to recognize when you have reached the fork in the road and to take the right turning. It does not mean you need to do anything now, it means that you should have this in the back of your mind and be prepared by having an action plan ready for when you recognize the very first landmarks.
    • PP
      Patrick P.
      13 August 2018 @ 15:35
      No one knows for sure what will happen... but IMO there will be a reset ....Stackin' the PM each month. This is off the subject but when they find a sunken Spanish galleon ...they don''t send those divers down searching for paper money.
    • my
      markettaker y.
      14 August 2018 @ 03:35
      How could they time it? What they COULD do which I think would be useful is to describe the conditions that would have to obtain for this scenario to play out. Then working back from that, they could discuss what would lead to those conditions. And from that we may be able to get some kind of roughish time frame. I think it's over a period of 5-10 years from now. But maybe it's three!
  • RC
    Robert C.
    13 August 2018 @ 10:30
    Looking forward to the next episode!