💬 "The Economy Stinks & Dr. Doom is Not Hopeful"

Podcast’s Essential Bites:

[19:28] NR: “The debate [...] about the recent surge in inflation [...] is the debate between those who say it was due to bad luck, as opposed to bad policy. Bad luck was three negative supply shocks: the initial COVID shock, the Russian invasion of Ukraine, and now they continue that zero tolerance policy towards COVID [in] China that is creating further global supply bottlenecks. But it's also true that on the bad policy side, the amount of monetary, fiscal, and credit easing was too much and was too excessive."

[27:07] NR: “There are some traditional economic, monetary, and financial threats, but [...] the ones that I emphasize in [my new] book ("MegaThreats"), [...] [are] the geopolitical ones. We have now a cold war between four or five revisionist powers: China, Russia, Iran, North Korea, and increasingly Pakistan with the West: US, Europe and their allies. This cold war is going to lead to deglobalization, to decoupling of the global economy, to balkanization of global supply chains, to a fragmentation of the global economy. [...] It's going to reduce growth and increase cost of production, among other things. And the biggest risk is that this cold war eventually is going to end up into a hot war.”

[28:05] NR: “Stagflation means [that] we have rising inflation and recession at the same time. [...] Today [...] we have negative supply shocks [...] [that] are going to reduce growth, increase inflation, and with loose monetary and fiscal policy are going to lead to inflation and recession. [...] In the 70s, we didn't have a debt crisis. And after the GFC (global financial crisis), we didn't have inflation. So we [now] have the worst of the 70s and the worst of the GFC."

[30:55] NR: “Mistakes were [made] in the last 10 to 20 years. And at this point, if you fight inflation, we're gonna cause a severe recession, a financial crisis, and they're gonna feed on each other. [...] And if you instead decide that you want to avoid that, in the short term you can lift markets, you can prevent a severe recession by printing money like crazy, not raising rates, but then inflation gets out of control. And once you have high inflation, eventually, you're not gonna avoid the recession. You're gonna have an inflationary recession. And you're not gonna avoid the debt crisis. [...] Interest rates are going to reprice for short term debt, and then wind up into a disaster. So right now, we have no solution."

[45:19] NR: “Right now you lose money on equities, you lose money on long term bonds, and you lose money on cash because of inflation. If you want to protect yourself, your portfolio, the investment should be short term treasuries that reprice, [...] precious metals and some commodities are gonna go up in value when there is inflation. And if there is moderate inflation, some forms of real estate are going to be the right investment, because they protect you against inflation. But a good third of all real estate stock in the US is going to be stranded because of climate change: flooding, hurricanes, sea rise levels, wildfires, droughts, and you name it. Half of the US is going to have to move somewhere [...] in the next 20-30 years, and therefore even your real estate investment should be done in light of the coming environmental disaster."

Rating: ⭐⭐⭐⭐