Russell Napier — The Rise And Fall Of The Age Of Debt

Blockworks Macro, Released on 3/26/24

Russell Napier, founder of Orlock Advisors and publisher of The Solid Ground Newsletter, returns to Forward Guidance to share how China’s decision to peg its currency the Chinese Yuan in 1994 at an artificially low rate had enormous consequences on world’s monetary system, and why China may be soon be forced to make a monetary policy decision regarding its currency which may have similarly large consequences for the globe. Filmed on March 13, 2024. Russell is the author of two books, “Anatomy of a Bear Market: Lessons from Wall Street’s four great bottoms” and “The Asian Financial Crisis 1995-1998 And The Birth Of The Age of Debt.”

00:00 Introduction
00:52 How To Spot A Change In Monetary Policy
03:50 Birth Of The Age Of Debt
08:43 Chinese Surpluses Are Getting Smaller
14:10 China’s Choice Between Deflation Or Devaluation
18:23 China’s Growth Requires Massive Expansion In Narrow Money
27:10 VanEck Ad
27:53 Is China The Biggest Real Estate Bubble Ever?
30:35 PBOC Likely To Move To Flexible Exchange Rate In Order To Achieve Their Goals In Controlling Price And Quantity of Money
33:53 Is Foreign Lending Contingent Upon U.S. Dollar Reserves?
36:29 The Origin of The Chinese Stock Market In 1992
39:11 Valuations of China’s Stock Market
41:33 Buy Cheap Currencies, Not Cheap Companies
54:11 Napier’s Views On Japanese Currency And Stock Market
58:51 The Lessons Of Quantitative Easing (QE)
01:01:27 The Future of Japanese Monetary Policy
01:03:10 The Interest Rate Shock Has Not Broken Something. Why? Will This Continue?
01:06:16 Are Higher Interest Rates Deflationary Or Inflationary?

Professor Russell Napier is author of The Solid Ground investment report for institutional investors and co-founder of the investment research portal ERIC–a business he now co-owns with D.C. Thomson. Russell has worked in the investment business for 30 years and has been advising global institutional investors on asset allocation since 1995. He also is the author of the book Anatomy of The Bear: Lessons From Wall Street’s Four Great Bottoms (‘a cult classic’ according to the FT) and he is founder and course director of The Practical History of Financial Markets course that is part of the Edinburgh Business School MBA. Russell is a director of the Mid Wynd International Investment Trust. He is a member of the investment advisory committees of two fund management companies, Cerno Capital and Kennox Asset Management.

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