Getting to Grips With a Fast-Changing World

Hello Visionaries… 

It’s been quite a grim month since last month’s issue… It’s impossible to overstate how much life has changed for society, and how much is going to be changed forever.

There is no return to normal, not really. This isn’t a contained event that finishes at a set point. 

So this month in The Vision we’re doing two things. 

First, we’re looking not just at the “what now” but the “what next” too…. (Spoiler: the dollar is going to eat itself).

And second, we’re taking a step back and sharing a couple of the most fascinating non-COVID-19 interviews (yes, they do exist) from the last few months.

Let’s get stuck in…

The Dollar Will Eat Itself

The market tells itself that quantitative easing means a lower dollar but I think that will prove to be a false narrative. 

I just don’t see a world where we don’t get a soaring dollar, a full-scale debt deflation and solvency crisis leading to a loss of confidence in the Dollar Standard and the entire financial system architecture as we know it today.

You see, it’s the dollar that’s the story here. It’s what’s going to break the global system.

I wrote about this in April’s issue of Global Macro Investor, which I shared with Real Vision Pro members. And now I’m sharing an excerpt with you:

Global Macro Investor: A Dollar Standard Crisis

Less available dollars, in a world of a massive dollar shortage, drives up the dollar creating a shortage

both home and abroad. Money printing does not make the dollars available. They get stuck in the financial system and hoarded.

Money for the banks, no money for the debtors...

The domestic shortage of dollars means that money gets hoarded while defaults rise. And the shortage abroad means that $13tn of debt scrambles for the available dollars as world growth slows and banks are less free with capital.

Don’t forget – the $13tn short dollar positions (foreign dollar debt held mainly by foreign corporation and investment vehicles) is the largest position ever taken in the history of global financial markets

It can only mean a massive, uncontrolled dollar rally. QE will not fix this. Swap lines will not fix this. A debt jubilee would fix this or multiple trillions of dollars in write-downs and defaults. It is the dollar strength that brings to world to its nadir (just like the 1930s). It is the dollar system that is the really big problem. 

The dollar has eaten all of its competitors and now it is going to eat itself. 

This eventually breaks the dollar after a super-spike as global central banks are forced to find alternatives. They are already working on digital currencies for exactly this.

All the central banks have raised the issue of the unsustainable dollar system. The Dollar Standard will be sacrificed for something different. Somewhere within this, the EU will lose its banking system....

And we can say sayonara to the Japanese banking system too...

Finally, the entire nightmare of global debt and pension losses of, let’s say $50tn, goes onto the governments’ – and therefore the central banks’ – balance sheets, leading to a loss of faith in the financial system and money itself. 

Yup. The whole enchilada. 

We knew all of this was coming in one way, shape or form, but what we didn’t know is when it would happen and over what timeline. We now have as much clarity as we could ever hope for, it is highly possible to play out over the next two to three years… 

What Now? 

So that’s an abridged version of what I think is going to happen. 

It’s not pretty... But look, I may be wrong, who knows? Please do get the discussion going in the comments, because I’d love your input…

We’ll resume normal The Vision service now and move on to some of the really important Real Vision pieces I learned from in the last month. 

Real Vision is absolutely critical to me as a way to make sense of the world, in financial, business, and economic terms… so I hope this helps you make sense of your world. I mean, the finest thinkers in all sectors all together in one place, with true freedom of speech to say what they really think – where else would you get it?! (Answer – Nowhere!) 

Let’s kick off with Dr. Doom Dr. Realist…

Great Recession Or Greater Depression?

Nouriel Roubini prefers to be called Dr. Realist than Dr. Doom. In this interview my take is that he’s much more the former than the latter… as well as being hilariously cutting about people who think stimulus will save the economy and markets: “I don’t know whether they are smoking something strange, frankly speaking.” Watch the renowned economist in action for a well-argued in-depth viewpoint on why we could be heading for a depression worse than the 1930s. Stiff drink may be required…

Coronavirus’s Impact On Macro & The Future Of Crypto 

It had been way too long since I sat down with the investing legend that is Dan Morehead, who has basically made a career out of being incredibly prescient about disruption. This was a fascinating conversation with a true giant of the crypto hedge fund world. Dan discussed why he thinks the Covid-19 fallout is “bigger than anything since World War II,” why we’re not going to get a V-shaped recovery, and his latest thoughts on crypto, the future of the monetary system, and Bitcoin’s biggest strength. (Yeah, there’s a lot in here.) And it’s free for you to watch.

Gold, Bitcoin, And The Death Of Risk Parity

DTAP Capital founder and Real Vision favorite Dan Tapiero appeared on Real Vision last October, and looking back at it now it seems like he had a bloody crystal ball. RV members have been re-watching the October interview too – here’s a comment from March 6: “Incredible how prescient Dan was back in October. He lays out almost exactly what has transpired over the 4-5 months since this talk.” So, I sat down with him just a couple of weeks ago for an in-depth, 70-minute monster of an interview. Pull a chair, this one goes deep…

Our Finest Hour – Live With Danielle DiMartino Booth & Ben Hunt

Last week, Epsilon Theory’s Ben Hunt and Quill Intelligence’s Danielle DiMartino Booth appeared on a live episode we streamed everywhere for free, talking about Ben’s “Our Finest Hour” initiative to provide PPE to frontline heroes. 7 minutes in, Ben got a call from an anonymous donor who donated $20,000 and agreed to match up to an additional $20,000 of Real Vision donations. Extraordinary. You can watch the episode here and learn more about Our Finest Hour here.

Mid-Issue Interlude…

One of the things I’ve found hard about shelter-in-place is limiting how much information/noise I’m absorbing. It is all too easy to just spend all your time online and saturating yourself in COVID-19 news, but you have to learn to carve up your day differently because it just gets overwhelming. To that end, let’s take a collective break from COVID-19 for the last couple of pieces of The Vision…

Deutsche Bank: On The Brink Of Disaster

This is an amazing story… It’s a full-blown thriller in its own right. The New York Times’ David Enrich joined us on Real Vision to discuss his new book, “Dark Towers: Deutsche Bank, Donald Trump, and an Epic Trail of Destruction.” I’ve been talking about Deutsche Bank for a few years, and I’ve stared at the chart a lot. It’s a total ****show. This interview is edge-of-your-seat stuff, and you get free admission.

Learning How To Lose

What do all traders and investors have in common? Losing(!) We all get to do it, every one of us. It’s painful, it’s mentally tough, and it’s an absolutely necessary occurrence to become better at what you do. This episode, where "Market Wizard" Mark Ritchie is interviewed by his son Mark Ritchie II, CIO of RTM Capital Advisors and “Momentum Master,’ is literally spilling over with insight, guidance, and a market perspective that comes from decades of experience: “It is a crazy business. I guess everybody knows that, your Real Vision's people ought to know that. If they don't know that by now, they're beginners.” True. Enjoy this one, it’s solid gold.