February 24, 2022

LFP197 – Money in the 21stC: Ballooning Printing of Fiat/QE/”MMT”/Govt Debt, CBDCs, Crypto, Dedollarisation, Hyperinflation, Gold w/Mario Innecco (@maneco64)

1 hour 3 minutes

Where money in major economies is and where it is going is very concerning right now – look at the list of issues in the episode title, let alone the impact of the ongoing globalist putsch and UN Agendas 21 and 2030. This is a topic that will affect not just FS but the lives of everyone we all know we are more than overdue a dive into this essential topic. In particular we end with practical investment/monetary strategies to survive and thrive in an age of – inter alia – serious monetary risk.

I have been looking for a guest to talk about this for over two years there being some polarisation between the ~ “it’s all fine, needs the odd tweak” and ~ “Jacob Rothschild owns all the central banks and tells them what to do” camps. Mario is someone who being a long-term FS-er himself understands FS and markets deeply but also as a consequence of deep understanding and deep study has for some time been raising the red flag for some time. It is worth noting that all fiat currency systems have eventually collapsed. There’s a simple reason (before we get into civilisational collapse and venal politicians angles), as Graeber points out in his magnum opus on Debt if everyone repaid all their debts to banks there would still be an astronomical amount owed to the banks simply as when banks lend money they create that money but do not create the interest margin they charge. Fiat currency is thus a Ponzi scheme.

In the UK it took 300yrs for the money supply to reach £1trn but only 8yrs to go from there to £2trn and another 4yrs to reach £3trn. A dollar a century ago is worth something like 2.5 cents now and as Charlie Munger the veteran Chairman of Berkshire Hathaway said recently “I think the safe assumption is that over the next 100 yrs the currency is going to zero”.

Mario has a very successful YouTube channel since 2015 where he is better known to 60,000 subscribers as maneco64 “the home of alternative economics and contrarian views”. And just in passing contrarian has a special meaning to us fund managers it doesnt mean your stroppy teenager who disagrees for the sake of it but rather long-term proven investment wisdom that you don’t make money by agreeing with the market. Rather to make money you need to stand against the current consensus.

Money is naturally at the heart of FS but most FSers don’t really understand what it is (they leave that to their treasury departments). Furthermore a 2014 Bank of England publication stated that the nature of money is widely misunderstood including in one important respect even in university textbooks (!).

But money isn’t just something of concern for FS folk. As John Kay notably explained when he was on the LFP, Finance is like a group of guys going into a pub and gambling with one exception namely that the outcome of their game extraordinarily affects everyone’s life outside the pub. That’s super-weird when you come to think of it.

Topics discussed include:

Mario’s YouTubing career and advice on becoming successful

what got Mario into looking deeply into money per se some 20 years ago

how Mario reversed Type 2 diabetes – which has become his most watched YouTube with some quarter of a million views

Mario’s personal and career journey to today from different parts of the world to different FS markets and trading and entrepreneurialism

a quick review of the history of money referencing LFP085 – The Nature of Money, Economic Imbalances & will Central Bank Digital Cash alleviate them? With David Clarke Positive Money

the FT’s chief economic commentator has written in favour of Positive Money’s approach (Strip private banks of their power to create money); eg:

Our financial system is so unstable because the state first allowed it [the private banking sector] to create almost all the money in the economy and was then forced to insure it when performing that function. This is a giant hole at the heart of our market economies. It could be closed by separating the provision of money, rightly a function of the state, from the provision of finance, a function of the private sector.

credit instruments in the era of the Gold Standard

stable and low inflation in days of precious-metal based monetary systems

comparison with the 20thC – a century of inflation and war

Voltaire “the thing about paper money is that it reverts to its intrinsic value of zero”

watering down the money (money supply up 16-fold since I took over fixed income in ’88) cf watering down beer – need more money to buy things, need more beer to get drunk

why do we need Central Banks? There is no central bakery or central brewery

underwriting private banks – limited and unlimited liability banking 19thC and 21stC

Ron Paul’s “End the Fed” 4.8*/5 from >1,100 reviews many of whom don’t agree with him politically but still write that its a brilliant analysis

are cryptos a private market solution to a public good failure? Is money being privatised?

will crypto be hijacked or subverted?

risks of crypto ETFs

Wall Street and crypto

CBDCs as a way of subverting crypto to achieve almost diametrically opposite objectives

De-dollarisation – an ongoing trend of declining holdings of the US dollar as its empire and unilateral power declines

US use of sanctions as accelerating the move away from the dollar

moving towards a pre-WW1 world of inter-country settlement

Hyperinflation – what is it practically and psychologically?

used car prices as a lead indicator of hyperinflation?

loss of confidence in all institutions in re loss of confidence in currency

other symptoms and rapidity with which it happens

the importance of investing in real assets – gold, land, property

liquid real assets and illiquid real assets

NB investment strategies of the likes of Gates and Black Rock

Mario’s discount codes to buy gold cheaper

...more

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By Tony Clark

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