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TOPIC: Discussion Thread - Grant Williams Episode 52

Discussion Thread - Grant Williams Episode 52 11 months 2 weeks ago #1

  • PatrickCeresna
    Patrick Ceresna
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Erik and Grant discussed populism, Trump, peak optimism, China and gold. Please feel free to share with us your opinions on Grant's perspective.
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Discussion Thread - Grant Williams Episode 52 11 months 2 weeks ago #2

  • spinafex
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First of all, thanks for a very entertaining episode. That said, I think Grant's thesis has a couple of problems.

1. The first problem is that China has a worse debt problem than the US. If you count all forms of debt guaranteed by the central government (corporate, bank and government), the total is higher as a percentage of GDP than the US.

2. The second problem is that China has lot LESS gold than the US. Despite being the largest producer of gold, China's output is minuscule compared to the US stockpile. At current rates of production and assuming the US does not increase its stockpile (the US happens to be the #4 producer of gold), it would take China nearly 18 years to accumulate a similar amount of gold.

3. Grant treats currency convertibility (open capital account) as a virtual fait accompli in his presentation. In fact, this is a long and fraught process (complicated by the massive debt load China is currently shouldering).

All this suggests that while he is likely correct in his general trajectory both for China's (and Russia's) strategic goals as well as America's looming fiscal issues, the scenario he suggests may take quite a bit longer to play out than he thinks. At a minimum, it is not apparent to me that major OPEC members would suddenly find payment in yuan a more attractive alternative than dollars until a) that gold stockpile grows considerably, b) the debt stockpile declines meaningfully, and c) the capital account is fully opened and the currency fully convertible.
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MACRO VOICES is presented for informational and entertainment purposes only. The information presented in MACRO VOICES should NOT be construed as investment advice. Always consult a licensed investment professional before making important investment decisions. The opinions expressed on MACRO VOICES are those of the participants. MACRO VOICES, its producers, and hosts Erik Townsend and Nathan Egger shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented on MACRO VOICES.

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