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TOPIC: DISCUSSION THREAD: Episode 12 - Richard Duncan

DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 1 week ago #1

  • NathanEgger
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We all got a chance to catch our breath this week after a wild one last week, and I enjoyed listening to Erik's interview with Richard as he does such a great job of putting a century's worth of government and economic policy into a tidy package, and reminding us just how we got to where we are today, and hinting at where we might be headed next.

I hope you guys enjoyed it as well, and I look forward to any and all feedback on this week's show.

As mentioned on the show, Erik has been traveling this week so he's been a little slow to respond to forum posts and emails, but he'll be back on his horse and galloping full speed shortly, rest assured.

Thank you for listening!

--Nathan
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 1 week ago #2

  • bigqueue
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Excellent show....I like the history lesson on money and the various booms and busts was great.
I have to admit though that the description of the suggested "fix" seems a bit inconsistent to me.
I mean the entire boom/bust and bubble scenario (i.e. the problem we currently have needing the
FIX) was "created" by the very same entity that he calls out to "keep it going"......or "fix it". The central
authority / government was the very cause....and like the people who want perpetual debt to fix a debt
problem, this seems to be a similar prescription. Perhaps this is all that can be done....but then the
notion of a "soft landing".....or slow and steady unwinding might be a better play.

Grow out it sounds good.....but as he noted, IMHO, only if that comes from true free market investment
for it was the very centrally controlled mal-investment that put us in the unsustainable bubble situation
we have today.....so for my money.....winding down the central control and allowing real market failure and
success to occur is the key. (something not many alive today have not seen....so might not even know
what it looks like when it does occur)

I admit to not completing the last few minutes of the show. on my commute to work...so my comment here
might be premature....but what I last heard was a government solution.....which IMHO, is like handing the keys
to the hen house to the fox.

As for what each of us individuals should do......create some sort of productive capacity. I don't see "savings"
as anything but a place for those trying to resolve the debt crisis to go to find the money they need.....between
that and the redistribution schemes now under way......savers are going to be targeted. Being productive means
the ability to generate what you need on a regular basis.....and if your productive capacity is "desired enough:,
it will be inflation-proof.....you would be able to set yo8ur price.....people will actually WANT your output. (whether
that is a place to live, a food item, a computer skill......etc...) Do that, and otherwise stay under the radar and NOT
become a "target" and all will be well. (BTW: Balancing liquid vs illiquid worth will be the real trick for short term
fluctuations in the economy will require some level of liquid "savings" to work around......if it were easy, anyone
could do it!
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 1 week ago #3

  • headacres64
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Thanks for the interview, it is very thought provoking. I like Duncan's macro view dating back to WWI though I'm puzzled by the logic a bit. He argues the debt crisis has its roots in WWI and later to a much greater extent in WWII but he also states we grew out of that crisis. So, if we grew the economy out of that crisis, wouldn't that mean the crisis was over so how can we trace today's issues back to a crisis that had been resolved? What am I missing?

I'll also argue that blaming the media sources FoxNews and CNBC for brainwashing the public is a reach. I seem to recall a protest vote of sorts taking place in 1992 when Ross Perot seriously challenged for the presidency. He faded at the end but he took enough votes from Bush 41 to swing the election to Bill Clinton. This predates any widespread influence of either such network. This dissatisfaction with the status quo has remained and grown, Obama's election was a reflection of that as well as seen in the Hope and Change message. Still there is lots to ponder. I understand Duncan's argument that the only hope is to spend gobs and gobs of money in new industries to reignite growth (isn't this just Paul Krugman's message restated) but where is the assurance that this will succeed? If it doesn't, we'll get the very thing Duncan argues will destroy civilization. Call me a pessimist but I remain skeptical.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 1 week ago #4

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I also enjoyed the interview. I was familiar with Richard and his views. It sounds easy: print a trillion dollars and invest in solar energy, biotechnology, etc. What I don't really understand is how we are going to do it without cheap energy. You can print but in the end you need energy to do whatever you want to do. It seems that 2015 will go down in history as the year of "peak oil". From now on, it's all downhill in terms of production and EROI. I just cannot see how we can avoid a depression no matter how much governments borrow or print, if the (cheap) energy sources necessary to sustain the economic activity are dwindling. It seems to me that most economists don't understand that without (cheap) energy there is no economy as we know it.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 1 week ago #5

  • tankumo
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There is a chance that oil production can be revived.

I just found out about a new technology that can revive the old abandoned oil fields, and it can be applied to world wide oil fields, so oil aplenty!

But short term we may see a brief spike, long term I don't know.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 6 days ago #6

  • marting
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This was one of the worst interviews ever. Would have better suited some government propaganda site.
1. WWII ended the depression??? How can a war end any depression when you are constantly destroying property? People's living standards were falling during the whole period. Yes, they got jobs. Slaves had jobs too.
2. China's economy would explode without US trade deficits??? According to this guy if four Asians and an American are on an island where all the Asians work and the American is eating their products the American is the key to the whole economy of the island.
3. Government investments??? The US Post Office has been in business for 100 years and still can't make a profit. Not to mention Amtrak. North Korea had plenty of investments. So how come life is not so good there?
What I was most disappointed about is that Erik Townsend didn't even try to challenge these ridiculous ideas. How is this podcast going to be different from CNBC?
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 6 days ago #8

  • Arthur Itarian
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marting wrote:
This was one of the worst interviews ever. Would have better suited some government propaganda site.
1. WWII ended the depression???
Thank you. I hesitated to post because I quit the interview after a few minutes, but Duncan also claimed the depression was prolonged by "laissez-faire" government inaction during the 1930s. My understanding is that both Hoover and FDR interfered with the economy relentlessly.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 5 days ago #10

  • marting
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Arthur Itarian wrote:
Thank you. I hesitated to post because I quit the interview after a few minutes, but Duncan also claimed the depression was prolonged by "laissez-faire" government inaction during the 1930s. My understanding is that both Hoover and FDR interfered with the economy relentlessly.

Hoover intervened massively. His administration was destroying livestock and dumping grains into the sea to stop prices falling while the population was starving.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 6 days ago #7

  • MichaelMedici
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Marting.

Both the Macrovoices podcast and this discussion board are places where investors from all points of view are welcome to share their opinions and support them with logic and evidence.

If you wish to simply present criticism instead of offering an opposing perspective backed with and explanation in a respectful manner then I highly suggest you go comment on a WSJ article with all the other average people who blame Obama for not making them rich.

Keep in mind, this is coming from someone who disagrees with Mr. Duncan and believes the U.S. debt is unsustainable, QE is the most ineffective monetary policy in the history of economics and that Government in itself is ineffectual, so my bias is actually in AGREEMENT with some of your points.

With that view point, I still was able to garner many takeaways from the information Mr. Duncan was generous enough to share with us and use that information to improve my mental model of macroeconoimcs, particularly relating to the Gold Standard and how that ties in with a previous podcast about the future of new currencies or an IMF bailout.

Also, it presented with me a counter argument to my belief that the U.S. debt crisis is impending, and suggested that i may need to re-analyze the time frame during which I expect these events to occur and, as we know, if you are early you are wrong.

I suggest you try to take a more positive outlook when listening to these podcasts and follow a "take what works and leave the rest" approach, and if nothing works for you then you simply don't have to listen to the valuable information Erik is providing, but I ask that you please do not ruin it for the rest of us.

Also, if you do not believe that, as the U.S is the largest foreign demand center for Chinese goods and the Chinese are the largest foreign holder of U.S. debt, that the fates of the two economies are inextricably linked to some degree, then maybe WSJ is the place for you after all.
Last Edit: 7 months 6 days ago by MichaelMedici.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 5 days ago #11

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MichaelMedici wrote:
Marting.
If you wish to simply present criticism instead of offering an opposing perspective backed with and explanation in a respectful manner then I highly suggest you go comment on a WSJ article with all the other average people who blame Obama for not making them rich.

If you'd bothered read to my full post you would have realised I posed several counter arguments to Duncan's views. He is not doing a favour to anyone giving an interview. Every guest does it to promote their books or business. And if you could actually understand what I posted you would see that my main criticism was to macrovoices. A podcast that claims to be different than the mainstream media yet accepts the silliest arguments from a so called "expert" without any challenges.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 6 days ago #9

  • Arthur Itarian
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The usual explanation is that Hoover created disaster by doing nothing. FDR then valiantly attempted an array of big-government remedies, but the problem was so severe that it could only be solved by war.

Reality is that Big Government prolonged the depression every step of the way. Here's a link to Murray Rothbard's book excerpt clarifying Hoover's role:

mises.org/library/hoovers-attack-laissez-faire

The quote below is Hoover in his own words, from a 1932 campaign speech:
We might have done nothing. That would have been utter ruin. Instead we met the situation with proposals to private business and to Congress of the most gigantic program of economic defense and counterattack ever evolved in the history of the Republic. We put it into action…. No government in Washington has hitherto considered that it held so broad a responsibility for leadership in such times…. For the first time in the history of depression, dividends, profits, and the cost of living, have been reduced before wages have suffered…. They were maintained until the cost of living had decreased and the profits had practically vanished. They are now the highest real wages in the world.

Creating new jobs and giving to the whole system a new breath of life; nothing has ever been devised in our history which has done more for … "the common run of men and women." Some of the reactionary economists urged that we should allow the liquidation to take its course until we had found bottom…. We determined that we would not follow the advice of the bitter-end liquidationists and see the whole body of debtors of the United States brought to bankruptcy and the savings of our people brought to destruction.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 5 days ago #12

  • ErikTownsend
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@marting @Arthur Itarian @MichaelMedici

One of the most important lessons I've learned about investing is the importance of keeping one's mind open to views that differ from your own. I too disagree with Mr. Duncan on many points, as I opined with Nathan after the interview. But frankly that's exactly why we thought Mr. Duncan would make an excellent guest. Please trust me that we would not be doing you guys a service if we had a policy of only interviewing guys who agree with me.

Nathan puts a LOT of work into this behind the scenes. In this case he very intentionally planned two consecutive interviews (Richard Duncan last week and Satyajit Das this week) because Nathan was smart enough to recognize that these two guests would likely have very different perspectives on the same macro issues. By design, my interview with Satyajit Das this week will address almost exactly the same subjects in the macro economy, but our expectation is that Mr. Das will present a viewpoint that contrasts Mr. Duncan's.

So quite a bit of work on Nathan's part went into setting things up so you guys could hear two different recognized experts with what we expect to be contrasting views on the same subjects. @marting, I certainly appreciate your passion for the subject matter, and I know you mean well. I think that @MichaelMedici had a similar reaction as I did to your opening description as "This was one of the worst interviews ever." Please put yourself in Nathan's shoes, and ask yourself how he'll feel when he reads your comment. He's working his ass off to design the best financial podcast content in the history of the Internet, and you can be sure that we intend to continue our practice of bringing you guests that can offer contrasting views on the most important issues of the day.

@marting, I hope you'll stay with us and give Satyajit Das a listen this week. If you find his views more to your liking, I hope you'll take a minute to express your thanks to Nathan. He puts a LOT of thought into how to design the guest schedule, and he welcomes constructive feedback. I think just a slight adjustment to your tone would make him a lot more receptive to your ideas and suggestions.

All the best,
Erik
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 4 days ago #13

  • marting
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I'm all for contrasting views but this is not what the Richard Duncan interview conveyed. He outright altered historical facts (ie the government didn't interfere during the 1929-1932 bear market) to justify his views. It's one thing to come to a different conclusion from the same facts and another to distort the facts to justify your conclusion. It's not fair to the listeners to give a platform to someone just spreading propaganda. At least confront him on that or present the true facts.Nathan's hard work is appreciated but in this case it could have been better utilised with another speaker.

I'm not interested in listening to people who have the same views as mine. I'm looking for people who can challenge my views with a constructive argument.

I met Das a number of times in Sydney. He is quite good but I would still prefer that not everything he says is accepted at face value. He has a very good macroeconomic understanding but not so much practical advice on how to invest under these circumstances.
Last Edit: 7 months 4 days ago by marting. Reason: update
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 3 days ago #14

  • Arthur Itarian
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ErikTownsend wrote:
Please trust me that we would not be doing you guys a service if we had a policy of only interviewing guys who agree with me.

Fine, but where do you draw the line? Duncan is a troll.

Here's Duncan's own headline when linking to a 2015 Financial Sense interview: "Austrian Economics Would Destroy The World."

www.richardduncaneconomics.com/interview...d-destroy-the-world/
"If our governments were to adopt the policies advocated by today’s spokesmen for Austrian Economics (balancing government budgets, disbanding the central banks, returning to a gold standard), not only would our global economy immediately disintegrate, our entire global civilization might very possibly collapse into a Mad Max world."

Hyperbolic much? To destroy the entire world, simply force balanced budgets, and take away the car keys from Janet Yellen et al. Plus implement a gold standard, which in reality government would likely ignore. (There's no mention of a gold standard in the Libertarian Party platform. The preferred remedy is to eliminate restrictions on legal tender.)
Last Edit: 7 months 3 days ago by Arthur Itarian.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 3 days ago #15

  • ErikTownsend
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@Arthur Itarian

There are plenty of Austrian economics buffs who would just as vehemently argue that reckless monetary policy and decades of living beyond our means have already destroyed the world, and that it's only a matter of time before everything falls to pieces. Now that's certainly just as "hyperbolic" an argument, yet frankly I agree with that one!

Guys, the point of what we're trying to do here is bring the audience contrasting views from different experts regarding what are essentially the same issues. I specifically wanted and asked for at least one guest who holds the view that the solution to our problems is massive government spending and intervention. That view is diametrically opposed to my own libertarian ideology, and that's exactly why I thought it important. Again, the whole point is contrasting views. We've got a fantastic interview this week with Satyajit Das whose views strongly contrast Mr. Duncan's, and then next week we'll bring you a well known economist with a formal academic background, to bring you a contrast in bacground vs. veterans of banking like Mr. Das and Mr. Duncan.

Trust me guys, the interventionists are going to continue to influence public policy for a long time to come. Smart investors will recognize that it behooves us to learn and understand their viewpoint, no matter how strongly we might disagree. I have no regrets about having Mr. Duncan on the show - I think he did an excellent job of representing the "everything could be fixed by massive government spending" view. The more I disagree with that view myself personally, the more important it is to really digest and understand it, because the fact that it's at odds with my own values makes the logic counter-intuitive to me. But if there's one thing I cannot afford as an investor, it is to stop caring what the interventionists and big-Gov't advocates think. In case you haven't noticed, the entire USA is warming up rather quickly to socialist ideals. The Bernie Sanders phenomenon is real. We need to understand how the "new majority" thinks.

Best,
Erik
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 2 days ago #16

  • marting
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I would prefer to hear a discussion between an interventionist and a non-interventionist and have Eric as a moderator. So far no interventionist I heard could consistently argue for their ideas. The fact that Mr Duncan had to alter known historical facts to justify his views is just another example. Sadly interventionists like Krugman, Bernankie never agree to a discussion like this. This is another sign they cannot be trusted.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 3 months 2 weeks ago #18

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Erik et al,
what is your take on just published video of Richard Duncan that QE is effectively cancelling debt at a rate of 0.5 Trillion/quarter and if Central Banks continue to do so more aggressively - crisis will be over, else - total collapse?
www.richardduncaneconomics.com/qe-is-now...nt-debt-per-quarter/
Trolling? Attention seeking? Sales tactic?
I'm perplexed...
Last Edit: 3 months 2 weeks ago by Daniel.
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DISCUSSION THREAD: Episode 12 - Richard Duncan 3 months 2 days ago #19

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I just discovered MacroVoices a few weeks ago so am catching up on some episodes. I am relieved to see that others here were also in serious question of the "spend money on alternative energy to fix the problem" simplistic idea.

Having said that, Duncan's discussion of monetary and economic history (ie we haven't been capitalists for a long time) is a good summary.

The idea that a government spending plan would turn out to be awesome carries no fleck of truth nor even a good hypothesis.

That's the reality with most viewpoints. Steve Keen is another individual who does an outstanding job of proof in some areas (effects of private debt on inequality) and goes off into hyperbolic opinion in other areas (when he speaks of government spending. I haven't yet heard Keen's interviews here by the way. I've seen many other interviews with him and read his book and blogs so am curious how Erik's interviews with him sound different (or not).
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DISCUSSION THREAD: Episode 12 - Richard Duncan 7 months 2 days ago #17

  • Awest1998
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For this episode, the discussion between Nathan and Erik was very informative.

Unfortunately, the interview with Duncan was hardly more than a waste of time. Erik is the best financial interviewer I've heard and I could hear him trying to steer the interview to an interesting place, but even he couldn't salvage this guest. Every MacroVoices interview up to this one has been outstanding -- every single one has had either tremendously interesting investing ideas, thorough analysis, or in depth monetary/market historical perspective. This interview was nothing I couldn't have heard on CNBC, so that was disappointing.

I'm also miffed at how someone can diagnose most countries' major monetary problems as being directly tied to central bank serial bubble blowing, then turn around and advocate for central government bubble blowing. Only someone as detached from the plebs as an IMF consultant could honestly suggest such a solution. That disagreement aside, the strength of MacroVoices is intelligent discussion of markets and investment, not policy solutions.

That said, this is the absolute best podcast out there -- the only one I prioritize listening to every week. Keep up the great work... but I hope Mr. Duncan will not be on the list as a return guest.
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