Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 24, 2017

Erik:     MacroVoices episode 96 was pre-recorded back in late November, 2017, to air on December 25th, 2017. I’m Erik Townsend; happy holidays!

This special edition of MacroVoices will not include a market wrap or postgame segment. Instead, the entire episode is dedicated to Part 2 of our 2017 year end special, Anatomy of the U.S. Dollar Endgame, featuring Alhambra Investments’ CIO Jeffrey Snider, Morgan Creek founder Mark Yusko, and Forrest for the Trees founder Luke Gromen.

You definitely want to listen to Part 1 of this series first, so if you missed it, please go to and start with Episode 95 which aired on Dec. 24th. You also want to be sure to have Jeffrey Snider’s slide deck, as it provides the outline and reference material for this entire episode. MacroVoices registered users will find the download link in your Research Roundup e-mail, or if you’re not registered yet go to and look for download instructions on our home page.

Now let’s go back to the conversation with our guests, right where we left off at the end of episode 95.

Hosted by Erik Townsend and starring Jeffrey Snider, Mark Yusko and Luke Gromen

December 24, 2017

Erik:     MacroVoices episode 95 was pre-recorded back in late November, 2017, to air on December 24, 2017. I’m Erik Townsend; happy holidays, everyone. We’re not going to have a market wrap or postgame segment for the balance of 2017. We’ll return to our usual format on January 4th, 2018. Instead, today’s entire show will be entirely dedicated to Part 1 of our Year-end special, featuring Morgan Creek founder Mark Yusko, Alhambra Investments’ CIO Jeffrey Snider, and Forrest for the Trees’ founder Luke Gromen. I think you’re really going to enjoy this 5-part series, which in my opinion is the only level headed, serious discussion you’ll find anywhere about how and why the U.S. Dollar will gradually lose its position of prominence and hegemony over the global financial system, just as the British Pound Sterling fell from that position of prominence in the early 20th century. This series was originally conceived as a 2-hour special, and the planned topic was simply a debate between the secular dollar bull vs. secular dollar bear arguments, with Jeff Snider and myself slated to represent the dollar bull argument, and Mark Yusko and Luke Gromen slated to argue the dollar bear case. Now let’s dive in to what were originally intended to be opening arguments. Keep in mind that as we were recording this first part, we still thought we were setting up a dollar bear vs. dollar bull debate. I’ll be back after these initial arguments to explain why we re-framed the rest of the series after realizing we were all in violent agreement that the Dollar’s age of hegemony over the global financial system is ending.

Joining me next on the program are Jeffrey Snider, CIO at Alhambra Partners, Luke Gromen, founder of Forest for the Trees, and Mark Yusko, founder and fund manager for Morgan Creek. I’d like to thank you guys for the time and energy you’ve put into this project. It really means a lot to us and our listeners. So thanks for joining us.

PROFESSOR STEVE KEEN headshotErik:     Joining me now is Professor Steve Keen. Steve, you are very distinguished in the fact that you’re one of very, very few people in finance who not only predicted the 2008 financial crisis – but can prove it, because you wrote about the fact that it would happen, why it would happen, and how it would happen, before it happened.

So you do have a book out this year, which is titled Can We Avoid Another Financial Crisis. The short answer is no, we cannot. The longer answer, in 140 pages, is a bargain at only $9 for the eBook version of that. We’ve got a link in our Research Roundup email to the Wiley Publications website where you can order that.

But give us the background. What was the principle cause of the last financial crisis in 2008?

Steve:  Fundamentally, that we borrowed too much private debt and became dependent on the rise in that debt as a major source of aggregate demand for both goods and services. And also asset markets. And when that debt stopped rising, that meant total demand actually fell. So it’s quite simple in that sense.

A financial crisis is caused by becoming too dependent on credit and credit then ceasing. And when it ceases, because credit is such a large part of demand a huge slab of demand disappears very rapidly. And that, first of all, affects finance markets. Because finance markets, of course, have more volatile prices than goods and services markets. And that collapse in prices means people then stop borrowing money. When they stop borrowing money demand falls and you have a crunch.

Juliette DeclercqJoining me now is JDI Research founder Juliette Declercq. Juliette is perhaps best known for her fantastic macro charts. In the past we’ve been very restricted in our ability to share these charts with our listeners, because Juliette’s institutional client base expects exclusive access. But we have an early Christmas present for you this week: Juliette put together a fantastic book of charts and graphs you won’t see anywhere else, and sent them to her institutional subscribers first to assure they keep the leg up on the market they’re paying for. This means we can now share them with MacroVoices listeners. Registered users will find the download link in your Research Roundup e-mail. If you’re not yet registered just go to and look for registration and download instructions on our home page.

Erik: Just to set the scene, how have you looked at the macro landscape in the US in 2017?

Juliette: That’s a very good question because one thing I would like to reiterate before I delve into my 2018 outlook in broad lines … is that the low US growth potential is not going away however loud Trump will be in stating the contrary … Let’s start on Chart 1 in my 2018 chart pack.

Marin Katusa OfficeErik:     Joining me next is Marin Katusa, founder of Katusa Research and a very well-known natural resource investor.

Marin, I want to start with not just the oil market but particularly Saudi Arabia.

I absolutely do not profess to be an expert on Saudi Arabia and their culture and politics and so forth. But what little I thought I knew about that country is I thought they were a very conservative culture that tended to place a lot of value on things like age and experience, you know, older age, wisdom.

You would think in a culture like that that if there was going to be a procession of power according to bloodlines it would probably go to the king’s eldest son.

And the other impression I’ve had of Saudi Arabia is they try to keep their business in house, you know, almost like what happens in the royal family stays in the royal family.

And all of a sudden, holy cow, we have Mohammad bin Salman, who’s the youngest son of the king. Not only has he been named the heir apparent to the throne, but he is basically really showing his teeth and has arrested a number of other very senior ranking princes – including Al-Waleed bin Talal who is estimated to be worth about 15 billion dollars.

Some people have called him the Warren Buffett of the Middle East. This guy is no schmuck, he’s a really serious guy. And there’s actually reports that Bin Salman has tied these guys up and literally humiliated them with beatings and all sorts of things. I don’t know if any of those reports are actually true – some of them are from dubious sources – but, holy cow.

What’s going on in Saudi Arabia? And what’s brought this about? And where’s it headed?

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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 Patrick Ceresna shall NOT be liable for losses resulting from investment decisions based on information or viewpoints presented on MACRO VOICES.

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