Transcripts
Patrick: Okay, so I want to move on now to talking about inflation and deflation. And I know Peter and Danielle, you’ve both spent a lot of time talking about this between the two of you and have different views on what are the risks and where things are going.
So let’s start with you, Peter. What’s your feelings about inflation and where we are in the market? And what are really the risks moving forward with inflation and potentially even deflationary risks?
Peter: Most people, and central bankers in particular, they look at inflation as black or white. Either going up or it’s going down. There’s either inflation or there is deflation.
And I believe that inflation is really in the eye of the beholder in that you can argue, okay, take the quantity of money that central banks have created. Well, that’s highly inflationary. But where does it show up?
Well, we know that there has been, obviously, massive inflation in asset prices, epic inflation in credit markets. And then, on consumer prices, there’s been more muted inflation.
But even within that, what do you look at? Do you look at CPI or do you look at PCE? Do you look at the PCE or do you look at Dallas Fed trimmed-mean PCE? Do you look at CPI or the Cleveland trimmed-mean CPI?
Well, each of them measure different things.
Patrick: I want to start this conversation with the FOMC statement and the rate cut that occurred.
Danielle, you were on our show on the All-Stars episode before the FOMC meeting. You talked about this as a historic rate cut and that, potentially, it was the onset of a potential new currency war – which you completely nailed. It was a great call that you made.
But, now that this is rearview mirror, what is your impression of the reactions after the FOMC? And what are we looking at here going into the September meetings?
Erik: Gold is on everyone’s mind this week and we’ve got a gold heavyweight for you for today’s feature interview. I’m joined now by Ronnie Stöferle who is managing partner, founder, and fund manager for Incrementum.
He’s also probably best known as the principle author of In Gold We Trust, which is probably one of the most respected – I think it’s annually re-published documents – that really makes the whole fundamental case. If you haven’t read it yet, I strongly recommend it, and we do have it linked to your Research Roundup email.
Ronnie, thanks so much for joining us. I want to dive into some fairly advanced topics today. But, just for the benefit of any newer listeners who may not be familiar with the high-level picture, let’s start with gold.
Why is it so important? I’m convinced it will be the asset to own in the next decade. But let’s hear it from you, your perspective. Why will we care about gold in our portfolios?
Erik: Joining me now is Mark Cudmore, the Global Managing Editor for Bloomberg’s Markets Live blog.
Mark, it’s great to have you back on. I’m going to have to apologize to you because the last time we had you on we recorded your interview on an FOMC week, before the FOMC meeting, so we didn’t have the benefit of knowing the outcome. We learned a lesson and we promised ourselves we would never do that again. And it’s you that we did it to again. So I apologize. And I’ll ask our listeners to understand that Mark and don’t know, because we taped this ahead of time, what the outcome will be from the FOMC.
But let’s go ahead and dive in and start with the global growth outlook for the global economy. My view is that we’re seeing awfully strong slowing signs. But a lot of people have different views.
What’s the big picture? How do you see this economy?
Erik: Joining me now is Dr. Peter Warburton, Director and Chief Economist for Economics Perspectives Limited.
Dr. Warburton, it is such a pleasure to get you on the program, because something I have been thinking about for years and, frankly, people ridicule me about, is it seems to me like if you look at all of the policy decisions of the last several years and the people who have criticized them – myself included – it seems to me like what’s going on is we can get away with these things until inflation gets in the way.
And once we have an inflation problem, all of a sudden central bankers can’t just paper over our problems by printing more money because it would exacerbate the inflation. But most people think inflation, hey, we haven’t had it in recent history. We’ve had a deflationary backdrop. It’s not a problem.
You gave a presentation back at the end of June called Blowing up the box! And what I really like about this is your perspective resonates so well with mine – that if you want to understand inflation you can’t just think about past history. You’ve got to think about not just the economics but also the political environment.
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