that crazy stuff – which I think is eventually going to come here – but they’ve never seized land. So again, it’s a way for you to really hide assets and to protect them.
This is basically just a circuitous way of saying, “I want to be long credit volatility.”
Raoul Pal, Goldman Sachs alum and founder of Real Vision Television
Erez Kalir, CEO and co-founder of Stansberry Asset Management We’re at the intersection today of two long and big trends... One is a debt supercycle, where more and more and more debt has been piled on and into both the U.S. economy and the global economy. I think people tend to think that we “solved that problem,” or at least cleaned it out after the 2008 financial crisis, which is just factually wrong. And the other thing that has come hand in hand with that debt supercycle is probably about 35 years in the making, if not longer... And that is, since the financial crisis, because of this intervention of global central banks, we’ve also entered this Truman Show era of artificially suppressed and low volatility. This is what you get when the central banks put their big thumbs on the scale, and inject as much liquidity as they have into financial markets. And being short volatility, in other words, selling volatility, has been a killer trade since the financial crisis. Everyone who’s done that has, at least to date, profited in doing it. To me, you know that there’s a bell ringing when people are manufacturing or inventing ETFs that allow you to be short volatility through an ETF product. But eventually, and I think these things will go hand in hand, that debt bubble will unwind. And I think that when that debt bubble unwinds, it will also be a massive unwind in the short-vol bubble.
When a debt jubilee occurs, it essentially represents the monetization of the nation’s debt, or some general agreement to
extinguish a debt. In this situation, it would be hugely negative for the currencies involved, and you therefore should expect gold to perform very well. However, what is less obvious is that once a jubilee has taken place, a nation is free of debts and the system is generally free of debts... that is incredible powerful for equity markets and any shock selloff should be a lifetime opportunity to buy.
Hank Blaustein | © 2017 Grant’s Interest Rate Observer. Used by permission. www.GrantsPub.com
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