Political Economy for Investors

Mark Dittli of the market NZZ interviews Russell Napier:

… the power to control the creation of money has moved from central banks to governments. By issuing state guarantees on bank credit during the Covid crisis, governments have effectively taken over the levers to control the creation of money.

… statistics on bank loans to corporates within the European Union since February 2020: Out of all the new loans in Germany, 40% are guaranteed by the government. In France, it’s 70% of all new loans, and in Italy it’s over 100%, because they migrate old maturing credit to new, government-guaranteed schemes.

… we are headed into a significant growth slowdown, even a recession, and bank credit is still growing. … The CFO of Commerzbank was asked about this fact in July, and she said that the government would not allow large debtors to fail.

… in a world where large parts of the global economy are in a system of financial repression, there will be all sorts of capital controls. That means that as an investor, you best invest in jurisdictions where you plan to spend your retirement.