Deflation May Be Coming Sooner Than You Think

realized that I am passionate about pensions. I mean, who hasn't. Let's be feeling who among us has not been passionate about pensions at one point? And I'll wait, everyone, everyone, But that's because they don't know how fascinating they can be and how exciting it is to have actually done some proper work on this, because you know, you know research,

sometimes we do it, sometimes we don't. Having done some actual research into how that the UK pension system works and how it works relative to other pension systems around the world, and we find that niceally, relatively speaking, it's pretty good. And we talked about this rating system, the most of pensions rating system that the looks at pension systems around the world in terms of all their different

parts as opposed to just the state pension. And we found that in terms of global ratings, the UK is really high up there, better by the way than Switzerland or Germany. That makes me feel kind of excited, as it should. I mean, I think I said it was a really good chart. Actually it was. It was very interesting, and I think everyone should go out and listen to.

Someone's going to put the link in the show notes. Um, but just as a little added incentive, we talked about house prices the last thing we did one of these Twitter spaces and it ended up being one of the most listened to Twitter spaces that Bloomberg's haven't done. So what we'd really love is if you look could go out right now and listen to the pensions one and help us to beat a personal record. John and I are target driven. We talk about our pbs all the time,

don't we. John KPI is coming out earliers absolutely, but listen, let's let's give them an incentive here. What was the most interesting thing for you that came out of that chat yesterday about pensions? What made you think, God, my retimement is going to be great. Apart from me pointing out that you haven't got a defined pension, defined benefit pension and you don't work in the public sector, which is a bit of a downer. But what was the thing that really made you feel that, actually this is

not so bad. Well, I think the these thing is that it is that idea that we've finally again. It's not so much more own pension. It's the sense that Britain was actually doing something right and right and and in quite a significant way. It's actually the system is a lot better, and it's also kind of backed by actual money as opposed to a promise to pay at

some point in the future. But the other thing actually that I thought was was interesting but also agent was we were on with Stuart True who's Blue Miss Pension columnists, and he pointed out that there was actually a really good deal on buying then missing national insurance years. At the moment you made thirty five of those, right in thirty five of those to get a full state pension.

And if you haven't got those, which you might not have, you taken time off, you know, for parenting, caring or just you know, hanging around, going to yoga, retreats whatever. You may not have those full thirty five years, and there's a deal on a sale on at the pension's department right where you can you can buy them back. Yeah. It's really good value. You get the money back in

three years. Yeah. No, it was really impressive. So so yeah, actually you really should license you this, you know, even if it is just for that, but the rest of it is also excellent. Um. But you know, you can really make a defency your personal finances in the long term if you haven't got those contributions and you make

them before April. Yeah. And you know what I was thinking afterwards, well five minutes ago, actually that the auto enrollment system, the way that the auto enrollment system that we have in the UK is by the way you getting money at fifty five. You don't get that anywhere else. Um. The way that interplace with the state pension system, which

is there is back up, etcetera. This interming angling of private and state financing that has worked so brilliantly to fully rescue the UK's pension system and make it one of the best and most resilient in the world. I'm thinking NHS, Yeah, I think that's a good idea controversial, absolutely hate mail to the usual address. Please right, everyone,

listen to that Twitter spaces. It's really interesting. There's a lot to say about pensions, and I know you think it's boring, and I know it's one of those things you just want to put out of your head, you know. Please God, let you never have to be old enough to to retire and take a pension. But this is going to happen. You need to know about it. And John and I are passionate about pensions and that comes through in the Twitter spaces. Go listen, help us reach

our targets because that matters to us as well. Thank you very much, Sean Love reach out to you as usual. Passionate pensions about pensions. Let's make that on a news strap line. Welcome to Marion Talks Money, the podcast in which people who know the markets explain the markets. I'm there in Sumset Web this week. Our guest is my old friend and ex colleague, James Ferguson, founder of the

Macro Strategy Partnership. He's got over twenty five years of experience as a stockbroker, sector analyst and as a Matt Grows strategist. James and I well, we kind of started our careers together as the stockbrokers over in Japan, so we've known each other a long time. We've had a lot of conversations in those years. James, Hello, thank you for joining us. Now listen, James. One of the reasons I always want to have you on my podcast because you tend to look at things a slightly different way

to other people. They'll be a little bit contrarian, well, quite a lot of contrarian, and very often you turn out to be absolutely right, and we like that. So this year, I'm looking at a PC. Recently, you are expecting this to be the year not of high inflation, not even maybe of inflation, but possibly the beginnings of deflation. Don't hear that? Often in the old days, deflation was

to find as a contraction in the nominal money supply. Now, on that basis, the U S money supply has been falling nominally, so not a justif inflation just the headline big has been falling since February of last year. So actually, from that point of view, we've we've actually been in deflation since February. That The trouble is that we have what Milton Freatment called long and variable lacks, and so I think it's going to be this year where the lags um play out and we end up with something

that looks, at least on the surface quite deflation route. Yeah, okay, well, let's let's just define deflation for the purposes of this podcast and this audience is being a general fall in the price level as measured by a CPI. Can we do that rather than a contraction in nominal money supply. That's why we didn't have deflation last year, or even though that's the textbook definition, but we will have it this year, I think. Okay, So what's driving it purely

this contraction and money supply? The sort of absolutely sort of first mover is the base effects. And now you may remember people talking about base effects when we had the inflation. The the authorities when the inflation started to crop up in sort of early one, talked about how it was still transitory and all that we were seeing

were base effects. I because inflation had dip lower than trend in the sort of March April May period of twenty Then in the same March April May period of twenty one, you were comparing the year on your change has been compared with something artificially depressed. So the base effect was making the inflation look was their argument. And those of us who said no, you've you've got to watch money supply was saying, no, it's not just base effect.

It's going to carry on going, And sure enough it did. This time we have exactly the same thing in reverse. So we had much stronger than trend prints basically May, certainly April May. The peak was June, and then there was still above trend but starting to fall back again in July and August. So therefore we're likely to see base effects. This ti'm working in reverse, so this time

the base is too high or higher than trend. So therefore it's going to make the prints for each of those months look on a year on year basis lower than the underlying rate of inflation really is. And that effect will peek out in June and give us potentially as much as a sort of two and a half percent lower than the underlying trend figure. So let's assume that there are roughly three pre sized components of CPI.

Um there's goods, which actually a bit smaller than an equal size, but goods if you include energy prices, then you've got services, which is about the same pretty much as wages, and then you've got shelter as the third component, which is basically house prices and a little bit of rent. If we assume that two thirds eye services slash wages

and shelter are both running at six percent. But because we've finally unwound the supply blockages, then goods inflation can come back down to normal, and that, of course, in the near term, means an overshoot to below possibly blow zero.

But let's just say for the lilitrative purposes, if goods are one third and their zero and the other two components are six percent, then the underlying trend will be about four actually four So if the underlying trend is four percent, but because these base effects, by June, we can have a figure that's two point five percent lower

than whatever the trend is. You can see that even on that assumption, we're basically looking at maybe a figure at one point five for June, which will probably lead to much dancing in the streets outside the fed um and everyone telling us that inflation has been conquered because

they're missing the base effects. So the number one thing is the base effect But what makes that really interesting is that also if you look at the huge amount of excess money that was printed in the COVID period um, that led to a sort of bubble of what even the Fed now acknowledges is excess savings, and that was what has been driving the nominal bit of nominal GDP inflation.

But those two things cross over because the money supplies being on a sort of very gentle downward trend, and not a normal GDP has been on a very sharp upward trend. Those two crossover around about April and May. So suddenly in June you're gonna have two things. You're gonna have a base effect that makes the print of artificially low, but you're also gonna lose assuming we don't find a sort of sudden surgeon money's like, you're always

going to lose that that bubble of excess savings. So we could suddenly be looking at something that really does look quite deflation. Arry By say May June July of this year. Okay, but that sounds like good news. It sounds like great news. So suddenly we've gone from environment when we're definitely worried about inflation, and most figures I have one at the moment say that they expect inflation to full very sharply, and again I'm talking cp I here.

Expect inflation to full very sharply. But after that they expected to not fall to stay tube center and stay there, but to be very volatile. So that's what most people are expecting, relatively high, relatively volatile inflation. And if it's actually going to fall down to you know, one percent to percent and stay there for a bit, this seems like great news. Um. Yes and no. So the first thing is that, yes, that's great news because it's what the FED was trying to do. I they they are

the cause of the error. Same with the Bank of England in this country. They printed the money because according to their theory, lots of excess money can't possibly lead to inflation. I know. I mean, there isn't anyone else on the planet virtually believes that that they believe they're in judge Um, and so that's what caused the problem. But they don't believe it anymore, do they, James. They don't believe it anymore. They should have learned something, but

don't forget. Cognitive dissonance is likely to be that the overriding condition because in order to learn that, they will have had to have learned that everything they've learned at university was wrong. And that's so there's does they're more likely to go there. I told you it's transitory rather than throw out every textbook they have and tear up there their PhD s and and go back to school as it, or demand that someone starts, you know, digging

out the old monetary or monetarist traps. So, yes, that we have a preside problem. We don't know how much they believe that they got it wrong and and how what they ascribe that too, But but it does we all become very pertinent because say we get to the summer and say we now have a sort of deflationary environment with a bit of a wages overhang, as wages

always lack at that point, what does the FED do? Now? Historically, as soon as you start getting a recession, which you usually get because unemployment, which has just been bubbling around the bottom, suddenly goes quite sharply upwards, and the FED usually cuts rates quite quickly, I mean, you know, within a couple of months quickly. So what they've said they're

going to do, But I don't believe. I think, you know, events will overtake this, but their plan at the moment is to hike rates to a certain point and then hold them. Based on the fact of these spase effects, they wouldn't be hiking rates any further, but they seem to be still intent on that, and they certainly wouldn't be holding them at that high level if the drop in inflation comes with a recession, which is actually what

we're talking about. Okay, tell us more about the recession, because I was saying someone the other day, possibly even on this podcast, that when people talk about the recession now, they refer to the mild recession, and I said, maybe mild is this year's transitory. In the US, we've had seven recessions post for recessions that you know, we have the data force. So there were actually someone who immediately after the World War that it's quite hard to get

the data for. So I'm talking about since like nine fifties, since ninety fifty had seven recessions. But the average decline in real earnings in the US. This is corporate earnings, not not people. The average decline was in real terms. So the idea that you can have a can you know, you could theoretically have a mild procession, but how would you have a mild procession? The point about inflation is that the feeders let the cat out of the bag.

The point about raising rates or type tighter monetary policy is in order to destroy demand, to get rid of some of that inflation. What is the destruction of the mound? Well, it's a recession. It's it's you know, it's just being disingenuous to pretend otherwise. When the Fed is tightening policy, it is tightening policy to create a recession, because if it doesn't create a recession, it will be doing nothing

to reign back inflation. And how do you create a recession, Well, basically you stop money supply growth in the sense that you you you know, you constrain bank lending. Now, bank lending is still running quite strongly at the moment, but obviously money supply growth is already negative. That The thing about the recession is we have almost record high corporate profit margins. And corporate profit margins obviously rely on two things.

They're allowing firms being able to sell their goods to the household sector, and the household sector is increasingly less able to buy their good They were able to buy them because they're this big chunk of excess savings from the money printing during COVID. But as as I said, this is going to evaporate come April May, whereupon households are going to need to get the extra money they need to buy all these corporate products from their earnings.

But we know that real earnings are shrinking because although wages are rising at record higher rates, they're rising less than prices are. So therefore we have a cost of living crisis. It's not quite as severe in the US, but it's it's driven on by very similar things to

to our situation. So that by the time the excess savings are used up, which as I said, best guesses maybe April, then households in general don't have enough financial resources to keep buying ever more expensive goods, so they start buying less unless it gets discounted, which is squeezing corporate profit margins. And then they go back to their boss and they say, I need a bigger way of

pay rise this year. So when the corporates are looking at this, they see, oh, so now our costs with a leg Our biggest cost is wages and those those costs are going up at the same time we're having trouble pushing through the higher prices of our goods. So it is often observed in the past that the first year of inflation is loved. Everyone likes the first year of inflation. It's years two, three, and four that get

really much more difficult. And if you basically have that situation, that margin squeeze situation, and that declining corporate revenue situation occurring at the same time that you prevent people borrowing. Um, I think you've got type mountry policy. That is the usual preamble to tour researtion. And this is gonna be a horrible shot, which usually not off cent offending, okay, real in real time, it's gonna be a horrible shots. But if the inflation evaporates, then it will not get

off in normal terms as well. Where's the bit where I get to interrupt you? For God's sake, I saw the body language and I just rolled straight over. We can see each other, listeners you see in it. It's not necessarily a good thing. Now. Corporate margins in the US have been expanding for a really long time. Everyone's gotten used to the idea that they expand expand expanding, record highs, etcetera. And there is a general assumption which you can feel that they're sort of stable that this

contraction I think will be a horrible shock to people. Historically, one of the most difficult things for corporates was pricing. You know, it's not like you're running a petrol fore court where you can you can flick a switch and change the price every day. Each delivery you know as a different cost to you, and you just change the price up on the big board for what people are going to have to pay to fill up their cars.

But most companies can't do that. Seventy percent able products are calling at lander fed are what we call sticky prices. And sticky prices on average don't change more often than about once every twelve months. So if you can have a sticky then obviously pricing becomes very difficult. Now, in a low, stable, low inflation environment, pricing isn't really a

big deal. But once you get into more volatile inflationary environment pricing, if you get your price too high, you're going to pay the price in terms of lower sales. If you get your price too lower, you're gonna get lower margins very very hard for everybody to get pricing right once we have inflation. If margins are going to fall by then that tells us presumably that the U

s ecuary market is still massively of the valued. The US equity market at this level probably doesn't have a valuation problem, but it does have an earnings problem, and that that means that you get the slightly different You get certainly different impacts on which bit of the market

that might do well. For example, if you have a bit of an earnings problem, then the sorts of companies that might do well might be more value and stables than growth and discretion, Whereas if you have a valuation problem, then you might actually find that the stuff that does well is the opposite. So it's really more about where you might expect to see the pain or feel the pain. Yes, if the equity market is no longer bad value, that assumption is predicated entirely in the fact that it doesn't

lose any money. If earnings go down, then obviously that immediately the extent which they go down makes the market look worse value. Again, what can we buy in a situation like this, Well, it's a very unfashionable thing to say. But the first thing that this makes me think about, at least for now, is the fact that the available quantity of dollars has been shrinking since February of last year, whereas the available quantity of euros or sterling or almost

all other currencies has been going up. If you think that the value of things should go up if the supply relatively shrinks, then the first thing to bear in mind is that after recent weakness, the dollar might be worth the look. And the second thing to think about is is um that most of the valuation problems and the profile of growth stocks compared to value stocks favors the US. So if we're now going to start favoring value over growth, and the reason we'd be favoring value

over growth, by the way, is because of two things. One, value stocks tend to be cheaper, which means they tend to have a higher earning sield. And the higher earning seald is what you require to protect you against inflation. We know from the eighties that seventies and eighties that the US stock market went into the period with a sort of twenty five times be multiple and it came

out with a six or seven times be multiple. In other words, the destruction of value really occurred with the destruction of p s. And and so what you we we're guessing you need to protect yourself is start with a nice, decently low pe and you only find that in the value sector. The other thing about the value sector is it tends to be boring, which is good

because you can protect your margins better. And it also tends to pay a dividend deal, and dividends are basically that that the the thing that that again you enables you to hold your head above water during inflation reperiod. I know I'm talking about inflation evaporating in the near term, but if we get onto it later, I think it will probably come roaring back in. Let's hear about that

right now, because that's the interesting bit. So you are fitting fitting into the inflation will be volatile camp really yes, And so so the reason why I think it'll be volatile is, firstly, we'll we'll get out of the basing effects as we go into the second half of this year. If we still have a declining broad most supply in

the US, it won't really make much difference. We'll have four percent the underlying four percent inflation rate will be revealed, will come back to be revealed because the base effects

will have dissipated. Um. But if we if we've got to sort of four percent inflation rate into the end of this year and at the same time money supply is still shrinking, most people will fairly reasonably and accurately predict that this is sort of a lagged effect and that flation within another twelve months, if we haven't got any money supply growth will be kind of back at zero.

And that is absolutely true. I mean, you know, if you want to destroy inflation, m then all you're gonna do is hold money supply growth as close as you can to zero and wait twelve to twenty four months. We know this because it was done in the after the post Second World War inflation. The problem is that the way the reason why this works and the way

it works is recession. And so what the FED tends to do when it realizes it's been successful and it's created a recession is it then tends to panic and think, well, I've gone too far. Let's let's take my foot off the off the throat of the economy. And so the normal response once we have a recession, and particularly the bit of the recession that the FED will be concentrating on is unemployment. But that is almost kind of how

you would define what a recession is. Um If unemployment suddenly starts a surge, and it usually doesn't search until the recession starts, and once the recession starts and then tends to search quite vertically um that then leads to the FED to panic in the opposite direction and start slashing rates and presumably in our case, canceling QT at the same time. And before you know it, we've got

money supply growth coming back up again. And it is worth bearing in mind that although we tend not to be we tend to be very simplistic about inflation, but technically inflation is more complicated than people think. And if your inflation is coming from overseas. China's reopened this year, they're going to start demanding more loyal more copper, more lithium, more, more of everything to get their hands on an aal tend to push the prices up, but that's not the

same as inflation. You know, if the US has falling money supply, but everything it wants to important gets more expensive, that's not inflation. That's what economists called a detrimental shift in the terms of trade. This is what happened during the Aile crisis, and the correct, well at least the textbook correct policy response to hire our costs from overseas is not to raise interest rates. That's the correct response to getting rid of inflation in your own economy caused

by you growing the money supply. If the inflation has been caused by much more expensive imports of commodities and raw materials than in order to prevent that having such a comprehensively negative impact in the economy, the correct policy response is to ease montro policy cuprates and try and

encourage money supply growth. So we could be looking at a FED that is trying to do the exact opposite within as little as twelve months, and that could pushed inflation back up next year the exact what it's doing now. All right, well, this is miserable, James, thank you for coming on. I'm really going well, I think it's not miserable. It's dismal. This is economics, and the correct description economics is the dismal science. All right, let's let's move over

to the UK UM and I think similarly dismal here. Um, well, we've you know, there there are sort of our inflation rate is now higher than the US, partly because everyone in Europe has paid the price of reliance on well, not so much of the reliance on Putin's gas pipelines, but the complacency of not restocking liquid natural gas in the summer ahead of the winter, which has amazingly not really been picked up much by the press. But here's the main root cause of of of this enormous cock

up that we've had. But anyway, that's now there are being bailed out on that via a fairly mild winter and uh and having paid exorbitant prices to redirect l n G from around the world towards Europe's storage tex. So we we currently have sort of a much higher level of headline inflation, and that's partly been supported by the fact that we're also growing money supply, whereas the US is actually shrinking money supply. M not that we're

growing money supply particularly aggressively. So both Europe and the UK are kind of heading into a more gentle recession scenario because frankly, the central banks aren't raising rates as fast as they are in the States, or as high as they've raised rates in the States, and they aren't slowing money supply growth as much. So therefore they've got kind of more of an inflationary overhang to work through.

But I'm quite sure that if you give it enough time, we'll see a similar story playing out in Europe as the one we're going to see first in the US is alwayst always first, you know, it's it's first into the dawn turn, it's first out of the dam turn.

They tend to have much more have a history of much more aggressive policy responses, too much harder in Europe, as you've got always people who are different nations require different degrees of policy response, whereas in the US they tend to add act at a federal level and so they can make things move. Okay, let me then ask you about a subject that I know you you suddenly used to think about an awful lot and our listeners

think about all the time, which is house prices. Um. You know, John and I have been talking a lot about house prices, and here's now announced that he believes that they'll fall at least before all this is over. And used to be a terrible old bear on the house prices. Would you agree with John on that? In the UK? So you know, we've we've always known that ours prices are pulled by to completely opposite forces. One

is the multiple of incomes. Obviously, you can never expect to pay off your mortgage in the future if the price you pay for a house starts to become too higher multiple of your income. On the other hand, the amount you're paying every month depends to extraordinary extent on the interest rate. So therefore, if interest rates are super low, the income multiple of houses goes up because the monthly

outgoings are are relatively low. And we've obviously just come up a period where monthly outgoings have been lower than they've been for if you believe that bankal England five thou years, and that obviously therefore means that house prices as a multiple of incomes, while still remaining affordable, have gone up to the highest multiple we've probably ever seen.

So it seems quite reasonable if unless you think introstructor going back down to to that five thousand year lobe, and if they do, I would argue that they won't

stay there very long. Then um, you know the chances are that the house prices have to reset in terms of multiples of incomes, and unless incomes are going to come down in nominal terms, which I think is unlikely even if they don't do so brilliantly in real terms, that it's kind of a no brainer to say that house prices in that mix have to come down relative to incomes. And if incomes aren't rising hugely, that means house prices have to come down full stop. You sound

to me like you're in John Camp. Well, I uh, you know. The thing about economics is every time something starts moving towards a target, itself has an effect, and that effects causes people to check. So, you know, yes, if we if we let's say we had a you know, we had interest rates at three and a mortgage rate across the economy of five, and that was having enough damage on house prices that alone could lead to the Bank of England cutting interest rates in order to take

the pressure of house prices potentially. So therefore, every single bit of the economy, you know, that's the economy's saying ceterris parables. We hold everything equal, then something might do that, but of course nothing is equal in economies. Every single thing that moves has an impact on every other thing, and they all reset after. It's more like sort of, um, that parlor game where you go around musical chairs. We've reset every time the music stops. Yeah, yeah, okay, listen

just before we go. Um. It sounded to me like you were bizarrely positive on the UK stock market, which people keep telling me is now investor bill again. Having been uninvestable last year, suddenly it is in vestable for reasons that you know those words who aren't private to their precision of thought inside the institutional fund management market can't quite understand. But if it's now investable again, are you considering that as something reasonable for the retail investor

to buy the UK market as a whole. Well, two things. One, it's quite interesting that the retail investor is supposed to be the thickest guy in the room and the institutional investors are the smart money. But the reason why the institution investors now think the UK is investable again is not because it was about to go up twenty compared to the US um induseas. It's because it has gone up relative to the U s induseries UM so it turns out there aren't any smart guys in the room

where it comes to Finland. But the second point to make is because it's quite relevant to the time when the US equity market really outperformed the U S which is basically from four through until around about the mid eighties.

Um that it outperformed for the same read them that it's kind of out performing right now, which is it started from a low enough base, having previously been brutalized the nineteen seventy four Those in the UK are just you know, just unbelievable really when looked at on a historical perspective, but of course coming from a really low level and having in this instance got the jump on the US, the US was still trying to find a floor, which you didn't find until two whereas the UK never

went lower than the n So the UK was basically it wasn't going up that much, but it was going it was going sideways when all around them we're going there. So the best way to outperform is to be cheap. You know, this is why we the emphasis on buying things with low p s, which kind of lost all currency during the low interest rate growth period. You know, when that comes back, that comes back into fashion when

people will start looking for ways to protect themselves. And the reason why low ps protect you is that that provides the floor that you know, it isn't necessary for other things, but it is worth bearing in mind. You know, you may not be necessarily making a lot of money. If you look at the US stock market over there the seventies and eighties, and there were two oil shops exorginous oil shops. So this is a worse very much a worse case scenario. It is worth bearing in mind.

In the index nominally, when absolutely flat sideways didn't do a dawn thing and adjusted inflation, it fell sevent So you know, sometimes if you want to invest for the long run, you want to invest an interest rates are high, and I'll go about to embark on a on a

twenty or thirty year down trend. It's very hard to not not to look at our scenario after that forty years interest rate DWN trend and say that we're now going to have to redress the balance, which might mean at least ten years of generally rising interest rate trends, which might mean that we've got to kind of, you know, payback that idea that what you're gonna do with the equity investments is by them and then you know, check

them every year see how much they've got up. That may not work so well in an environment where and hasn't historically worked well in an environment where interest rates go up and interest rates up, in an environment where inflation keeps coming back. And it's worth bearing in mind that inflation kept getting kept appearing to be defeated in the late sixties and early seventies or through until the early eighties. But what happened was each time it came

back stronger than other. So what made it be defeated, well, central banks hiking interest rates, triggering recessions down it would come again. What made it then take off and go back higher than ever. Well, I think the fact that, you know, psychologically speaking, people no longer believed that inflation was dead, so wage hikes, wage demands were always just a little you know, built in a buffer. You know, treasury investors does my under a higher yield built in

an inflation protection buffer? And I don't see that yet in inflation in treasury yields. I think the modern investor hasn't yet been brutalized enough by this experience to building these buffers. But as people do building these buffers, you know,

everything just grinds to a to a slower halt. So I you know, I think one has to be thinking, probably quite carefully about how to find value, how to not be greedy, how to protect principle, and possibly to diversify into things like you know that for a long long time, I wasn't having any of it when you want to talk about gold, but actually I think this is the sort of environment where gold, you know, which has done nothing for ten years, um, But this is

the sort of environment we're going into. Imagine if you if the FED can'ts rates hard because we have a recession and starts to reignite money supply growth into say which is you know not that are after and everybody still remembers twenty twenty two very well, and then they start seeing interest rates being cut the fair this money supply picking up again. What are all those people going to think will happen to inflation? And if they all think it's gonna come back, then you know they're all

going to go and buy gold. Yeah, Okay, I'm want to stop you there, James, because I've worked really really hard over the last half herd to get you to say something positive about any asset class and I've got there, right, you see something positive about about gold. I'm going to quit while I'm ahead. Thank you so much for joining us today, and thank you for finally, after all these years, coming around to my way of thinking on gold. I appreciate its taking me what twenty five years, but we

always go there in the end. Thank you. Thank you for listening to this week's Marin Talks Money. We will be back next week. In the meantime, If you like our show, which I really hope you do, rate it, review it, and subscribe wherever you isn't to your podcast. This episode was hosted by me Marion sumset Well. It

was produced by Sammersadi. Additional editing by Blake Maples and special thanks of course to James Ferguson, Stuart Trout, and to John Stepec as usual, and of course our weekly reminder to sign up for John's daily newsletter Money Distilled. The link is in this show notes. It's very good and you won't regret it. James, if you signed up yet the John's newsletter, Yeah, absolutely, first thing I did this morning and isn't it good? Yes, well I knew you'd asked me about it, so I thought i'd better

get in. Excellent, And you agree it's very good, and everyone else should sign up. Yeah. John Sepec is a very very bright guy. There we go, Thank you very much,