Do We Really Understand Inflation? with Cullen Roche

 
 

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“If you could pick one variable in the whole world that you had to understand that would be your go to indicator, inflation would be the thing to me; you tell me what the rate of inflation is in twenty years, I’ll tell you pretty much what most financial assets have done, whether it’s bitcoin, bonds, stocks, whatever.”
— Cullen Roche

SHOW DESCRIPTION

Location: New York
Date: Saturday 5th December
Project/company: Pragmatic Capitalism, Orcam Financial Group
Role: Chief Investment Officer

In the 1980’s, Harry Browne devised an investment strategy designed to perform well in all economic conditions. It is referred to as the Permanent Portfolio. Investments are equally allocated to stocks, bonds, gold, and cash. The objective is for the portfolio to perform well in all economic conditions.

But Harry Browne’s strategy was developed in a period when short term boom and bust debt cycles were still a feature of economic systems. Since the global financial crisis of 2007, the debt cycle hasn’t been allowed to function properly: recessions have been mitigated through unprecedented governmental monetary and fiscal stimulus programmes.

In this new paradigm, where inflationary pressures cast a large shadow, what are the best investment strategies to take? Certain Bitcoiners are all in on the new form of money designed for these times. This does not fit everyone's risk appetite. But, having a portfolio that lacks exposure to Bitcoin risks missing out in a market that could otherwise be devoid of alpha.

Then there is also a geographical variable at play: the US has certain inherent strengths that are not available to citizens of other countries, significantly affecting investment decisions.    

In this interview, I talk to investment strategist and founder of the educational website Pragmatic Capitalism, Cullen Roche. We discuss the drivers for inflation, the role of government, investment strategies during uncertain times, and the place for Bitcoin in asset portfolios.

TIMESTAMPS

00:03:47: Introductions
00:05:16: What causes inflation
00:10:37: Defining what inflation is
00:15:13: The money printer and redefining money
00:22:43: Growth in money supply
00:25:41: The Fed and the Treasury
00:32:00: Economic crashes
00:39:47: Asset portfolio management
00:44:35: The Harry Browne portfolio
00:49:15: Bitcoin and the network effect
00:55:04: The government's role in the monetary policy
01:02:05: Bitcoin within financial advice
01:09:44: Bitcoiners on social media
01:12:06: Emerging market economies and cryptocurrencies
01:18:32: Diversify for an uncertain future
01:21:24: Final comments

 

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SHOW NOTES

Connect with Cullen:

Mentioned in the interview:

Other Relevant WBD Podcasts:

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