RV Classics — Issue #7
- Real Vision
- June 19, 2023
This Week…
…we’re revisiting and instant classic.
Last September, as part of our hit series, Make or Break: Inflation, Jim Bianco of Bianco Research joined Real Vision co-founder and CEO Raoul Pal for a wide-ranging conversation about all things inflation and recession.
From the path of interest rates, inflation, and systemic risks like the banking crisis, the guys nailed some of their predictions. Other topics, though — like the future of labor, global energy supply, and the AI takeover — have yet to play out.
Perhaps in another 9 months, we’ll have all the answers…
RV Classics
This is RV Classics, a monthly newsletter where we pull the best from the Real Vision vault. We’ve spent the last 8 years learning from some of the greatest investors of our time, and we’ve got thousands of hours of analysis to show for it. Well, now it’s time to dig into the most thought-provoking, relevant insights.
Consider these our tales from the crypt — the greatest hits handpicked by Raoul Pal to help you learn how past cycles are shaping the world today.
Real Vision Classics Newsletter
A decade of the best financial interviews, compressed into a 5-minute read.
The Highlight Reel
- Breaking Inflation: Last September, Jim said the Federal Reserve’s monetary tightening policy would break inflation, but not without collateral damage. The end of cheap labor, cheap goods from China, and cheap Russian energy are irreversible trend shifts that increase the risk of higher inflation becoming the norm. Because of this, the Fed has accepted that it’s going to have to hold interest rates higher for longer than expected — and likely put a lot of people out of work.
- 1940s Analog: According to both Raoul and Jim, the best historical parallel for the current economy is the post-war 1940s. Jim points out that after World War II, the transition from a wartime to peacetime economy led to unemployment and higher inflation. He believes this is a similar moment of extreme upheaval — the only difference is that we don’t know whether this is an entirely new era, or (as Raoul suggests) just a cyclical shift within the same secular trend.
- Reconstruction: Jim emphasizes the need to start restructuring the economy now before stagflation is here to stay. He believes there are seismic shifts occurring across various sectors, with supply chains and global trade relationships forever changed. Additionally, aging population demographics and an evolving attitude towards work has sparked a new era of expensive labor. And while exponential technologies like AI could be deflationary, Jim’s not sure that progress will happen soon enough to offset inflation.
- AI and the Workplace: Jim believes we’re witnessing a sociological shift in people’s attitudes towards work. He points out that people are more inclined to quit a job even if it means making less money, and he believes that the pandemic (and government stimulus) reset the collective worker’s expectations for work-life balance. Meanwhile, Raoul and Jim discuss how the rise of AI will likely lead to higher unemployment but also more productivity — and that increased growth could potentially subsidize a larger faction of the unemployed workforce.
- WSBD (What Should Boomers Do)? Baby Boomers are stuck between a rock and a hard place. Jim explains how a long bear market or sideways price action could wreak havoc on retirement plans for boomers who don’t have the luxury of time to use this moment as an entry point. Meanwhile, instead of battening down the hatches, many Boomers are finding it difficult to adjust their discretionary spending — which makes this moment even more financially and psychologically daunting.
Watch Now
Beware the paywall: This video is available to Real Vision Essential members and above.
Not a member yet? Right this way…
Jim Bianco: Has Everything Changed Since 2019? — There’s no going back to 2019, according to Jim Bianco, and the sooner we accept reality the better we’ll be able to see new opportunities. The post-pandemic global economy is fundamentally different, and the “easy money” era is over.
Thanks for reading. In our next issue, we’re traveling way back to 2014 for the first time bitcoin was ever mentioned on Real Vision…
When you have a moment, let us know what you think of RV Classics. Just email us at essential@realvision.com.
Real Vision Classics Newsletter
A decade of the best financial interviews, compressed into a 5-minute read.