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Axel Merk: Disincentives to Work Are Growing

Tom welcomes Axel Merk to the show. Axel is the President and CIO of Merk Investments.

Axel discusses the ECB’s recent press conference and Christine Lagarde’s comments. The ECB adjusts its mandate in whatever direction they desire so long as it’s in the interest of the European Union. There has been a tiny uptick in credit spreads and this caused them to print further while discussing tapering.

The pandemic has caused distortions due to stimulus and caused parts of the economy to slow or shut down. Bankers are calling inflation transitory and clearly, some sort of support was necessary. Much of the liquidity generated has been mopped up with other central bank programs like reverse repos. In order to get inflation in earnest, you need to get spending through direct stimulus. He’s concerned about banks becoming involved with digital currencies because that could provide them with additional control mechanisms.

There may be problems generated with the mid-terms in the U.S. however additional infrastructure spending seems very likely.

He explains how their funds manage over a billion in precious metals and mining companies. They take these positions to mitigate potential economic risks. The closest historical comparison to today seems to be the roaring 1920s which will all know ended badly.

Gold price will adjust after an equity sell off and the policy reaction to a deflationary shock is good for precious metals. Gold is quite likely to maintain its value compared with most investments.

The best investment you can make is in yourself. You are a fixed income generating machine and you can control your work skills. Invest in your own health and resilience. Use this time to be less dependent on the existing system.

Time Stamp References:
0:00 – Introduction
0:38 – ECB Press Conference
6:14 – Business Cycle
8:47 – Stimulating Velocity
10:35 – C.B. Digital Currencies
15:32 – Fed Rate Hikes?
21:22 – US Mid-Terms and Biden
22:48 – Economic Recovery?
25:08 – Doomsday Scenario
27:11 – Outlook for gold
31:18 – Gold & Equity Selloff
33:02 – Deflationary Shocks
34:40 – Banking Regulations
36:56 – Building Resilience
39:40 – Wrap Up

Talking Points From This Episode

  • ECB and Central Bank Policies
  • Stimulus, full employment, rates, and tapering.
  • The economic recovery and mitigating risk.
  • Building resilience and building independence.

Guest Links:
Amazon Book:

Axel Merk is the President and Chief Investment Officer of Merk Investments, manager of the Merk Funds.

Founder of the firm bearing his name, Merk is an expert on macro trends. He is a sought-after speaker, contributor, and author; Axel Merk’s book, Sustainable Wealth, describes how the greater economic universe works, how it might affect your finances, and how to manage those finances to seek financial stability. Axel Merk holds a B.A. in Economics (magna cum laude) and an M.Sc. in Computer Science from Brown University.

Axel Merk founded Merk Investments in Switzerland in 1994; in 2001, he relocated the business to California. He has grown Merk Investments into an investment advisory firm offering investment funds and advisory services on liquid global markets, including domestic and international equities, fixed income, commodities, and currencies.

He lives in the San Francisco Bay Area with his wife and their four children. He is a marathon runner and a private pilot.

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