Tim Price: The Cracks in the Edifice are Starting to Form
Tom welcomes back Tim Price from Price Value Partners to discuss the issues the world now faces. He feels we are “standing on the edge of the debt precipice.” Many countries are mired in heavy debt, thus leaving three options; maintain the servicing of existing debt, restructure the debt (essentially defaulting), or the usual way out – inflating the debt away. It comes as no surprise that inflation is front and center. Although, metrics around inflation are often distorted, leading many to believe it is much higher than acknowledged. The Fed’s next developments may be to pivot, even with the past intention to raise rates further. If hard decisions had been taken after 2008, many of these issues may have been avoided. Alas, the only way out now appears to be more printing, risking the currency’s destruction.
Tim then moves onto discussing the risks posed by Japan and how it differs from other Western countries, as well as the Biden administration and their policy drift. Globally, this has eroded trust in the financial integrity of the United States.
Inflation is typically linked to excessive money printing and supply, thus rendering rates mostly irrelevant. We are likely close to some sort of systemic crisis thus making assets, such as gold, the free market fix. No entity can fix these problems; what cannot go on forever eventually won’t.
The discussion turns to ESG and its effects on politics and finance. ESG tends to be powered by large institutions, like Blackrock, but now there appears to be a reversal of these policies. Tim examines the benefits of holding gold in this environment.
Time Stamp References:
0:00 – Introduction
0:35 – A Debt Precipice
1:52 – Three Debt Choices
3:56 – Pivots & Rates
7:02 – Japan & Contagion Risks
10:38 – BRICS Rising & Inflation
14:35 – Financial Sins
18:08 – State of the Markets
22:46 – Trend Following Funds
28:07 – Charts & Finding Value
30:57 – Historical Comparisons
34:52 – ESG & Mkt. Distortions
38:14 – Shifting Narratives
43:58 – Wrap Up
Talking Points From This Episode
- Three options exist for dealing with debt – servicing, restructuring, or inflation.
- ESG policies are being reversed, with gold becoming the preferred asset to hold in this environment.
- Rising debt and excessive money printing has pushed us close to a systemic crisis – no entity can fix this.
His Book: https://www.amazon.ca/Investing-Through-Looking-Glass-Irrational/dp/0857195360
Tim Price has worked in the capital markets for over 30 years. A graduate of Christ Church, Oxford, he spent a decade as a bond specialist before going on to serve as Chief Investment Officer at three separate wealth management firms.
Tim has been shortlisted for five successive years in the UK Private Asset Managers Awards program and was a winner in 2005 in the category of Defensive Investing. He is now co-manager of the VT Price Value Portfolio, a fund investing in Benjamin Graham-style value stocks, and specialist value funds, from around the world. He also co-manages bespoke private client portfolios.
Tim writes for MoneyWeek Magazine and The Spectator, and his weekly commentaries are freely available at the Price Value Partners website.