WEBVTT - The Great Rotation is Here, What's Next For Gold, and UK Borrowing

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news. Hi John, Hi, listen.

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<v Speaker 1>We're talking in the middle of the week, and there's

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<v Speaker 1>been a lot of fuss over the last few weeks,

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<v Speaker 1>a lot of volatility, lots of seteria lots we're talking

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<v Speaker 1>about bear markets, lots of people complaining about their four

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<v Speaker 1>O n ks, et cetera, et cetera. So I have

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<v Speaker 1>just had a quick look and guess that's for me. Okay,

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<v Speaker 1>over the last twelve months. What's the change in the

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<v Speaker 1>S and P five hundred?

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<v Speaker 2>Okay, so it's not going to be connection toory. We

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<v Speaker 2>call it about six seven percent actually.

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<v Speaker 1>Over seven percent up. Also over seven percent up the

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<v Speaker 1>last twelve months. Yes, yes, I'm going to double check

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<v Speaker 1>that in real time for you, okay, because I have

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<v Speaker 1>access to a Bloomberg terminal, and here we are. NASADAC

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<v Speaker 1>Composite Index year to date not so good, down twelve

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<v Speaker 1>point two seven percent over the last twelve months, plus

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<v Speaker 1>seven point ninety three percent. So if you are just

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<v Speaker 1>an ordinary person who doesn't trade in and out all

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<v Speaker 1>the time, isn't just directly watching finance Telly, et cetera,

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<v Speaker 1>you have eight percent more money if you're invested in

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<v Speaker 1>the US than you did twelve months ago. Can we

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<v Speaker 1>just say this is all a great, big clus fair

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<v Speaker 1>nothing or is that a little simplastic.

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<v Speaker 2>It's a little bit simplistic, but it's not, hye simplastic,

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<v Speaker 2>you know when you think about it, you know, yeah,

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<v Speaker 2>I mean it's a good watch.

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<v Speaker 1>Yes, But also what it tells you is that that

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<v Speaker 1>you know returns last year we're absurd and the American

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<v Speaker 1>aquity market was ludicrously expensive and ludicrously concentrated at the

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<v Speaker 1>end of our year, and it moved much too far,

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<v Speaker 1>much too fast. And so even after everything's happened so far,

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<v Speaker 1>this year just will be up. And twelve months ago

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<v Speaker 1>told you that what happened towards the end of last

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<v Speaker 1>year was slightly not.

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<v Speaker 2>Yeah, definitely, And I mean that's place the whole point.

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<v Speaker 2>But TROMP being a catalyst for shifting things over the

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<v Speaker 2>years towards everything else which we knew was going to happen.

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<v Speaker 1>Time it. We just couldn't time it.

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<v Speaker 2>Yeah, you just needed a push, and Toomp's been the push,

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<v Speaker 2>and I suspect that's still going to carry you Oin.

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<v Speaker 1>Yeah, I mean it's going to come up and down.

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<v Speaker 1>I mean as we are speaking today. We are speaking

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<v Speaker 1>on Wednesday. By the way, then as I is up

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<v Speaker 1>over four percent as we speak, So you know, you

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<v Speaker 1>get this this huge volatility. But I think we still

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<v Speaker 1>suspect overall that there is a great rotation underway from

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<v Speaker 1>very expensive stock to cheapest stocks. And we have got

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<v Speaker 1>our main podcast this week out on Friday is with

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<v Speaker 1>a value Investor, which is really interesting in the context

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<v Speaker 1>of this great rotation out of expensive the cheaper markets.

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<v Speaker 2>Well, for once, yeah, if you do it often enough.

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<v Speaker 1>And the other thing, John, that you and I have

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<v Speaker 1>been that for twenty five years and twenty five twenty

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<v Speaker 1>five years.

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<v Speaker 2>Yeah, yeah, it's suning like that had a field sketched

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<v Speaker 2>twenty twenty five years.

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<v Speaker 1>Hey, the gold price at the gold price, I don't know, Harry.

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<v Speaker 1>We are do the gold price up in dollar terms

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<v Speaker 1>forty percent over the last year alone, down little today

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<v Speaker 1>because everything else is going up because it is the

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<v Speaker 1>greatest portfolio insurance of all time. Yes, you're doing up

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<v Speaker 1>the direction, et cetera. But nonetheless there's been a phenomenal

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<v Speaker 1>run and we're just going to enter it into our

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<v Speaker 1>we told you so section.

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<v Speaker 2>Well, thanks, So, what I think we can definitely put there,

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<v Speaker 2>especially seeing his late twenty five years ago. Everyone said,

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<v Speaker 2>what idiots, and you had actually been bettered buying gold

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<v Speaker 2>twenty five years ago within the S and P. I

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<v Speaker 2>mean that is striking. And I including reinvested dividends so

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<v Speaker 2>that you could have bought golden. You wouldn't even have

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<v Speaker 2>had to reinvest the dividends because there aren't any.

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<v Speaker 1>I just sit there expect that's what you did, isn't it, John, Yeah.

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<v Speaker 2>Just a law effort. Well, I wish it's what I did.

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<v Speaker 1>Any We don't always do what we recommend anyway, So

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<v Speaker 1>here we are, gold price up a lot, and gold price,

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<v Speaker 1>you know, you would expect if the chales over the

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<v Speaker 1>last few months continues, if we continue to have doubt

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<v Speaker 1>about the America, about the global monetary system, about the dollar,

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<v Speaker 1>about incoming global recession, et cetera, you would think to

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<v Speaker 1>yourself or the gold price will continue to go up.

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<v Speaker 1>But I think we both slightly feel it's moved a

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<v Speaker 1>long way, very fast, and there could be a little

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<v Speaker 1>bit of a correction in here.

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<v Speaker 2>Yeah, and I think, well, there's a number of things.

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<v Speaker 2>I mean, it was on the front cover of the

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<v Speaker 2>Ft today and yeah, I mean again, there's no sheath

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<v Speaker 2>on the Ft, but gold's one of those, cause golds

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<v Speaker 2>a slightly more obscure asset. You have to watch the

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<v Speaker 2>more financial peoples than the normal peoples because the gold's

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<v Speaker 2>never given me in the front cover of the Times.

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<v Speaker 2>But as the stock market may be at some point,

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<v Speaker 2>if it could actually is hard enough. But as far

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<v Speaker 2>as gold goy is, if you see it on the

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<v Speaker 2>front cover of the Ft, there's probably a big contrat

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<v Speaker 2>and indicator and that means it's come too far, too fast.

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<v Speaker 2>Bitcoin's the same, And I said, to be fair, I

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<v Speaker 2>remember twenty seventeen high in bitcoin. It was on the

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<v Speaker 2>front Covery Money Week, which I was editing at the time,

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<v Speaker 2>and even when I looked to the cover, I thought

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<v Speaker 2>the top of the market signal you have become your

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<v Speaker 2>own What's night? And then it was absolutely was. So

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<v Speaker 2>the more obscure the aid, the more you have to

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<v Speaker 2>sort of downgrade your your cover expectations. But I think

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<v Speaker 2>for gold, sentiment wise, that's a tell. And also you

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<v Speaker 2>have to go we have got when you've been watching

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<v Speaker 2>an asset for that for as long as we have,

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<v Speaker 2>and you're starting to feel a tiny bit kind of hegy.

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<v Speaker 2>I don't think it's the mega top. I think we'd

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<v Speaker 2>have to see a few other things happen. For me,

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<v Speaker 2>you think it was the absolute top, but I think

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<v Speaker 2>that it's probably due a breather.

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<v Speaker 1>But then there is a possibility there the gold mineer

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<v Speaker 1>is might catch up a bit.

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<v Speaker 2>Yeah, I mean you would think so. And silver, Well,

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<v Speaker 2>the interesting is silver's going up today, which I think

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<v Speaker 2>is probably more to do with the fact that everyone

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<v Speaker 2>is feeling relieved the Trump isn't in the fire, you know. Yeah,

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<v Speaker 2>and it's tariffs. I think it's silver. There's an element

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<v Speaker 2>of silver that goes up alongside the economic growth, and

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<v Speaker 2>that bit has been crushed by recent events, which is

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<v Speaker 2>one reason why it's departed so far from gold. So

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<v Speaker 2>we might see silver catch up as well.

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<v Speaker 1>And you'd expect gold miners to lag a bit with you,

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<v Speaker 1>because it's not just gold going up, it's gold going

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<v Speaker 1>up and staying up that matter.

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<v Speaker 2>Yeah, yeah, I mean, although they are still they're really

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<v Speaker 2>lagging it. And I mean I think that's partly to

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<v Speaker 2>do with the fact that they've been such a reliable

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<v Speaker 2>capital incinerators for such a long time that people just

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<v Speaker 2>really need.

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<v Speaker 1>To capital andcinerated. If you run a gold mining company,

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<v Speaker 1>please send your head now direct.

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<v Speaker 2>To John and John. You have used, don't you?

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<v Speaker 1>Independent central banks? And we've talked about this a lot

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<v Speaker 1>over over the years. Or central banks ever genuinely independent?

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<v Speaker 1>Should they be independent? And in fact there's whole central

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<v Speaker 1>bank independence. I think it's kind of you anyway.

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<v Speaker 2>Yeah, it's just a it's a convenient fag leaf. It

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<v Speaker 2>was fine in the nineties and the two thousands and

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<v Speaker 2>actually the tens because the central banks were doing exactly

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<v Speaker 2>what the government wanted them to do. Any keeping rates low. Yeah,

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<v Speaker 2>nobody felt uncomfortable about it. If it was happy enough

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<v Speaker 2>about it. Well, yeah, they should really should have been

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<v Speaker 2>higher while China was exportant inflation around the world. They

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<v Speaker 2>should have leaned against that. Then we wouldn't have got

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<v Speaker 2>the acid bubble in the house place bubble, and everyone

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<v Speaker 2>would be less measurable. Now because that's I do they say,

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<v Speaker 2>the fact the house place has been too.

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<v Speaker 1>High central bankers also, Director John, Please, But we had

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<v Speaker 1>all that period where it looked like independent central banks

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<v Speaker 1>were an absolutely fabulous idea, the great moderation, low interest rates,

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<v Speaker 1>low inflation. We had the hero central bankers, Greenspan, et cetera.

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<v Speaker 2>The Plunge Protection Team, lunch Protection team.

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<v Speaker 1>And when we look back now, you and I said,

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<v Speaker 1>at the time, of course, fell andre I told you so.

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<v Speaker 1>But you when you look back now, you can say, well,

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<v Speaker 1>this was simply a function of deflation being exported from

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<v Speaker 1>out of China. And we don't really know if independent

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<v Speaker 1>central banking is any good at what it's supposed to do.

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<v Speaker 2>We don't really know.

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<v Speaker 1>If the models work. We don't really know if independent

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<v Speaker 1>technocrats do a better job of interest rate fiddle than governments.

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<v Speaker 2>Yeah, and I don't thinks even that. I think it's

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<v Speaker 2>more the doint. Basically, you've got the if you're in central,

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<v Speaker 2>if you're an independence is contingent or in someone giving

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<v Speaker 2>the tea, then you're not independent. You're just not independent.

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<v Speaker 2>So it only lasts for as long as they're happy

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<v Speaker 2>for it to do. And I mean Arthur Bond's in

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<v Speaker 2>the eighteen seventies with elected nexton is a classic example.

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<v Speaker 2>And it's the same thing. No, I mean, you know

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<v Speaker 2>I should if if Trump wants to say Lane not

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<v Speaker 2>get a depot, he will find a way. He doesn't

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<v Speaker 2>have to do it. I fire on them, and would thought.

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<v Speaker 2>I thought that there are other ways to get around

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<v Speaker 2>any resistance. But the point is that whenever the kind

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<v Speaker 2>of politics and the central bank, the politics and the

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<v Speaker 2>technical as pomp heads, the politicians are going to win

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<v Speaker 2>one we had another. So I think that the idea

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<v Speaker 2>of central bank independence is really just it's just a mirage.

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<v Speaker 2>It's like the two percent inflation target is sort of

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<v Speaker 2>it's what for a yo and then stops working and

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<v Speaker 2>you find something else.

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<v Speaker 1>Okay, we're going to stop at that, John, because I

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<v Speaker 1>can feel your hobby host is rising to.

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<v Speaker 2>This or note.

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<v Speaker 1>Thanks for listening to this week's Marin Talk's Money Debrief.

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<v Speaker 1>If you like us, you rate, review, and subscribe wherever

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<v Speaker 1>you listen to podcasts. Alsof He's short follow me and

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<v Speaker 1>John on ex of Twitter. I'm at Mariners w and

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<v Speaker 1>John is John Underscore Step. This episode was produced by

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<v Speaker 1>Someasadi Production, Sport and sound designed by Moses and Questions

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<v Speaker 1>and comments on this show and all our shows are

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