The Exchanges

Q Why do you call today, we are sitting in December, 20, 24, why do you call this a unique inflection point in history?

A Well, you know, Sid, you just see the sheer range of things that have happened just this week. Uh, we are, I think this is Thursday evening, the fifth of December, but just look at this week. We have seen, uh, martial law declared by, uh, sort of a renegade president of South Korea, President Yoon, Suk Yoon, to take his full name, but, uh, uh, the guy went totally berserk. Uh, he accused his, uh, opposition in parliament of being in cahoots with the North Korean dictatorship. Dictatorship. And, you know, declared martial law. Like dictatorship. Yeah, yeah, yeah, almost, almost, exactly. I mean, martial law means military rule. And this is a country that has had a terrible, terrible, terrible, uh, history of martial law. I still remember in my youth, I, you know, one of the dictators whose name is seared in my mind, because I saw a BBC report in 1980 on him, was Chundu Huan, a general, who literally there were students protesting in a city called Gwangju, And he ordered the military to fire on them. It was South Korea's Tiananmen moment, Tiananmen Square moment, 1980. Now, this is not what you expect from a democratic country that's been, you know, they call Korea the miracle on the Han River. You go from absolute poverty. The country was absolutely destroyed during the Korean War. It had a per capita income in 1960, which was less than that of East Pakistan, let alone West Paki…

AI assessment note: “you just see the sheer range of things that have happened just this week”

Q And where there was a narrative on recession happening in the US?

A Well, it didn't happen at all. The, the, the recession, uh, uh, did not happen at all. Uh, I mean, I think in 2020, 20, 24, You know, a year ago, precisely. Had we been told that the S&P would be up 27%, you know, gold would be up 30%, we would say, what the hell are you talking about? We could see a recession and a collapse in earnings. That did not happen. I think that was more a tribute to the fact that, well, it's 70%, the US economy is almost 70% consumer, and the consumer has been, other than the very low end, has been In a, in, in a pretty robust shape. Uh, the reason for that has been, well, quite frankly, um, absolute, you know, the fiscal injections, the fiscal lollipops, trillion dollar fiscal lollipops given by Biden, when it was very clear that the, uh, uh, pandemic was over, uh, the monetary lollipop that was given by the Federal Reserve, and then, of course, that was taken away later on when inflation came on. But you, in a sense, Uh, uh, and, and then the inflation. Then the inflation. Rhythm Desai of Morgan Stanley has, uh, done an analysis, and, uh, I was, you know, I've just sort of seen his conclusion that Indian households, let's say a hundred million Indian households have got equities. Over the last decade, they have seen a 10 trillion dollar increase in the consumer net worth.

AI assessment note: “Well, it didn't happen at all. The, the, the recession, uh, uh, did not happen at all.”

Q And where do you think the U.S. debt is going, right? What, what effect it has on the global economy in the U.S.

A Yeah, she said, uh, the U.S. debt is actually quite problematic. People are talking about France being, uh, bankrupt. France on a collision course with the EU, with Brussels, now not even having a government, and the French GDP, uh, debt to GDP Is a budget deficit is six, six percent roughly, right? Well, the U.S. is worse than that. The U.S. is 1.8 trillion dollars on, let's say, a 27, 28 trillion dollar economy. Uh, the U.S. is about 6.4%, and soon to rise to as much as two trillion dollars next year. And the worst thing about it is that 80% of it is, uh, things they cannot really cut You know, no matter what Elon Musk or anybody else says, uh, you simply cannot cut Medicare, Medicaid, Social Security, uh, defense spending or thing. Well, education you probably can, but, uh, there is some discretion there, uh, and, uh, but education is only, mainly done through the states, right? Most of the states are the ones who are running the education state universities in America, if you will. Uh, or you have private universities, right, which have their own endowments like the Ivy Leagues. So, um, Uh, so I would tend to think, I mean, even though they've come up with this very nice catchy slogan, uh, which, I think, I believe the new treasury secretary has a global macro manager called Scott Besant, very interesting guy. Uh, they have come up with this idea of three, three, three, mea…

AI assessment note: “The U.S. is about 6.4%, and soon to rise to as much as two trillion”

Q I believe it's because people started buying more dollars with Trump in center. That's the reason?

A Yeah, yeah. You see, the thing was again, that in many ways from a classic sense, Uh, if you look at Trump's agenda from a big picture point of view, there's no doubt, Sid, that it's inflationary. But are we talking about a severe inflation shock? Or are we talking about a one-shot pop in inflation and then things will revert back to normal? Even the Fed doesn't know. The Fed says I'm data dependent. Yeah, and he is to a very great extent. Uh, the central bank has been following the data, and the data has been disinflationary. We have reached a soft landing. Right? The whole, you know, the problem, metaphor used to be Goldilocks, right? Growth not too strong, and inflation not too cold, right? Or maybe the other way around, right?

AI assessment note: “if you look at Trump's agenda from a big picture point of view... it's inflationary”