March 3, 2023 • 53 mins
Inflation isn’t heading back to 2%, according to Pippa Malmgren, author and former adviser to President George W. Bush. She says it’s more likely to stay around 4 to 5%. Why? Malmgren contends that it’s because the main problem facing economies today is tied to supply and demand, and that means traditional inflation-fighting tools won’t really work. Malmgren joins this week’s episode of Merryn Talks Money to talk inflation targets, geopolitics and Britain's future in space.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
John, Hello him, John, listen, I have a question for you.
Have you ever seen a UFO hey Mason a UF
four points when I was like twyolve in a scot camp.
But it's quite possible of a drunk christ You Scott's
Jesus right, Listen. UFO sightings in Scotland have gone up
twenty percent from the last year. I haven't looked at
the English sightings, but I'm sure they've done the same.
(00:23):
And here's something else I bet you didn't know, despite
the fact that you were from Glasgow and you should
note this stuff. There's a town in the Central Belt
called bonnie Bridge, which is one of the most well
known UFO sighting places on right, three hundred ver sightings
the year so Texas, New Mexico bonnie Bridge. So why
(00:44):
is bonny Blood the UFO central Absolutely no idea and
then close to not caring. So you know that I'm
just putting that out there is a little bit of
trivia for anyone who wants something to talk about over
dinner tonight. The key point is that, and you and
I have discussed this before in sightings, UFO sightings go
up everywhere when societies are tense, when people feel uncertain
(01:07):
when there is change effort, when there is unrest. Right,
So UFO sightings in the US went up massively just
before Donald Trump was arreted. Hang on, donald Trump was elected.
There was I don't know if you remember when we
were both working at Dennis Publishing at the time and
they owned a magazine called The Fourteen Times. Do you
remember that their headline is Donald Trump an Alien? Yeah.
(01:30):
I think they stall that headlines from National enquired art anyway.
So there is this correlation, which I was telling an
acquaintance at the Bank among Then the other day that
they really should put in their models because it's kind
of handy. There is a correlation. We won't go as
far as causation between rising sightings of UFOs and political
and economic change. I just wanted to let you know
(01:50):
that and put it out there because obviously there's a
lot of political and economic change going on at the
moment where at there's a turning point that we've talked
about before demographically firstically, monetary policy. Everything everything is at
a at an inflation interest rate, everything's turning right. Actually,
I suppose the other interpretation is that people will see
uf always because whenever times are just stub that's partly
(02:14):
because geopolitics is an upheaval and maybe governments around the
world of like tests and new weapons like stealth bombers
and things like that. How so you think that there's
secret jets in the sky, you know. Welcome to John
and Marrin's Conspiracy Theory podcast. Yeah, that would be very popular.
I think we shouldn't not it would dismiss it. Like
you know what, we get a lot more listeners than
(02:35):
we do talking about inflation and interest rates. Listen, Timmy done.
There is a lot of change. What's the thing that
you've seen this week that to you represents that the
biggest change, the biggest inflection Well much as I'd like
to see the based inflection point is the drop in
house places which are falling uponly for the first team
since twenty twelve, I actually think they can A base
(02:56):
thing that happened this week was the exit deal. I
think we've been going on about Brexit for a long time,
but I think that this could be a catalyst for
long neglected UK equities to finally attract some of those
flows that have been vanishing from them over the past
seven years. I mean You can spend lots of time
arguing about the economic impact of Brexit, but thing it's
(03:18):
pretty clear that over the last seven years, global fund
minders at least have taken it as an excuse to
just put the UK in the two hard bin. And
I think that that will be much more difficult now,
particularly as you know, everyone's looking for new things to
invest in and cheap assets to invest in. Now that
the kind of fangs, aren't they only game in town? Excellent. Finally,
(03:39):
and don't forget everybody that if you're investing in equities,
the best hedge gainst inflation is your dividend income. And
where do you get the best dividend income? The UK?
Of course, yes, the UK? Right onwards. Thanks John. Welcome
(03:59):
to Marando Money in the podcast in which people who
know the markets explain the markets. I'm there in some
stweb this week. Our guest is Dr Pipperman. Group's an author,
an expert in geopolitics, and has served a special assistant
of President George W. Bush as an advisor for reckono
and policy on the National Economic Council. And she's a
former member of the US President's Working Group on Financial Markets.
(04:20):
And she knows something about UFOs. By the way, we
begin our conversation discussing Russia's invasion of Ukraine. Pepper, thank
you so much for joining us today. It's absolutely brilliant
to have you on. Thank you. I'm glady to be here.
We are talking around the first year anniversary of the
Russian invasion of the Ukraine. Now, when that began, it
(04:42):
looked like a little war, a localized war, local conflict.
But a lot has changed in the last year, right,
And I've been looking at some things that you've been
saying and you've been writing, and what looked like a
local conflicts is expanding globally. This is not a local
conflict anymore, is it. No. And I wrote a piece
in October twenty twenty one which was very boldly entitled
(05:07):
world War three has already started, And that really sounded
crazy at the time. But I think we're now seeing
that this is not about one country, it's not about
one location. It's a grand strategy, and it's pitting the West, NATO,
the United States against an aligned Russia and China. And also,
(05:30):
just to be clear, because the phrase world War three
is so terrifying for people, this is a very different
kind of war, and I don't think it is going
to look like World War One or World War Two,
where lots and lots of civilians were engaged in direct combat.
I think this is a technology war. This is an
(05:50):
invisible war where the combatants fight each other in ways
that are not visible to the public. I can elaborate
on that, but bottom line is it's still not a
great situation. But when I say world War three, I
don't mean to imply that we're going to end up
in that kind of conflagration. However, what we have now,
(06:11):
in my opinion here on the anniversary of the day
the tanks rolled into Ukraine, is well, there's a word
that everybody needs to know. There's a word called irredentism,
and irredentism is when a nation says, we have nationals
abroad that need to be protected. And that was the
irrationale behind Russia rolling into Ukraine, right The Russians in
(06:36):
Ukraine were under siege and they needed protecting. They're now
expanding that strategy to new places like Transnistria, which is
on the border of Moldova and of Kasia, and places
like basically places people haven't heard of, you know, Artsak
is another one of them. Spulbard in Norway. I think
(06:58):
it's going to be one of them. So it's the
same strategy, just expanded to new locations. That's one element,
and i'll just finish with the second. The second is
the Russians have basically decided to do a reverse Star Wars.
So I was an intern working for Ronald Reagan in
the White House when they introduced the Star Wars strategy,
(07:19):
which was laser based systems in space on satellites, so
you could take out the other guy's intercontinental ballistic nuclear
missile using this system. Basically it forced the Russians to
spend a ton of money they didn't have trying to
keep up with the technology. Well, they learned and today
(07:42):
they're reversing. So they're saying we're going to drop out
of the nuclear Mutual Weapons Inspections treaties. We're going to
put nuclear weapons on our submarines and our ships, which
Norwegian intelligence this week confirmed. And this will force you
to spend a huge amount of money monitoring all the
(08:05):
borders so that you can catch any potential inbound. So
I don't think anybody wants to actually launch a nuclear weapon,
and I want to be clear about that, I do
think that raising this threat threshold is going to be
enormously expensive for the West, and the real strategy is
how to bankrupt the West. When you talk about an
(08:25):
invisible war, is that part of what you mean a
war basically an economic war, a cashual and let me
make you spend a vast amount of money on things
that will make it hard for you to manage economy
outside that. Yeah, it's also a little bit more than that.
It's about the return of spy games, of kind of
(08:49):
Cold War style spies that are implanted in Western countries
and organizations, and probably it's happening in reverse as well.
So the spy game is back, and you can see
that if you google for it, you'll see lots of
arrests have been made and spies are being captured, and
so that's an element. But it's also things like TikTok,
(09:12):
which the US government is about to potentially ban as
a basically military instrument. That it's something that's been used
by China to weaponize public opinion. And so, for example,
the Chinese balloons that we recently saw, on one level
could be seen as a highly staged TikTok event that
(09:35):
resulted in a reduction of confidence by the American public
in their own government. That's a kind of invisible war, right,
So there are many layers to it. And again I've
written a piece called Invisible Wars on January tenth this
year on my substock column. It goes into greater detail
about this. But it's a useful concept right now, Okay,
(09:58):
And can I just take you back, fum one other
thing you said about the Russia wantingle saying that what
they're trying to do is protects Russian citizens in other
parts of the world, and you mentioned a part of
Norway where there may be Russian citizens living. How on
earth does that manifest itself? How does Russia do something
to protect citizens living in a country such as Norway. Well, so,
(10:21):
super intring. First, let's be clear about the geography. There's
a place called spall Barge. It's an island in the
Arctic Circle. It's extremely remote. I actually went up there
this summer. And because of the messy end to World
War two, Small Bard has a highly unusual situation that
it is technically Norway, but many countries under the Small
(10:43):
Bard Treaty have the right to be there. So for example,
I think they're thirty two or thirty four countries that
are signatories. So there's a large Russian population there. Now.
Historically they had been involved in coal mining, but then
the governor of spall Barge shut call mining down for
(11:03):
climate change reasons, and suddenly the Russian nationals who mainly
live in Barrensburg in Spalbard suddenly couldn't make an income.
So then Russia had to subsidize them to stay. Now
they've just said in the last week or so that
they're basically giving away apartments in spal Bard to Russian nationals,
(11:26):
so you can just basically have a free place to stay.
Why because as long as there are Russian nationals physically
present on Svalbard, that creates the reason why they might
need to be protected. And what we've seen is a
much more aggressive stance by Russia around spaal Bard. We've
seen Russian submarine surfacing and when you go up there
(11:50):
there are loads of native ships. Basically the whole place
is not high alert. And remember, actually this is just
a key point. Small Barge has the fastest Internet connection
in the world. Why because virtually every high altitude satellite
whether commercial or military, or the International Space Station connect
(12:11):
to Earth at Spaullbark. Why do you know, I don't
know exactly why. There must be technical reasons for this.
I think it does have something to do with it's
easier for calms to happen at the polls, and it's
easier for the North pole than the South pole. But
for whatever reason, that is the point of connection. And
in fact, to my mind, this war that we're seeing
in Ukraine didn't begin with the tanks rolling in to
(12:34):
Ukraine a year ago. It began about eight weeks earlier
when somebody cut that Internet cable, thus signaling we can
shut down all your communications. And remember all these missiles
need satellite guidance, so none of your systems will work
if we cut your calms off. And since then we've
(12:56):
had loads of Internet cutting exam apples. There again, no fingerprints,
nobody knows who did it. This is part of this
invisible war and that I was talking about. So small
Bards suddenly is on the radar and Russia is trying
to increase the number of Russians who are actually present
there with free flats like probably get a lot of
(13:18):
about British people to go there anything. He said, this
is really interesting. So a lot of the Invisible War
and a lot of what we're going to cool World
War three, even though it's a very different kind of war.
It happens in places that most of us have no
connection with, never heard of, and consider would previously have
considered to be completely irrelevant, far distant Norwegian islands, etc. Completely.
(13:42):
I call them sort of magical kingdoms that sound like
they belong in a Hairy Potter novel, like Abkhazia and
South Ossetia. And they do, they do. Yeah. And if
you notice this week the Russians have been doing military
exercises off South Africa where they're working with Swotini, and
(14:02):
you know, again, for a lot of people they are like, wait,
where's a Swartini? What is that? So yeah, these magical named,
magically named kingdoms, as it were, are right at the
heart of modern geopolitics. Okay, everyone's going to need to
get an Atlas out. I have on the wall of
our sitting room a giant world map so I can
(14:23):
try and keep some sense of geography. And as soon
as we finished talking, Peper, I'm going to go down
and look on it. See if I can find some
of these places and get a sense this is super interesting.
But listen, Okay, So here we are a different kind
of war, lots of strange stuff going on, but it
doesn't turn, you think, into either a nuclear wall, please God,
let hand what happen, or into a massive ground wall.
(14:47):
So given that, what effects does it have on the
thing that we're actually supposed to talk about it in
this podcast on the global economy? For example? What a
fact does that have on the way the global economy
developed from here? On globalization, on energy, on this kind
of thing. Okay, So one layer of this very complicated
(15:07):
onion is what Russia did was to demonstrate that anything
can be weaponized, and so Ukraine is not just a
war on the ground. It was about weaponizing food prices
and energy prices and creating inflation at a time where
the West was very vulnerable to that. Now, what's been
(15:28):
the response. Initially, everybody's heating bills obviously went up, and
that's been a big social issue, no question about it.
But also there's been this incredible entrepreneurial innovation response. So
suddenly Norway has replaced Russia as the main supplier of
oil and gas to Western Europe. Morocco has replaced Belarus
(15:52):
as the main supplier of fertilizers and potash component parts
for agriculture, and so it just goes to show you
how resilient and robust the world economy is and how
quickly it adapts. Similarly, this return of conflict, it happened
to coincide with COVID as well, has caused a lot
(16:13):
of people to say, my goodness, the world is a
complicated place, and I don't know if I can trust
my government or my company to look after me in
the future. I'm going to start my own thing. And
we see this wave of entrepreneurial response, and I think
we're going to see a lot of those companies are
going to do well. They're going to create value. People
(16:36):
are learning how to work independently from institutions. So while
there are bad things happening, there are also really good
response functions as well. Now, in terms of the big picture,
the markets have been expecting that eventually we'll get a resolution. Here,
what I'm arguing is this may take longer, and this
(16:56):
may be a more expensive process than you thought to finish.
What China is doing is very clever. So the minute Russia.
Putin said nuclear was a real possibility of threat. Within
an hour, the Chinese came out and said truce, one
word truce. Then they said constructive negotiations to China doesn't
(17:18):
want to go to a nuclear confrontation, and neither does
the US. But by threatening that, and by having Russia
and China much more aligned than we've ever seen before,
it pushes US and NATO to come to some kind
of agreement over Ukraine's So right now we're in a
(17:39):
moment where the question really is is the West going
to put pressure on Ukraine to cut a deal or
are we really going to fight to the bitter end?
And I think that the appetite in the West to
fight to the bitter end, especially if the Russians are
now going to up this anti by taking the Ukraine's
strategy to many other locations. Basically, it's creating an environment
(18:05):
where eventually we're everybody has to cut an unpalatable deal.
Russia won't get it what it wants, Ukraine won't get
it once, the West won't get what it wants. But
we may be able to bring it to an end.
And I'll just say one tiny last thing, otto bone
Bismarck put this so well, and nobody knows much about
diplomacy today as he did during his era when he
(18:28):
ran the ground strategy of all Western Europe, and he said,
diplomacy is the art of building ladders for others to
climb down. And right now we do not have anybody
building any ladders for people to climb down. And even
though it's an awful thing to have to do, I
think in the end we're going to have to end
up in that place. It's interesting because the rhetoric q
(18:49):
hit coming out of the West suggested even if there
was an absolutely perfect ladder made of gems, no one
would climb down it. Yeah. Yeah, And I visit the
Conservative Party shind ignite where Hunac spoke, and you know,
the line from the West we will fight to the
end is getting harder, stronger. Well, given everything that's happened,
(19:11):
one of the things that we've been talking about a
lot over the years, and I think you and I've
talked about before, is the reversal of the great globalization
of the last couple of decades and the effect that
that will have on individual economies and on inflation. Now,
do you still think that globalization will continue to all
to go backwards. I know you're terribly optimistic in lots
of areas. So where do you see that going? The
(19:34):
rebuilding of supply chain, resilience, etcetera. Which has given us
bouts of inflation over the last couple of years, how
do you see that playing out over the next couple Totally?
So I had to make up a new word for you.
Always make up new words. Words are great, you know,
by the way, listeners who aren't used to hearing Pipper speak,
It was Pipper, I believe, who invented the word shrink flation. Right, Well,
(19:57):
the words of yours. Well, here's the thing. Actually, it
turns out so I did. I came up this word sreinflation,
and I remember talking to your conference about it at
the time. You know, this was back in twenty sixteen
or earlier, because there wasn't a word to describe this
thing about your candy bars at the shop keep getting
(20:17):
smaller but you're paying the same price, and it's an
early indicator than inflation is building and it's going to come.
But then it got into the Merriam Webster Dictionary this year,
which was amazing. It's amazing However, now it turns out
there are some other people who were also using it,
but I didn't know it at the time, so I
think it's an open question who really invented it, But
(20:38):
a bunch of us kind of spotted that there was
a need for a new word. So today my new
word is globalization, and what that means is globalization and
localization coming together. And I think that is where we
are with globalization. So the old definition of globalization was
really that all the jobs would go to China. Right
(21:00):
we just said, Okay, we're going to outsource all manufacturing
of hardware to China and software will be done in
the West, and that was the definition of globalization. Well,
today we have a situation where we are relocalizing supply chains.
We are manufacturing everywhere in the world now, and because
(21:21):
China isn't competitive anymore through inflation, through their slowdown, the
destroyed belief that they're going to get rich before they
get old, they don't believe this anymore, so they're not
working in the same way they were. All that taken
together means that we have a relocalization of production everywhere,
(21:44):
and I think fundamentally we're going to end up with
more competition, more market entrance, a greater distribution of jobs
around the world instead of just everything going only to China.
And so glocalization is a more advanced, more comprehensive version
of globalization than what we used to have. It's a
(22:07):
better version, actually, even though it's been a hard process
to get here. Now, the problem for China and the
problem for the world is that if they're not competitive anymore,
we can't just say to a billion people, oh well,
too bad for you, right, we have to find a
way to reintegrate those billion workers into the world economy
(22:29):
in some way or another. And that is our sort
of task of our generation now. And I would add
that we have to do it with Russia too. You know,
it's not that every Russian citizen supports what President Putin
is doing. And you can't just cancel economies, right, You
can't just say, oh, well, everyone in Russia has to
(22:50):
suffer forever because they once had a bad leader. I mean, heck,
I'd hate to be held accountable for any of our
recent US presidents, right as an American citizen. So one day,
when something changes and we get a deal, we're all
going to have to figure out how to reverse on
a dime and reintegrate all those brilliant Russians who had
(23:12):
nothing to do with all this back into the world economy.
And unpalatable as all that sounds right now, I think
it's essential because if we don't reintegrate the Chinese and
the Russians, we will end up in this fight again. Okay,
but how do you reintegrate those tens of millions of
Chinese workers who may now be slightly priced out with
(23:33):
the global market when it comes to making localst goods.
How does that turn around? Well? And it's further complicated
because President she has introduced the Great Digital Wall as
they're calling it, which is he cut off access to
the global Internet. So if you're in China, you cannot
connect to the top four or five thousand websites. And
(23:56):
how are you going to innovate if you don't know
where the cutting edge of innovation is? And so I'm
very concerned that the leadership in China are making it
impossible for the average person to figure out a better
way forwards. Right in the West, we can do it
because we have personal freedoms which we often take for granted.
But you know, you can just upsticks as many people have,
(24:18):
right the great quitting that we all talk about, and
they say, I'm just going to start my own thing.
I'll be a digital nomad, I'll go create online, I'll
we don't even think about how wonderful it is to
have that freedom. And in China you don't have that freedom.
Not only can they not connect to the internet, but
they have the social credit system now where you get
(24:38):
scored on all your behaviors, and so if you express
opinions that are contrary to the government, you try to
go buy a train ticket, but your card won't work,
so they start locking you into digital prisons, physical spaces
that you can't burst out of, and thought processes that
you can't burst out of. None of this is conducive
(25:00):
to productivity. So I think within China there's been a
big argument and g has been under pressure from the
party as the party begins to realize that China's future
is being impeded by this strategy. Yeah, do we need
to worry about about social credit systems coming to the UK.
(25:21):
There's lots of conversation around digital ID cards and the
type of information that can and can't be held on
those cards, etc. And it is making the kind of
people who worry about the sort of thing. And I
have a tendency to worry about the sort of thing myself. Say,
you know, we look at China and we're horrified by
the digital control systems there that this could be coming
(25:42):
to the West. I think it has come to the West.
We've done it with private companies, right, we do with
Amazon and Google and every company that you interact with.
And for me, the issue is people always say, well,
I have nothing to hide, and then I ask, Okay,
when's the last time you ordered ice cream on Uber
(26:03):
eats at midnight? And they're like, yeah, I do that. Okay,
Like okay, so you think you have nothing to hide.
But the thing is the correlations that the algorithms generate
will tend to say that someone who eats ice cream
at Bennet is maybe of a little bit emotionally unstable,
(26:24):
and then that shows up as someone does a digital
search on you, and when you're applying for a job
and they see that red flag and now you didn't
get the job because you've ordered Uber eats, right, And
do you think, oh, but it's all anonymized. Yeah, it's
not so anonymized. Anymore. I mean, it's pretty easy to
reverse engineer things. So I think you know, for all
(26:47):
our GDPR, the reality is that you have a digital footprint,
and is it knows more about your digital twin knows
more about you than you know about yourself. And the
footprint that you are leaving with every single thing you
do is visible. It's just not visible to you. So
I'm very concerned about this intensification of the digitization, which
(27:11):
by the way, is coming in the form of new currency,
which is to the core of your podcast, right. This
is an entirely new form of money that's coming, which
we call CBDC Central Bank Digital Currency. What that will
permit is the integration of all of your data, everything
on your phone, everything on your computer, everything that has
(27:34):
to do with your spending, and that comprehensive picture, in
my view, can be used against you. And you should
have some kind of a bill of human rights to
either be able to ask to see I think you
should be able to go to every company, like you
should be able to go to marks and sparks and
say tell me what I look like to you, and
(27:54):
then it's like a credit right. You should be able
to look at your credit record and say what's going on,
and you find doubt there's something that you didn't know,
so you change your behavior to lift your credit score.
I think we're going to need this, and I think
it's a reasonable ask, but oh boy, the big data
gathering firms and government are probably going to fight this
(28:15):
to the bitter end. So I think, you know, it
brings the many efficiencies that are very useful, lots of transparency.
I wish government would apply it to its own balance
sheet and we'd have a better sense of, you know,
how public spending is working, which I kind of doubt
will happen. Well, old tyranny starts with convenience, doesn't it.
I love that line. Who say, is that yours? I
(28:38):
think it might be someone else, But that's a serious Okay,
I'm putting that up on the nets. That's a great line.
Starts with convenience. Yes, you know. I mean, I think
lots of our listeners do worry about CBDCs because we've
talked a lot over the last few years about how
a digital currency, a bank sponsor digital currency is effectively
(29:00):
the loss of the loss of the last vestiges your privacy,
and also, of course it could conceivably come with negative
interest rates applied to your cash, and could come with
spending constraints in various areas. You know, a government could
decide that actually, you know, what were the tomatoes shortage?
No one's allowed by tomatoes or cucumbers, and that can
go through a digital currency in ways that we would
(29:22):
all find it extremely uncomfortable. So that's something that I
think our listeners are very interested in, and thank you
for scaring them more. Sorry, but you know, it's like
I'm just the messenger here. Here we have the Prime
Minister of Britain saying he wants Britain to be the
center for digital asset clearing. Now, on the one hand,
jacks are going to be some big benefits to the
(29:44):
country if it can become the center of digital asset clearing.
But on the other hand, it does mean that this
brickcoin concept is going to get rolled out, and now
is the time for the public to express their concerns
and desire instead of being ignorant or staying silent. So
(30:04):
that's why I'm raising the flag and waving it around
on this. We can make this work. We just have
to participate and not allow it to be a purely
technocratic rollout. And let me ask you then, now, which
has you on digital currency? So let me ask you
about where you see inflation going from here. I know
you've got a good record of inflation has previously discussed,
but you know where the world is not dividing into
(30:25):
two camps, people who say, once inflation has gone beyond excent,
it's really really hard to get it down, and so
we're going to hover around sixty seven something for quite
a long time. And the other camp who was saying, well,
actually we're going straight to deflation. Where where do you stand? Yeah,
so I have not felt that we're going into hyper inflation.
(30:48):
Let's just start at that end of the spectrum. I
do think this is tricky because all the textbooks don't
apply to what we're in right now. It's a supply
side and demand side problem. Usually what you do, and
all the textbooks say if you raise interest rates then
inflation will come down. But right now, we don't have
(31:09):
enough companies making things, whether it's tomatoes growing things, or
whether it's computer chips, or you can put pretty much
anything in that line, you know, So how are you
going to get more companies to make more stuff? You
need to supply capital, so raising interest rates is not
(31:31):
helping to increase the supply. So you know, this idea
that the two are correlated is just not really working anymore.
And second, this is another reason why CBDCs are probably coming,
because governments see that with digital currency you can double
or have the money supply in a single keystroke. So
(31:52):
then not only that, but you can direct it. So
with traditional monetary policy, you announce you know, you're giving
away free money and your lowing interest rates, and basically
all the cash goes to the banks, and then the
banks allocate that capital out, which they typically don't really
actually do very well. Under CBDC, they can say, oh,
you're building a new nuclear fusion plant and we want that,
(32:16):
so we're going to allocate capital to you. Oh but
you are building something we think there's already too much
of it, so we're not going to allocate capital to you.
And the danger is that government starts to get into
the business of allocating capital to winners and losers, which
they are historically just terrible at, and it would be
(32:37):
a defiance of the whole system of capitalism, which should
allow capital to flow where investors see opportunities, not where
government designates there's a socially engineered outcome they want. You know.
The other thing is, yes, supply chains are relocalizing, which
means supply is more readily available locally. Great, but it
(33:03):
means you have to change your habits. So, for example,
the business of buying raspberries in January, it's not so
easy in an inflation world. But if people stop buying
raspberries in January and they change their habits, then the
inflation isn't so bad, right, because the demand for that
(33:24):
expensive thing is declining. So I think people are changing
their habits, their consumption habits, in quite a remarkable way.
COVID is probably most responsible for that. People have really
shifted and started to think about what's really important to
be And do I really need to spend money on
raspberries in January? Do I really need to be on
(33:48):
a career path of a particular kind? Like the question
of what do I really need? Has changed? Yeah? I agree,
I agree, and to be you know, behavior changes can
obviously change the path of inflation. And so it sounds
to me like that like you are a four to
five percenter. Yeah, I would say that's a good description
(34:09):
of me. I mean, I anticipated we were going to
go to double digit, which again at the time, people
are like, that is insane. We will never in the
West go to double digit inflation. I'm like, well, will
watch it. Watch it. So we have jumped up, right,
so we could be more like a five to ten
five to ten percent. I think we may face that
for a while. And that's still pretty shocking for pretty
(34:30):
shocking for populations that he used to inflation knocking around
one two three percent. It's still it's a shocking business.
And it makes you wonder something I talk about with
several guests. Will the central bank shift their inflation targets?
You know, will they shift the target to meet the
radi of inflation rather than hoping that the raatei of
inflation will come down to meet the target, the target,
of course, being almost entirely random, no one can remember.
(34:51):
I often ask people, you know, do you know where
the chief scent came from? And of course most people
haven't got the faintest idea it always picked out of
thin air. It was what we've actually found, and I've found,
and I've mentioned this on the podcast before, we actually
found in an all magazine called Status, which is not
a fund In an issue of that from the early sixties,
we found a report on the paper that an academic
(35:13):
had written where he made the suggestion that possibly, conceivably
two percent inflation was roughly the right amount to encourage
growth in a developed economy New Zealand. New Zealand academic.
I know, I've talked to central bankers about this and
they're likely it's just totally random. We picked it out
at an air The real issue is what is the
(35:35):
pain tolerance of the public. And then the really big issue,
and this is the critical issue, is how are we
going to fund the future? That's the real basic question.
And because there's so much debt, inflation is a way
of getting rid of debt. So if you say two
(35:58):
percent inflation is okay, where you're really saying is we
erode the debt burden by that much and that shouldn't
be so much pain for the general public. But when
you get up into these higher numbers, it's just more pain.
So you get more political volatility, which we're seeing right.
We're definitely seeing more political volatility. And this is a
(36:20):
question of like what's the pain tolerance over the coming
years for what's required to fix all this, Just to
be clear. In the end, look, we've had much worse
inflation than ten percent. People will figure it out, they
will adjust, there will be solutions. So it's not that
it's impossible. Right when I was a kid, we got
(36:40):
to what was it, twenty one percent inflation and everybody's
still here, right, they survived, So we'll figure it out.
It's just uncomfortable. We'll figure it out. Yeah, And you know,
with a bit of like that level of inflation, will
if maybe we say four five percent for a decade,
and we'll find that our level of government debt have
(37:01):
gone down very significantly relative to GDP, and that will
not be a bad thing. Might be uncomfortable on the way,
but it's a good result. It's a good result that
let's pepper, I have to ask you because here we are.
We've talked a lot about the global environment, the geo
political environment, the global economy, inflation, etc. But what on
earth does an investor do in an environment like this?
(37:21):
So you know, here we are, as ordinary retail investor,
sitting here with our ices and our auto enrollment pensions
going Oh god, one day I want to retire what
do we do? Why would you put money? Now? Well,
so let's start with the word retire, which I think
is to retire one day. I hear you, well, but
(37:44):
what's the definition of retire in the modern era. It's
not this old nineteen fifties sixties idea that you stop
and then you spend the rest of your life playing golf.
I don't think that really works anymore. The fastest growing
component of the labor market now in the US and
in the UK are the over fifty fives. Now why
(38:04):
is that? Because frankly, they realize they're going to live
till they're a hundred and they don't want to be bored. Now,
are they going back to a full time job. No,
but they are going back to a portfolio. So they'll
be like working with a friend on an entrepreneurial project,
and they'll do some consulting for their old boss and there,
you know, they create a portfolio of different income streams.
(38:25):
And it also gives them something that's productive to do.
And I do think human beings are healthier and happier
when they have identity, that they have meaningful work. And
so I think that's happening and I can't say that's
a bad thing. That also brings all that knowledge and
wisdom back into the economy. I always thought it was
(38:46):
crazy that we fire people automatically at sixty. I'm like, wait,
there aren't those people maybe the most valuable people to
have around. Yeah, now I'm tirely agree. Okay, So let
me redefine retirement for you. Let me redefine retire as
being the ability to choose when, how and where you work,
be the ability to afford to do that. So that's
(39:07):
what we want. I think when we hit maybe fifty
five pushing sixty, what we want is to be able
to fully afford to say, do you know what, there's
just one afternoon on that for me, and I'm going
to play golf for two days and then may be
able to another half day consulting for so and stiff.
So it's still even with the new definition of retirement
or growing old, etc. It's still nonetheless a financial equation agreed,
(39:31):
and the choice options are fewer in the current environment,
which is why people feel like I wanted to retire,
but I'm not able to yet. So that's one piece
of this second piece of it is, you know, look
as interest rates go up. There are lots of very
conservative things that are paying better. You know, bonds look good,
(39:53):
and that is what everybody was complaining about a decade ago. Right,
So now you can make money being in bonds, government bonds,
you know, corporate bonds. And also because of all this
innovation and technology and people forget that, you know, the
phone in your pocket literally has more computational power than
(40:16):
we needed to send a human to the moon. Right,
people are able to create income streams using their phone
in ways that were unimaginable twenty years ago, and they
are so that means there are lots of new startups.
And I mentioned the wave of startups. If you google that,
you'll see Bloomberg did a piece a little while ago
(40:38):
about this incredible wave of startups that's occurring now. Startups
are fascinating to me because our biggest pools of savings
are pension funds. Basically can't invest in them because number one,
they're too small, so they can't absorb very much capital,
and number two, they're very risky, and that number three
(41:01):
they don't really move the performance dial for big institutional
investors and for little investors they're just too crazy risky.
But It's so strange because this is the part of
the economy that generates most of the net new jobs
is firms that employ less than fifty people, and it
definitely is the source of most of the new innovation.
(41:23):
Like this week, I was talking at Rolls Royce and
they have to figure out how to interface with little
startups because they're the ones with the coolest new technology.
It's not coming out of the big majors anymore. So
we need to find a way for the people in
your audience to be able to engage with earlier stage
(41:45):
startups than we have been able to. I also think
there's a ninety four percent failure rate of startups in
the United Kingdom, which is considered one of the best
performing startup markets in the world right at a ninety
four percent failure rate, So we should ask question why
are they all failing? And often it has to do
(42:07):
with things that are so easily fixed. It's because they
have a brilliant idea, but it's never occurred to them
how do you actually run a business? So they don't
know how to set up a data room for the investors,
or they don't understand what kind of legal framework they're
going to need to create the business. These are things
that are fixable. We could lift the success rate of startups.
(42:30):
And I would say that everyone in your audience has
an interest in be able to engage and invest in
that space and getting a higher success rate. But you
have to be able to accept that. You know, like
private equity firms, they go, We're going to invest in
twenty things and seventeen are going to fail, and three
(42:52):
of them are really going to pay well, they're going
to one. One'll ago. Yeah, it sounds like John and
I need to write more about VCTs and IT equity.
John has been writing a bit about private equity recently.
He's interested there. I'm always mildly suspicious of the structure
of the private equity sector, but you know, we'll write
more on that. Let me ask you one last thing,
(43:12):
which I'm fred asking everybody because I'm fascinated in it.
In the answers, you hold any cryptocurrencies? Would you be
a buyer of cryptocurrencies, in particular of bitcoin? So I don't,
but I'm very active in following this new technology and
I I've not been a big bitcoiner. Oh gosh, now
(43:37):
I'm going to get hit on Twitter. N't time for
saying yep, you are. But I have been very big
on crypto. I have said, this is a fundamentally new technology.
It's about decentralizing the world of finance, and it's a
democratization of finance. That's very important. But that doesn't mean
(44:02):
that every single business model that is within crypto is good.
So the shakeout that we've seen in crypto, you know,
the whole sam Bangmin freed disaster, people went, that's it
crypto's debt, and I'm like, no, no, yeah, that was me,
that was me crypt That would definitely me Crypto's dead. Okay,
But I think this is like when the dot com
(44:24):
bubble burst and everybody was like, that's the end of
the Internet. Were done, and actually it was the beginning.
And the reason is you had the shakeout of all
the really bad business models around the Internet that didn't
make any sense, and the ones that survived, which weren't many,
were good business models. And so I'm watching the crypto
(44:46):
space for these better business models that will now begin
to exist. And again, as government goes to CBDC, they're
gonna say, I think they're gonna say crypto is fine,
you can have crypto if one, which has not been
their position to date. But I think they're going to
say it's okay, but they're two provisors. Number One, it
(45:06):
can't be held anonymously, and number two, you have to
declare it. Now the bitcoin crowd is going to say it,
but the whole point of being a bitcoin is to
be anonymous and not have to declare my money to
the government. I'm like, well, good luck with that, because
the state is the state. So you know, you can't
run and hide this. You're going to have to pay
your taxes and be part of the system, or you
(45:27):
can try to find some islands somewhere, but you know,
good luck with that. So and the Sam Bankman Freed
case is going to demonstrate this that And I actually
will go further and say, I think the US government
or maybe the British government are going to end up
being the biggest holders of bitcoin and crypto assets through confiscation. Yeah,
(45:50):
because as you confiscate all these assets, then you're gonna
if you're a treasury and you're at the Justice Department
and FBI, you're like, hey, I just confiscated four billion
dollars worth of crypto, which was the first big enforcement
case that they did. That's how much they got. Now
are they going to say that's worthless. No, they would
(46:12):
much rather say no, this has real value and it's
ours now and we could spend it. I mean, that's
more than the annual budget of you know, most government agencies.
So I do think we're going to see crypto that
is compliant. Now, that's the whole bunch of people are
going to say, well, that defeats the whole point of crypto,
and I say, well, I don't think so. I think
(46:33):
that we'll see a place for this democratizing of finance,
this this dividing up of the capital flows that crypto permits.
It's just just going to be compliant with the new
CPDC arrangements. Okay, yeah, you're definitely getting k back. I
(46:56):
can fail it coming. Yeah, but we should end that
they are taking up enough of your time. But that
I would tell you what we didn't do. We didn't
talk about space. We're gonna have to we have to
talk about by the way that all right, okay, we
have to do that. We have to do that, especially
here in Britain, because I think the British public are
totally not getting the Britain space sector is going to
(47:16):
be massive. I would say it's going to be on
a par with the city It's this is going to
generate cash gloves for this country that are extraordinary. And
people are like, well, why, first of all, why are
we even going into space? We've got all these problems
here on Earth. And the real answer is because you
can solve virtually every earthbound problem with a space based solution,
including unlimited energy unlimited US no no, no, stop, SUPs up.
(47:39):
How can we get unlimited energy from space? This is
about the Sun and mirrors. It is it is yeah,
and Arabus has now done the test and shown it works.
By the way, we already knew it worked because militaries
knew it worked. All you're doing is put a mirror
on a satellite, you beamed the Sun's raised Earth in
the form of mainly radio waves, and suddenly you can
(48:00):
have cheap unlimited energy anywhere, anytime. And notice that the
Saudis have just invested with the British to build this
capacity in the North Sea. So you know this is
not like sci fi. This is totally coming and I
have friends who are building the prototypes for these things.
This will be in two and a half three years,
(48:21):
we're gonna see this live. And okay, now that start
worrying about the energy crisis. I do start worrying about
the energy crisis completely. Honestly, it's gonna be we wake
up one morning where to go, Holy moly. And here's
the big problem. What the heck is that going to
mean for oil and gas companies? I think their sure
price is going to get hit hard by this reality
(48:42):
that's coming. So there's a whole bunch more to say.
But Britain is at the forefront of this, and the
US wants them to be in that position. So it's
scenario that I would be investing in. I would be
watching carefully and understanding the implications for other industries, including
by the way, I know this sounds so science fiction,
(49:04):
but mining of asteroids and suddenly you don't need to
rip up Earth anymore, and mining companies on Earth they're
going to find they're confronting really high grades silicon, really
high grade cobald, really high grade gold that you are
getting from an entirely new location and it doesn't create
(49:26):
environmental problems. And so there's a whole bunch of stuff
going on in the space space that's worthy of attention,
So I write about that too on my subset column.
I have a couple of columns called the space space. Okay, okay,
one last question. Then I'm gonna ask you to give
us the address of that subsex so can go sign up.
But why why the UK? Why? I mean you keep
(49:46):
saying this is a wonderful of chinkief. The UK well
right at the full front of this, But why why
are we at the full front of it? I mean,
I'm thrilled, but why ls I think it's partly because
the United States wants Britain as their closest defense ally
to be deeply engaged in this. It's partly because I
(50:06):
think it's the imperial empire path. So the British have
a sense of the world and possibility. And one of
the things the earliest stage of the space space is communications,
and so the British are very involved in satellite networks
for Internet connectivity. For example, British are very strong on
(50:30):
the international Internet cabling process around the world, submarines, etc.
All that is connected to this building out of Internet
access via space. Right like today, only three percent of
most Internet connections happen via starlink in space in the future.
I think that's going to go to like ninety percent rights.
And so because the British have this global view and
(50:54):
this history of working with different parts of the world,
they are actually very involved in the communication sector and
therefore involved in that space. And let's face it, British
are very strong on things like mining globally, so the
clever miners are going, hey, we have a whole new
domain to work in. So I think we're gonna send
(51:17):
the launch that we recently saw in You and I
talked about all the new launch locations here in the UK,
the one in um Cornwall and the one you've been
to up and I think, yeah, yeah, you said, there's
not much there. It's not very exciting that will be,
but there will be. That's right. Well, right now everybody's
focused on launch. I think launch is almost over, Like
(51:40):
we already know we can launch. The issue is what
you're going to do in space, and I think the
build in space is coming. And again Britain's very good
at robotics, remote control, automation, right, I've you know, been
involved in manufacturing drones here in the Okay. I know
(52:00):
the British can be very competitive in this space. So,
by the way, just to finish, I'll just say this,
when you think about the space space, I think they're
gonna be a ton of jobs created by this. But
then you won't need to go into space. I think
we're going to find there a whole bunch of people
that are sitting here on the ground here in Britain
working every day managing assets that are in space. That's
(52:24):
the future that I see. Well, there we go, everybody,
not just global Britain, but into galect. It's seriously interplanetary
and I'm not too writing. Give us your substack address.
I'm gonna fail. Everybody wanting to read more about this. Yeah,
doctor Pepa dot substag dot com and it's listed as
doctor Peppa's pen on podcast. But I haven't launched the
(52:45):
podcast yet, but I will be. You better get home.
I know it's going to be brilliant. Pippa, thank you
so much for joining us today. Absolutely fantastic. We're so grateful,
so great to be on with you. Thank you, Thank
you for listening to this week's Marion Talks Money. We
will be back next week. In the meantime, if you
like our show, and I can't think that you wouldn't rate, review,
(53:08):
and subscribe wherever you listen to your podcast. This episode
was hosted by me Bear in Sunset Web. It was
produced by Samasadi, additional editing by Blake Maple's special thanks
of course to Pipmalgram and to John Steppok and his
many UFO sightings, and of course our weekly reminder to
sign up to John's daily newsletter Money Distilled. Link is
(53:28):
in the show notes. You will not regret signing up right.
One more special announcement, I will be doing a live
taping of this podcast at the Bloomberg invest event on
the twenty second of March. It's called Strategies for Wealth Creation.
If you're in London you can join in person. Everyone
else join online. The link is in the show notes,
so do please register. We would love to see you
(53:49):
there
John, Hello him, John, listen, I have a question for you.
Have you ever seen a UFO hey Mason a UF
four points when I was like twyolve in a scot camp.
But it's quite possible of a drunk christ You Scott's
Jesus right, Listen. UFO sightings in Scotland have gone up
twenty percent from the last year. I haven't looked at
the English sightings, but I'm sure they've done the same.
(00:23):
And here's something else I bet you didn't know, despite
the fact that you were from Glasgow and you should
note this stuff. There's a town in the Central Belt
called bonnie Bridge, which is one of the most well
known UFO sighting places on right, three hundred ver sightings
the year so Texas, New Mexico bonnie Bridge. So why
(00:44):
is bonny Blood the UFO central Absolutely no idea and
then close to not caring. So you know that I'm
just putting that out there is a little bit of
trivia for anyone who wants something to talk about over
dinner tonight. The key point is that, and you and
I have discussed this before in sightings, UFO sightings go
up everywhere when societies are tense, when people feel uncertain
(01:07):
when there is change effort, when there is unrest. Right,
So UFO sightings in the US went up massively just
before Donald Trump was arreted. Hang on, donald Trump was elected.
There was I don't know if you remember when we
were both working at Dennis Publishing at the time and
they owned a magazine called The Fourteen Times. Do you
remember that their headline is Donald Trump an Alien? Yeah.
(01:30):
I think they stall that headlines from National enquired art anyway.
So there is this correlation, which I was telling an
acquaintance at the Bank among Then the other day that
they really should put in their models because it's kind
of handy. There is a correlation. We won't go as
far as causation between rising sightings of UFOs and political
and economic change. I just wanted to let you know
(01:50):
that and put it out there because obviously there's a
lot of political and economic change going on at the
moment where at there's a turning point that we've talked
about before demographically firstically, monetary policy. Everything everything is at
a at an inflation interest rate, everything's turning right. Actually,
I suppose the other interpretation is that people will see
uf always because whenever times are just stub that's partly
(02:14):
because geopolitics is an upheaval and maybe governments around the
world of like tests and new weapons like stealth bombers
and things like that. How so you think that there's
secret jets in the sky, you know. Welcome to John
and Marrin's Conspiracy Theory podcast. Yeah, that would be very popular.
I think we shouldn't not it would dismiss it. Like
you know what, we get a lot more listeners than
(02:35):
we do talking about inflation and interest rates. Listen, Timmy done.
There is a lot of change. What's the thing that
you've seen this week that to you represents that the
biggest change, the biggest inflection Well much as I'd like
to see the based inflection point is the drop in
house places which are falling uponly for the first team
since twenty twelve, I actually think they can A base
(02:56):
thing that happened this week was the exit deal. I
think we've been going on about Brexit for a long time,
but I think that this could be a catalyst for
long neglected UK equities to finally attract some of those
flows that have been vanishing from them over the past
seven years. I mean You can spend lots of time
arguing about the economic impact of Brexit, but thing it's
(03:18):
pretty clear that over the last seven years, global fund
minders at least have taken it as an excuse to
just put the UK in the two hard bin. And
I think that that will be much more difficult now,
particularly as you know, everyone's looking for new things to
invest in and cheap assets to invest in. Now that
the kind of fangs, aren't they only game in town? Excellent. Finally,
(03:39):
and don't forget everybody that if you're investing in equities,
the best hedge gainst inflation is your dividend income. And
where do you get the best dividend income? The UK?
Of course, yes, the UK? Right onwards. Thanks John. Welcome
(03:59):
to Marando Money in the podcast in which people who
know the markets explain the markets. I'm there in some
stweb this week. Our guest is Dr Pipperman. Group's an author,
an expert in geopolitics, and has served a special assistant
of President George W. Bush as an advisor for reckono
and policy on the National Economic Council. And she's a
former member of the US President's Working Group on Financial Markets.
(04:20):
And she knows something about UFOs. By the way, we
begin our conversation discussing Russia's invasion of Ukraine. Pepper, thank
you so much for joining us today. It's absolutely brilliant
to have you on. Thank you. I'm glady to be here.
We are talking around the first year anniversary of the
Russian invasion of the Ukraine. Now, when that began, it
(04:42):
looked like a little war, a localized war, local conflict.
But a lot has changed in the last year, right,
And I've been looking at some things that you've been
saying and you've been writing, and what looked like a
local conflicts is expanding globally. This is not a local
conflict anymore, is it. No. And I wrote a piece
in October twenty twenty one which was very boldly entitled
(05:07):
world War three has already started, And that really sounded
crazy at the time. But I think we're now seeing
that this is not about one country, it's not about
one location. It's a grand strategy, and it's pitting the West, NATO,
the United States against an aligned Russia and China. And also,
(05:30):
just to be clear, because the phrase world War three
is so terrifying for people, this is a very different
kind of war, and I don't think it is going
to look like World War One or World War Two,
where lots and lots of civilians were engaged in direct combat.
I think this is a technology war. This is an
(05:50):
invisible war where the combatants fight each other in ways
that are not visible to the public. I can elaborate
on that, but bottom line is it's still not a
great situation. But when I say world War three, I
don't mean to imply that we're going to end up
in that kind of conflagration. However, what we have now,
(06:11):
in my opinion here on the anniversary of the day
the tanks rolled into Ukraine, is well, there's a word
that everybody needs to know. There's a word called irredentism,
and irredentism is when a nation says, we have nationals
abroad that need to be protected. And that was the
irrationale behind Russia rolling into Ukraine, right The Russians in
(06:36):
Ukraine were under siege and they needed protecting. They're now
expanding that strategy to new places like Transnistria, which is
on the border of Moldova and of Kasia, and places
like basically places people haven't heard of, you know, Artsak
is another one of them. Spulbard in Norway. I think
(06:58):
it's going to be one of them. So it's the
same strategy, just expanded to new locations. That's one element,
and i'll just finish with the second. The second is
the Russians have basically decided to do a reverse Star Wars.
So I was an intern working for Ronald Reagan in
the White House when they introduced the Star Wars strategy,
(07:19):
which was laser based systems in space on satellites, so
you could take out the other guy's intercontinental ballistic nuclear
missile using this system. Basically it forced the Russians to
spend a ton of money they didn't have trying to
keep up with the technology. Well, they learned and today
(07:42):
they're reversing. So they're saying we're going to drop out
of the nuclear Mutual Weapons Inspections treaties. We're going to
put nuclear weapons on our submarines and our ships, which
Norwegian intelligence this week confirmed. And this will force you
to spend a huge amount of money monitoring all the
(08:05):
borders so that you can catch any potential inbound. So
I don't think anybody wants to actually launch a nuclear weapon,
and I want to be clear about that, I do
think that raising this threat threshold is going to be
enormously expensive for the West, and the real strategy is
how to bankrupt the West. When you talk about an
(08:25):
invisible war, is that part of what you mean a
war basically an economic war, a cashual and let me
make you spend a vast amount of money on things
that will make it hard for you to manage economy
outside that. Yeah, it's also a little bit more than that.
It's about the return of spy games, of kind of
(08:49):
Cold War style spies that are implanted in Western countries
and organizations, and probably it's happening in reverse as well.
So the spy game is back, and you can see
that if you google for it, you'll see lots of
arrests have been made and spies are being captured, and
so that's an element. But it's also things like TikTok,
(09:12):
which the US government is about to potentially ban as
a basically military instrument. That it's something that's been used
by China to weaponize public opinion. And so, for example,
the Chinese balloons that we recently saw, on one level
could be seen as a highly staged TikTok event that
(09:35):
resulted in a reduction of confidence by the American public
in their own government. That's a kind of invisible war, right,
So there are many layers to it. And again I've
written a piece called Invisible Wars on January tenth this
year on my substock column. It goes into greater detail
about this. But it's a useful concept right now, Okay,
(09:58):
And can I just take you back, fum one other
thing you said about the Russia wantingle saying that what
they're trying to do is protects Russian citizens in other
parts of the world, and you mentioned a part of
Norway where there may be Russian citizens living. How on
earth does that manifest itself? How does Russia do something
to protect citizens living in a country such as Norway. Well, so,
(10:21):
super intring. First, let's be clear about the geography. There's
a place called spall Barge. It's an island in the
Arctic Circle. It's extremely remote. I actually went up there
this summer. And because of the messy end to World
War two, Small Bard has a highly unusual situation that
it is technically Norway, but many countries under the Small
(10:43):
Bard Treaty have the right to be there. So for example,
I think they're thirty two or thirty four countries that
are signatories. So there's a large Russian population there. Now.
Historically they had been involved in coal mining, but then
the governor of spall Barge shut call mining down for
(11:03):
climate change reasons, and suddenly the Russian nationals who mainly
live in Barrensburg in Spalbard suddenly couldn't make an income.
So then Russia had to subsidize them to stay. Now
they've just said in the last week or so that
they're basically giving away apartments in spal Bard to Russian nationals,
(11:26):
so you can just basically have a free place to stay.
Why because as long as there are Russian nationals physically
present on Svalbard, that creates the reason why they might
need to be protected. And what we've seen is a
much more aggressive stance by Russia around spaal Bard. We've
seen Russian submarine surfacing and when you go up there
(11:50):
there are loads of native ships. Basically the whole place
is not high alert. And remember, actually this is just
a key point. Small Barge has the fastest Internet connection
in the world. Why because virtually every high altitude satellite
whether commercial or military, or the International Space Station connect
(12:11):
to Earth at Spaullbark. Why do you know, I don't
know exactly why. There must be technical reasons for this.
I think it does have something to do with it's
easier for calms to happen at the polls, and it's
easier for the North pole than the South pole. But
for whatever reason, that is the point of connection. And
in fact, to my mind, this war that we're seeing
in Ukraine didn't begin with the tanks rolling in to
(12:34):
Ukraine a year ago. It began about eight weeks earlier
when somebody cut that Internet cable, thus signaling we can
shut down all your communications. And remember all these missiles
need satellite guidance, so none of your systems will work
if we cut your calms off. And since then we've
(12:56):
had loads of Internet cutting exam apples. There again, no fingerprints,
nobody knows who did it. This is part of this
invisible war and that I was talking about. So small
Bards suddenly is on the radar and Russia is trying
to increase the number of Russians who are actually present
there with free flats like probably get a lot of
(13:18):
about British people to go there anything. He said, this
is really interesting. So a lot of the Invisible War
and a lot of what we're going to cool World
War three, even though it's a very different kind of war.
It happens in places that most of us have no
connection with, never heard of, and consider would previously have
considered to be completely irrelevant, far distant Norwegian islands, etc. Completely.
(13:42):
I call them sort of magical kingdoms that sound like
they belong in a Hairy Potter novel, like Abkhazia and
South Ossetia. And they do, they do. Yeah. And if
you notice this week the Russians have been doing military
exercises off South Africa where they're working with Swotini, and
(14:02):
you know, again, for a lot of people they are like, wait,
where's a Swartini? What is that? So yeah, these magical named,
magically named kingdoms, as it were, are right at the
heart of modern geopolitics. Okay, everyone's going to need to
get an Atlas out. I have on the wall of
our sitting room a giant world map so I can
(14:23):
try and keep some sense of geography. And as soon
as we finished talking, Peper, I'm going to go down
and look on it. See if I can find some
of these places and get a sense this is super interesting.
But listen, Okay, So here we are a different kind
of war, lots of strange stuff going on, but it
doesn't turn, you think, into either a nuclear wall, please God,
let hand what happen, or into a massive ground wall.
(14:47):
So given that, what effects does it have on the
thing that we're actually supposed to talk about it in
this podcast on the global economy? For example? What a
fact does that have on the way the global economy
developed from here? On globalization, on energy, on this kind
of thing. Okay, So one layer of this very complicated
(15:07):
onion is what Russia did was to demonstrate that anything
can be weaponized, and so Ukraine is not just a
war on the ground. It was about weaponizing food prices
and energy prices and creating inflation at a time where
the West was very vulnerable to that. Now, what's been
(15:28):
the response. Initially, everybody's heating bills obviously went up, and
that's been a big social issue, no question about it.
But also there's been this incredible entrepreneurial innovation response. So
suddenly Norway has replaced Russia as the main supplier of
oil and gas to Western Europe. Morocco has replaced Belarus
(15:52):
as the main supplier of fertilizers and potash component parts
for agriculture, and so it just goes to show you
how resilient and robust the world economy is and how
quickly it adapts. Similarly, this return of conflict, it happened
to coincide with COVID as well, has caused a lot
(16:13):
of people to say, my goodness, the world is a
complicated place, and I don't know if I can trust
my government or my company to look after me in
the future. I'm going to start my own thing. And
we see this wave of entrepreneurial response, and I think
we're going to see a lot of those companies are
going to do well. They're going to create value. People
(16:36):
are learning how to work independently from institutions. So while
there are bad things happening, there are also really good
response functions as well. Now, in terms of the big picture,
the markets have been expecting that eventually we'll get a resolution. Here,
what I'm arguing is this may take longer, and this
(16:56):
may be a more expensive process than you thought to finish.
What China is doing is very clever. So the minute Russia.
Putin said nuclear was a real possibility of threat. Within
an hour, the Chinese came out and said truce, one
word truce. Then they said constructive negotiations to China doesn't
(17:18):
want to go to a nuclear confrontation, and neither does
the US. But by threatening that, and by having Russia
and China much more aligned than we've ever seen before,
it pushes US and NATO to come to some kind
of agreement over Ukraine's So right now we're in a
(17:39):
moment where the question really is is the West going
to put pressure on Ukraine to cut a deal or
are we really going to fight to the bitter end?
And I think that the appetite in the West to
fight to the bitter end, especially if the Russians are
now going to up this anti by taking the Ukraine's
strategy to many other locations. Basically, it's creating an environment
(18:05):
where eventually we're everybody has to cut an unpalatable deal.
Russia won't get it what it wants, Ukraine won't get
it once, the West won't get what it wants. But
we may be able to bring it to an end.
And I'll just say one tiny last thing, otto bone
Bismarck put this so well, and nobody knows much about
diplomacy today as he did during his era when he
(18:28):
ran the ground strategy of all Western Europe, and he said,
diplomacy is the art of building ladders for others to
climb down. And right now we do not have anybody
building any ladders for people to climb down. And even
though it's an awful thing to have to do, I
think in the end we're going to have to end
up in that place. It's interesting because the rhetoric q
(18:49):
hit coming out of the West suggested even if there
was an absolutely perfect ladder made of gems, no one
would climb down it. Yeah. Yeah, And I visit the
Conservative Party shind ignite where Hunac spoke, and you know,
the line from the West we will fight to the
end is getting harder, stronger. Well, given everything that's happened,
(19:11):
one of the things that we've been talking about a
lot over the years, and I think you and I've
talked about before, is the reversal of the great globalization
of the last couple of decades and the effect that
that will have on individual economies and on inflation. Now,
do you still think that globalization will continue to all
to go backwards. I know you're terribly optimistic in lots
of areas. So where do you see that going? The
(19:34):
rebuilding of supply chain, resilience, etcetera. Which has given us
bouts of inflation over the last couple of years, how
do you see that playing out over the next couple Totally?
So I had to make up a new word for you.
Always make up new words. Words are great, you know,
by the way, listeners who aren't used to hearing Pipper speak,
It was Pipper, I believe, who invented the word shrink flation. Right, Well,
(19:57):
the words of yours. Well, here's the thing. Actually, it
turns out so I did. I came up this word sreinflation,
and I remember talking to your conference about it at
the time. You know, this was back in twenty sixteen
or earlier, because there wasn't a word to describe this
thing about your candy bars at the shop keep getting
(20:17):
smaller but you're paying the same price, and it's an
early indicator than inflation is building and it's going to come.
But then it got into the Merriam Webster Dictionary this year,
which was amazing. It's amazing However, now it turns out
there are some other people who were also using it,
but I didn't know it at the time, so I
think it's an open question who really invented it, But
(20:38):
a bunch of us kind of spotted that there was
a need for a new word. So today my new
word is globalization, and what that means is globalization and
localization coming together. And I think that is where we
are with globalization. So the old definition of globalization was
really that all the jobs would go to China. Right
(21:00):
we just said, Okay, we're going to outsource all manufacturing
of hardware to China and software will be done in
the West, and that was the definition of globalization. Well,
today we have a situation where we are relocalizing supply chains.
We are manufacturing everywhere in the world now, and because
(21:21):
China isn't competitive anymore through inflation, through their slowdown, the
destroyed belief that they're going to get rich before they
get old, they don't believe this anymore, so they're not
working in the same way they were. All that taken
together means that we have a relocalization of production everywhere,
(21:44):
and I think fundamentally we're going to end up with
more competition, more market entrance, a greater distribution of jobs
around the world instead of just everything going only to China.
And so glocalization is a more advanced, more comprehensive version
of globalization than what we used to have. It's a
(22:07):
better version, actually, even though it's been a hard process
to get here. Now, the problem for China and the
problem for the world is that if they're not competitive anymore,
we can't just say to a billion people, oh well,
too bad for you, right, we have to find a
way to reintegrate those billion workers into the world economy
(22:29):
in some way or another. And that is our sort
of task of our generation now. And I would add
that we have to do it with Russia too. You know,
it's not that every Russian citizen supports what President Putin
is doing. And you can't just cancel economies, right, You
can't just say, oh, well, everyone in Russia has to
(22:50):
suffer forever because they once had a bad leader. I mean, heck,
I'd hate to be held accountable for any of our
recent US presidents, right as an American citizen. So one day,
when something changes and we get a deal, we're all
going to have to figure out how to reverse on
a dime and reintegrate all those brilliant Russians who had
(23:12):
nothing to do with all this back into the world economy.
And unpalatable as all that sounds right now, I think
it's essential because if we don't reintegrate the Chinese and
the Russians, we will end up in this fight again. Okay,
but how do you reintegrate those tens of millions of
Chinese workers who may now be slightly priced out with
(23:33):
the global market when it comes to making localst goods.
How does that turn around? Well? And it's further complicated
because President she has introduced the Great Digital Wall as
they're calling it, which is he cut off access to
the global Internet. So if you're in China, you cannot
connect to the top four or five thousand websites. And
(23:56):
how are you going to innovate if you don't know
where the cutting edge of innovation is? And so I'm
very concerned that the leadership in China are making it
impossible for the average person to figure out a better
way forwards. Right in the West, we can do it
because we have personal freedoms which we often take for granted.
But you know, you can just upsticks as many people have,
(24:18):
right the great quitting that we all talk about, and
they say, I'm just going to start my own thing.
I'll be a digital nomad, I'll go create online, I'll
we don't even think about how wonderful it is to
have that freedom. And in China you don't have that freedom.
Not only can they not connect to the internet, but
they have the social credit system now where you get
(24:38):
scored on all your behaviors, and so if you express
opinions that are contrary to the government, you try to
go buy a train ticket, but your card won't work,
so they start locking you into digital prisons, physical spaces
that you can't burst out of, and thought processes that
you can't burst out of. None of this is conducive
(25:00):
to productivity. So I think within China there's been a
big argument and g has been under pressure from the
party as the party begins to realize that China's future
is being impeded by this strategy. Yeah, do we need
to worry about about social credit systems coming to the UK.
(25:21):
There's lots of conversation around digital ID cards and the
type of information that can and can't be held on
those cards, etc. And it is making the kind of
people who worry about the sort of thing. And I
have a tendency to worry about the sort of thing myself. Say,
you know, we look at China and we're horrified by
the digital control systems there that this could be coming
(25:42):
to the West. I think it has come to the West.
We've done it with private companies, right, we do with
Amazon and Google and every company that you interact with.
And for me, the issue is people always say, well,
I have nothing to hide, and then I ask, Okay,
when's the last time you ordered ice cream on Uber
(26:03):
eats at midnight? And they're like, yeah, I do that. Okay,
Like okay, so you think you have nothing to hide.
But the thing is the correlations that the algorithms generate
will tend to say that someone who eats ice cream
at Bennet is maybe of a little bit emotionally unstable,
(26:24):
and then that shows up as someone does a digital
search on you, and when you're applying for a job
and they see that red flag and now you didn't
get the job because you've ordered Uber eats, right, And
do you think, oh, but it's all anonymized. Yeah, it's
not so anonymized. Anymore. I mean, it's pretty easy to
reverse engineer things. So I think you know, for all
(26:47):
our GDPR, the reality is that you have a digital footprint,
and is it knows more about your digital twin knows
more about you than you know about yourself. And the
footprint that you are leaving with every single thing you
do is visible. It's just not visible to you. So
I'm very concerned about this intensification of the digitization, which
(27:11):
by the way, is coming in the form of new currency,
which is to the core of your podcast, right. This
is an entirely new form of money that's coming, which
we call CBDC Central Bank Digital Currency. What that will
permit is the integration of all of your data, everything
on your phone, everything on your computer, everything that has
(27:34):
to do with your spending, and that comprehensive picture, in
my view, can be used against you. And you should
have some kind of a bill of human rights to
either be able to ask to see I think you
should be able to go to every company, like you
should be able to go to marks and sparks and
say tell me what I look like to you, and
(27:54):
then it's like a credit right. You should be able
to look at your credit record and say what's going on,
and you find doubt there's something that you didn't know,
so you change your behavior to lift your credit score.
I think we're going to need this, and I think
it's a reasonable ask, but oh boy, the big data
gathering firms and government are probably going to fight this
(28:15):
to the bitter end. So I think, you know, it
brings the many efficiencies that are very useful, lots of transparency.
I wish government would apply it to its own balance
sheet and we'd have a better sense of, you know,
how public spending is working, which I kind of doubt
will happen. Well, old tyranny starts with convenience, doesn't it.
I love that line. Who say, is that yours? I
(28:38):
think it might be someone else, But that's a serious Okay,
I'm putting that up on the nets. That's a great line.
Starts with convenience. Yes, you know. I mean, I think
lots of our listeners do worry about CBDCs because we've
talked a lot over the last few years about how
a digital currency, a bank sponsor digital currency is effectively
(29:00):
the loss of the loss of the last vestiges your privacy,
and also, of course it could conceivably come with negative
interest rates applied to your cash, and could come with
spending constraints in various areas. You know, a government could
decide that actually, you know, what were the tomatoes shortage?
No one's allowed by tomatoes or cucumbers, and that can
go through a digital currency in ways that we would
(29:22):
all find it extremely uncomfortable. So that's something that I
think our listeners are very interested in, and thank you
for scaring them more. Sorry, but you know, it's like
I'm just the messenger here. Here we have the Prime
Minister of Britain saying he wants Britain to be the
center for digital asset clearing. Now, on the one hand,
jacks are going to be some big benefits to the
(29:44):
country if it can become the center of digital asset clearing.
But on the other hand, it does mean that this
brickcoin concept is going to get rolled out, and now
is the time for the public to express their concerns
and desire instead of being ignorant or staying silent. So
(30:04):
that's why I'm raising the flag and waving it around
on this. We can make this work. We just have
to participate and not allow it to be a purely
technocratic rollout. And let me ask you then, now, which
has you on digital currency? So let me ask you
about where you see inflation going from here. I know
you've got a good record of inflation has previously discussed,
but you know where the world is not dividing into
(30:25):
two camps, people who say, once inflation has gone beyond excent,
it's really really hard to get it down, and so
we're going to hover around sixty seven something for quite
a long time. And the other camp who was saying, well,
actually we're going straight to deflation. Where where do you stand? Yeah,
so I have not felt that we're going into hyper inflation.
(30:48):
Let's just start at that end of the spectrum. I
do think this is tricky because all the textbooks don't
apply to what we're in right now. It's a supply
side and demand side problem. Usually what you do, and
all the textbooks say if you raise interest rates then
inflation will come down. But right now, we don't have
(31:09):
enough companies making things, whether it's tomatoes growing things, or
whether it's computer chips, or you can put pretty much
anything in that line, you know, So how are you
going to get more companies to make more stuff? You
need to supply capital, so raising interest rates is not
(31:31):
helping to increase the supply. So you know, this idea
that the two are correlated is just not really working anymore.
And second, this is another reason why CBDCs are probably coming,
because governments see that with digital currency you can double
or have the money supply in a single keystroke. So
(31:52):
then not only that, but you can direct it. So
with traditional monetary policy, you announce you know, you're giving
away free money and your lowing interest rates, and basically
all the cash goes to the banks, and then the
banks allocate that capital out, which they typically don't really
actually do very well. Under CBDC, they can say, oh,
you're building a new nuclear fusion plant and we want that,
(32:16):
so we're going to allocate capital to you. Oh but
you are building something we think there's already too much
of it, so we're not going to allocate capital to you.
And the danger is that government starts to get into
the business of allocating capital to winners and losers, which
they are historically just terrible at, and it would be
(32:37):
a defiance of the whole system of capitalism, which should
allow capital to flow where investors see opportunities, not where
government designates there's a socially engineered outcome they want. You know.
The other thing is, yes, supply chains are relocalizing, which
means supply is more readily available locally. Great, but it
(33:03):
means you have to change your habits. So, for example,
the business of buying raspberries in January, it's not so
easy in an inflation world. But if people stop buying
raspberries in January and they change their habits, then the
inflation isn't so bad, right, because the demand for that
(33:24):
expensive thing is declining. So I think people are changing
their habits, their consumption habits, in quite a remarkable way.
COVID is probably most responsible for that. People have really
shifted and started to think about what's really important to
be And do I really need to spend money on
raspberries in January? Do I really need to be on
(33:48):
a career path of a particular kind? Like the question
of what do I really need? Has changed? Yeah? I agree,
I agree, and to be you know, behavior changes can
obviously change the path of inflation. And so it sounds
to me like that like you are a four to
five percenter. Yeah, I would say that's a good description
(34:09):
of me. I mean, I anticipated we were going to
go to double digit, which again at the time, people
are like, that is insane. We will never in the
West go to double digit inflation. I'm like, well, will
watch it. Watch it. So we have jumped up, right,
so we could be more like a five to ten
five to ten percent. I think we may face that
for a while. And that's still pretty shocking for pretty
(34:30):
shocking for populations that he used to inflation knocking around
one two three percent. It's still it's a shocking business.
And it makes you wonder something I talk about with
several guests. Will the central bank shift their inflation targets?
You know, will they shift the target to meet the
radi of inflation rather than hoping that the raatei of
inflation will come down to meet the target, the target,
of course, being almost entirely random, no one can remember.
(34:51):
I often ask people, you know, do you know where
the chief scent came from? And of course most people
haven't got the faintest idea it always picked out of
thin air. It was what we've actually found, and I've found,
and I've mentioned this on the podcast before, we actually
found in an all magazine called Status, which is not
a fund In an issue of that from the early sixties,
we found a report on the paper that an academic
(35:13):
had written where he made the suggestion that possibly, conceivably
two percent inflation was roughly the right amount to encourage
growth in a developed economy New Zealand. New Zealand academic.
I know, I've talked to central bankers about this and
they're likely it's just totally random. We picked it out
at an air The real issue is what is the
(35:35):
pain tolerance of the public. And then the really big issue,
and this is the critical issue, is how are we
going to fund the future? That's the real basic question.
And because there's so much debt, inflation is a way
of getting rid of debt. So if you say two
(35:58):
percent inflation is okay, where you're really saying is we
erode the debt burden by that much and that shouldn't
be so much pain for the general public. But when
you get up into these higher numbers, it's just more pain.
So you get more political volatility, which we're seeing right.
We're definitely seeing more political volatility. And this is a
(36:20):
question of like what's the pain tolerance over the coming
years for what's required to fix all this, Just to
be clear. In the end, look, we've had much worse
inflation than ten percent. People will figure it out, they
will adjust, there will be solutions. So it's not that
it's impossible. Right when I was a kid, we got
(36:40):
to what was it, twenty one percent inflation and everybody's
still here, right, they survived, So we'll figure it out.
It's just uncomfortable. We'll figure it out. Yeah, And you know,
with a bit of like that level of inflation, will
if maybe we say four five percent for a decade,
and we'll find that our level of government debt have
(37:01):
gone down very significantly relative to GDP, and that will
not be a bad thing. Might be uncomfortable on the way,
but it's a good result. It's a good result that
let's pepper, I have to ask you because here we are.
We've talked a lot about the global environment, the geo
political environment, the global economy, inflation, etc. But what on
earth does an investor do in an environment like this?
(37:21):
So you know, here we are, as ordinary retail investor,
sitting here with our ices and our auto enrollment pensions
going Oh god, one day I want to retire what
do we do? Why would you put money? Now? Well,
so let's start with the word retire, which I think
is to retire one day. I hear you, well, but
(37:44):
what's the definition of retire in the modern era. It's
not this old nineteen fifties sixties idea that you stop
and then you spend the rest of your life playing golf.
I don't think that really works anymore. The fastest growing
component of the labor market now in the US and
in the UK are the over fifty fives. Now why
(38:04):
is that? Because frankly, they realize they're going to live
till they're a hundred and they don't want to be bored. Now,
are they going back to a full time job. No,
but they are going back to a portfolio. So they'll
be like working with a friend on an entrepreneurial project,
and they'll do some consulting for their old boss and there,
you know, they create a portfolio of different income streams.
(38:25):
And it also gives them something that's productive to do.
And I do think human beings are healthier and happier
when they have identity, that they have meaningful work. And
so I think that's happening and I can't say that's
a bad thing. That also brings all that knowledge and
wisdom back into the economy. I always thought it was
(38:46):
crazy that we fire people automatically at sixty. I'm like, wait,
there aren't those people maybe the most valuable people to
have around. Yeah, now I'm tirely agree. Okay, So let
me redefine retirement for you. Let me redefine retire as
being the ability to choose when, how and where you work,
be the ability to afford to do that. So that's
(39:07):
what we want. I think when we hit maybe fifty
five pushing sixty, what we want is to be able
to fully afford to say, do you know what, there's
just one afternoon on that for me, and I'm going
to play golf for two days and then may be
able to another half day consulting for so and stiff.
So it's still even with the new definition of retirement
or growing old, etc. It's still nonetheless a financial equation agreed,
(39:31):
and the choice options are fewer in the current environment,
which is why people feel like I wanted to retire,
but I'm not able to yet. So that's one piece
of this second piece of it is, you know, look
as interest rates go up. There are lots of very
conservative things that are paying better. You know, bonds look good,
(39:53):
and that is what everybody was complaining about a decade ago. Right,
So now you can make money being in bonds, government bonds,
you know, corporate bonds. And also because of all this
innovation and technology and people forget that, you know, the
phone in your pocket literally has more computational power than
(40:16):
we needed to send a human to the moon. Right,
people are able to create income streams using their phone
in ways that were unimaginable twenty years ago, and they
are so that means there are lots of new startups.
And I mentioned the wave of startups. If you google that,
you'll see Bloomberg did a piece a little while ago
(40:38):
about this incredible wave of startups that's occurring now. Startups
are fascinating to me because our biggest pools of savings
are pension funds. Basically can't invest in them because number one,
they're too small, so they can't absorb very much capital,
and number two, they're very risky, and that number three
(41:01):
they don't really move the performance dial for big institutional
investors and for little investors they're just too crazy risky.
But It's so strange because this is the part of
the economy that generates most of the net new jobs
is firms that employ less than fifty people, and it
definitely is the source of most of the new innovation.
(41:23):
Like this week, I was talking at Rolls Royce and
they have to figure out how to interface with little
startups because they're the ones with the coolest new technology.
It's not coming out of the big majors anymore. So
we need to find a way for the people in
your audience to be able to engage with earlier stage
(41:45):
startups than we have been able to. I also think
there's a ninety four percent failure rate of startups in
the United Kingdom, which is considered one of the best
performing startup markets in the world right at a ninety
four percent failure rate, So we should ask question why
are they all failing? And often it has to do
(42:07):
with things that are so easily fixed. It's because they
have a brilliant idea, but it's never occurred to them
how do you actually run a business? So they don't
know how to set up a data room for the investors,
or they don't understand what kind of legal framework they're
going to need to create the business. These are things
that are fixable. We could lift the success rate of startups.
(42:30):
And I would say that everyone in your audience has
an interest in be able to engage and invest in
that space and getting a higher success rate. But you
have to be able to accept that. You know, like
private equity firms, they go, We're going to invest in
twenty things and seventeen are going to fail, and three
(42:52):
of them are really going to pay well, they're going
to one. One'll ago. Yeah, it sounds like John and
I need to write more about VCTs and IT equity.
John has been writing a bit about private equity recently.
He's interested there. I'm always mildly suspicious of the structure
of the private equity sector, but you know, we'll write
more on that. Let me ask you one last thing,
(43:12):
which I'm fred asking everybody because I'm fascinated in it.
In the answers, you hold any cryptocurrencies? Would you be
a buyer of cryptocurrencies, in particular of bitcoin? So I don't,
but I'm very active in following this new technology and
I I've not been a big bitcoiner. Oh gosh, now
(43:37):
I'm going to get hit on Twitter. N't time for
saying yep, you are. But I have been very big
on crypto. I have said, this is a fundamentally new technology.
It's about decentralizing the world of finance, and it's a
democratization of finance. That's very important. But that doesn't mean
(44:02):
that every single business model that is within crypto is good.
So the shakeout that we've seen in crypto, you know,
the whole sam Bangmin freed disaster, people went, that's it
crypto's debt, and I'm like, no, no, yeah, that was me,
that was me crypt That would definitely me Crypto's dead. Okay,
But I think this is like when the dot com
(44:24):
bubble burst and everybody was like, that's the end of
the Internet. Were done, and actually it was the beginning.
And the reason is you had the shakeout of all
the really bad business models around the Internet that didn't
make any sense, and the ones that survived, which weren't many,
were good business models. And so I'm watching the crypto
(44:46):
space for these better business models that will now begin
to exist. And again, as government goes to CBDC, they're
gonna say, I think they're gonna say crypto is fine,
you can have crypto if one, which has not been
their position to date. But I think they're going to
say it's okay, but they're two provisors. Number One, it
(45:06):
can't be held anonymously, and number two, you have to
declare it. Now the bitcoin crowd is going to say it,
but the whole point of being a bitcoin is to
be anonymous and not have to declare my money to
the government. I'm like, well, good luck with that, because
the state is the state. So you know, you can't
run and hide this. You're going to have to pay
your taxes and be part of the system, or you
(45:27):
can try to find some islands somewhere, but you know,
good luck with that. So and the Sam Bankman Freed
case is going to demonstrate this that And I actually
will go further and say, I think the US government
or maybe the British government are going to end up
being the biggest holders of bitcoin and crypto assets through confiscation. Yeah,
(45:50):
because as you confiscate all these assets, then you're gonna
if you're a treasury and you're at the Justice Department
and FBI, you're like, hey, I just confiscated four billion
dollars worth of crypto, which was the first big enforcement
case that they did. That's how much they got. Now
are they going to say that's worthless. No, they would
(46:12):
much rather say no, this has real value and it's
ours now and we could spend it. I mean, that's
more than the annual budget of you know, most government agencies.
So I do think we're going to see crypto that
is compliant. Now, that's the whole bunch of people are
going to say, well, that defeats the whole point of crypto,
and I say, well, I don't think so. I think
(46:33):
that we'll see a place for this democratizing of finance,
this this dividing up of the capital flows that crypto permits.
It's just just going to be compliant with the new
CPDC arrangements. Okay, yeah, you're definitely getting k back. I
(46:56):
can fail it coming. Yeah, but we should end that
they are taking up enough of your time. But that
I would tell you what we didn't do. We didn't
talk about space. We're gonna have to we have to
talk about by the way that all right, okay, we
have to do that. We have to do that, especially
here in Britain, because I think the British public are
totally not getting the Britain space sector is going to
(47:16):
be massive. I would say it's going to be on
a par with the city It's this is going to
generate cash gloves for this country that are extraordinary. And
people are like, well, why, first of all, why are
we even going into space? We've got all these problems
here on Earth. And the real answer is because you
can solve virtually every earthbound problem with a space based solution,
including unlimited energy unlimited US no no, no, stop, SUPs up.
(47:39):
How can we get unlimited energy from space? This is
about the Sun and mirrors. It is it is yeah,
and Arabus has now done the test and shown it works.
By the way, we already knew it worked because militaries
knew it worked. All you're doing is put a mirror
on a satellite, you beamed the Sun's raised Earth in
the form of mainly radio waves, and suddenly you can
(48:00):
have cheap unlimited energy anywhere, anytime. And notice that the
Saudis have just invested with the British to build this
capacity in the North Sea. So you know this is
not like sci fi. This is totally coming and I
have friends who are building the prototypes for these things.
This will be in two and a half three years,
(48:21):
we're gonna see this live. And okay, now that start
worrying about the energy crisis. I do start worrying about
the energy crisis completely. Honestly, it's gonna be we wake
up one morning where to go, Holy moly. And here's
the big problem. What the heck is that going to
mean for oil and gas companies? I think their sure
price is going to get hit hard by this reality
(48:42):
that's coming. So there's a whole bunch more to say.
But Britain is at the forefront of this, and the
US wants them to be in that position. So it's
scenario that I would be investing in. I would be
watching carefully and understanding the implications for other industries, including
by the way, I know this sounds so science fiction,
(49:04):
but mining of asteroids and suddenly you don't need to
rip up Earth anymore, and mining companies on Earth they're
going to find they're confronting really high grades silicon, really
high grade cobald, really high grade gold that you are
getting from an entirely new location and it doesn't create
(49:26):
environmental problems. And so there's a whole bunch of stuff
going on in the space space that's worthy of attention,
So I write about that too on my subset column.
I have a couple of columns called the space space. Okay, okay,
one last question. Then I'm gonna ask you to give
us the address of that subsex so can go sign up.
But why why the UK? Why? I mean you keep
(49:46):
saying this is a wonderful of chinkief. The UK well
right at the full front of this, But why why
are we at the full front of it? I mean,
I'm thrilled, but why ls I think it's partly because
the United States wants Britain as their closest defense ally
to be deeply engaged in this. It's partly because I
(50:06):
think it's the imperial empire path. So the British have
a sense of the world and possibility. And one of
the things the earliest stage of the space space is communications,
and so the British are very involved in satellite networks
for Internet connectivity. For example, British are very strong on
(50:30):
the international Internet cabling process around the world, submarines, etc.
All that is connected to this building out of Internet
access via space. Right like today, only three percent of
most Internet connections happen via starlink in space in the future.
I think that's going to go to like ninety percent rights.
And so because the British have this global view and
(50:54):
this history of working with different parts of the world,
they are actually very involved in the communication sector and
therefore involved in that space. And let's face it, British
are very strong on things like mining globally, so the
clever miners are going, hey, we have a whole new
domain to work in. So I think we're gonna send
(51:17):
the launch that we recently saw in You and I
talked about all the new launch locations here in the UK,
the one in um Cornwall and the one you've been
to up and I think, yeah, yeah, you said, there's
not much there. It's not very exciting that will be,
but there will be. That's right. Well, right now everybody's
focused on launch. I think launch is almost over, Like
(51:40):
we already know we can launch. The issue is what
you're going to do in space, and I think the
build in space is coming. And again Britain's very good
at robotics, remote control, automation, right, I've you know, been
involved in manufacturing drones here in the Okay. I know
(52:00):
the British can be very competitive in this space. So,
by the way, just to finish, I'll just say this,
when you think about the space space, I think they're
gonna be a ton of jobs created by this. But
then you won't need to go into space. I think
we're going to find there a whole bunch of people
that are sitting here on the ground here in Britain
working every day managing assets that are in space. That's
(52:24):
the future that I see. Well, there we go, everybody,
not just global Britain, but into galect. It's seriously interplanetary
and I'm not too writing. Give us your substack address.
I'm gonna fail. Everybody wanting to read more about this. Yeah,
doctor Pepa dot substag dot com and it's listed as
doctor Peppa's pen on podcast. But I haven't launched the
(52:45):
podcast yet, but I will be. You better get home.
I know it's going to be brilliant. Pippa, thank you
so much for joining us today. Absolutely fantastic. We're so grateful,
so great to be on with you. Thank you, Thank
you for listening to this week's Marion Talks Money. We
will be back next week. In the meantime, if you
like our show, and I can't think that you wouldn't rate, review,
(53:08):
and subscribe wherever you listen to your podcast. This episode
was hosted by me Bear in Sunset Web. It was
produced by Samasadi, additional editing by Blake Maple's special thanks
of course to Pipmalgram and to John Steppok and his
many UFO sightings, and of course our weekly reminder to
sign up to John's daily newsletter Money Distilled. Link is
(53:28):
in the show notes. You will not regret signing up right.
One more special announcement, I will be doing a live
taping of this podcast at the Bloomberg invest event on
the twenty second of March. It's called Strategies for Wealth Creation.
If you're in London you can join in person. Everyone
else join online. The link is in the show notes,
so do please register. We would love to see you
(53:49):
there
Host
Merryn Somerset Webb
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