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Resolve's Gestalt University

Jan 31, 2021

This is “ReSolve’s Riffs” – live on YouTube every Friday afternoon to debate the most relevant investment topics of the day.

With governments pressing on with huge fiscal and monetary expansion, fears of inflation have once again resurfaced. The spectacular rise in the price of grains and other raw materials, some by as much as 30% last year, have added fuel to these concerns. To discuss this inflationary macro backdrop we welcomed Bill Fleckenstein (President of Fleckenstein Capital & co-host of the End Game podcast series) to the show. A former dedicated short seller, this episode was particularly timely in the wake of the historic short squeezes that took place this week and the ripple effects across markets. Our conversation included:

  • Running a short equity fund, adapting to shifting circumstances and ultimately returning capital to shareholders
  • The role of short selling in markets and the disruptions caused by Fed policies
  • r/WallStreetBets, GameStop et al – a brief anatomy of a surreal week
  • Deflation and Japanification – why the Fed is cornered
  • Why inflation is the most important variable to watch for in the coming months
  • MMT, taxation and breaking the social contract

Bill also expressed his views on how portfolios should prepare for what he believes is an inevitable outcome, but also entertained scenarios that might cause him to change his thesis. In the end, “in a social democracy with fiat currency, all roads lead to inflation”.

Thank you for watching and listening. See you next week.