Summary: Credit is now the new money - A game that can’t last<br> “Moneyness of Credit,” works as long as the Fed can turn fear to greed<br> Noland sees credit dystopia vs Duncan’s credit utopia (next week’s show)<br> <br> <br> <br> The McAlvany Weekly Commentary<br> with David McAlvany and Kevin Orrick<br> <br> Doug Noland: It’s Too Late To Turn Back Now… I Believe You Should Take Cover!<br> August 5, 2020<br> <br> “At some point, a crisis of confidence in this so-called money is inevitable. People aren’t going to trust it forever if you continue to create trillions and trillions backed by nothing but a promise from a central bank and a promise from governments. That’s the flaw in all of this. You can’t sustain the perceptions of moneyness forever. History has many examples of how money is destroyed by over-issuance, and now we’re watching it in real time.”<br> <br> – Doug Noland<br> <br> Kevin: I’m really looking forward to the next two weeks, Dave. This week we’ve got, of course, Doug Noland on, and Doug Noland has been a master at analyzing the dangers of credit for the last three or four decades. He’s now on the team. He was somebody that we’ve read for decades before he ever came on with you and I love it. I love listening to you guys talk.<br> <br> David: He joined our asset management team four years ago and time has gone by very quickly. Love working with Doug. When you work with people who are incredibly sharp, it sharpens you. And I think the last 3-4 years have been… I’m grateful. I’m grateful for just being able to continue to grow and hone a skill set within the asset management space. Noland is someone who is very analytical. Next week we have a person who is very analytical as well and actually loves the study of money and credit as well. So we go from Doug Noland this week to Richard Duncan next week.<br> <br> Kevin: But they don’t necessarily agree on outcomes.<br> <br> David: You’re right. There is a fork in the road. As they analyze similar things in terms of money and credit, there is a potential for a negative outcome in terms of Noland’s analytical framework. And there’s also potential for a negative outcome in terms of Richard Duncan’s framework and that necessitates a different set of decisions. And so there is an inevitability to credit growth and expansion. For Noland that comes at a high cost, ultimately. And for Duncan, it also comes at a high cost, but that’s why we must press on and press forward.<br> <br> Kevin: You know, I think about where the two of them agree. They would both say that we’re past the point of no return, that money turned into credit, and we’re now in a credit expansion. Noland would say kicking the can down the road is ultimately going to end in dystopia. What Duncan would say is, it’s our only chance at utopia. And they both know that credit probably ends badly, but I think Duncan would just like to have it end badly after he passes away.<br> <br> David: That may be, so if we have a shot at utopia, let’s spend a little bit more. And that’s a little bit like looking at the hair of the dog as the real solution to a problem with alcoholism.<br> <br> You’re right. It will take away some of the consequence in the short run.<br> <br> Kevin: Do you remember Ian McAvity said that a doctor told him to not stop smoking because he had smoked so much that it would probably kill him.<br> <br> David: That’s right. “You quit now and you’re dead.” That’s really what we’re talking about. Great back-to-back weeks here. I hope for the listener that they appreciate the tension that’s created and the appropriate place to sit, somewhere right in between, sitting with that tension and allowing that to sort of inform your more critical appraisal of the markets.<br> <br> Kevin: Right. And it may create some aggravation. If you’re not debating with the people you’re listening to,
