1. Skip to Menu
  2. Skip to Content
  3. Skip to Footer

On the 4th November 2016, VCL published its monthly note. This included the publication of VCL's CEO, Martin Wood's monthly comment, as well as this month's five resource stocks of interest, which can be seen on the Short Note page.

"My eldest son and his peers are starting university, this started me thinking about studying the dismal science of economics. I can't decide if this is the worst time to study it because all, and I mean all, the mainstream current theories clearly don't work. Or the most exciting as for the same reason new and radical ideas will shortly be emerging into the main stream and can be explored and tested. I will throw my idea in for a PhD economics student to run with - "The world is awash with capital and needs a roll back". Not sure how to get this across but it is obvious to me that there is too much capital chasing too few assets. Wages are stagnant, inflation is negligible, and the excess capital is being concentrated on fewer and free hands - no surprise there to anyone who understands the driving forces of (and perhaps even the whole point of) capitalism. 

Asset prices are roaring off into the distance and housing prices particularly are getting away from being affordable to the average person. 

We need to get rid of trillions of dollars of surplus capital without reducing average wages, this will reduce asset values back to the point where normal people can look to buy. 

NIRP doesn't seem to be able to do this. We need a junior resource style roll back but not on savings, which we need for capital formation, but on the assets, themselves. Some sort of one off realignment (an expropriation of value) - which is essentially what a roll back is, so we can realign the world for growth.

I know someone is going to write and point out that a) this is almost impossible to do in reality and b) in theory at least, roll back doesn't lead to any loss of value, but a) I am just chucking an idea out for discussion, doesn't have to be realistic and b) we all know in reality, it does!