Russell Napier: The world will experience a capex boom

There are a lot of financial people continuing to highlight various situations in "never before seen" spots. This interview frames a view that wea re shifting to a very different economic environment, and explains the reasons why and how.

Back in 2008, the world economy came to the brink of a deflationary debt liquidation, where the entire system was at risk crashing down. We’ve known that for years. We can’t stand normal, necessary recessions anymore without fearing a collapse of the system. So the level of debt – private and public – to GDP has to come down, and the easiest way to do that is by increasing the growth rate of nominal GDP. That was the way it was done in the decades after World War II.

Interesting read, and the timeline is long.

Absolutely. I think we’ll need at least 15 years of government-directed investment and financial repression. Average total debt to GDP is at 300% today. You’ll want to see it down to 200% or less.

There is some potential to avoid he states, if we can figure out a way to drive real productivity up faster. Who knows where that could come from though.