“After a great blow, or crisis, after the first shock and then after the nerves have stopped screaming and twitching, you settle down to the new condition of things and feel that all possibility of change has been used up. You adjust yourself, and are sure that the new equilibrium is for eternity. . . But if anything is certain it is that no story is ever over, for the story which we think is over is only a chapter in a story which will not be over, and it isn’t the game that is over, it is just an inning, and that game has a lot more than nine innings. When the game stops it will be called on account of darkness. But it is a long day.”
– Robert Penn Warren.
Reporter: “Did you direct Secretary Bessent to intervene in the bond market?”
Trump: “No. Not at all. He’s a very capable man. He wanted to do it. He’s very good at it.. He has a good touch – a very good natural touch – for the bonds and interest. He did that. Yeah.”
Reporter: “Yields have come back since then. Have you talked with him about another type of intervention? Is that something he’ll be doing?”
Trump: “There are many types of intervention. That’s one. The ultimate intervention is our military. If we have to use that, we will.”
– President Trump to reporter at Joint Base Andrews, 21st August 2026.
Get your Free
financial review
People behave oddly in a crisis. First, there is outright denial. When Elia Zedeño heard the impact of an aircraft striking the World Trade Centre eleven floors above her, her first reaction was to remain at her desk. On average, survivors of the tragedy waited six minutes before heading for the exits. Some waited as long as 45 minutes before deciding to do something. Even amid the presence of smoke and the choking smell of jet fuel, roughly one thousand people elected to take the time to shut down their computers.
Then there is deliberation. Amanda Ripley, author of ‘The Unthinkable: who survives when disaster strikes – and why’, writes:
“We know something is terribly wrong, but we don’t know what to do about it. How do we decide ?”
Despite being yelled at by a colleague to leave the building, Elia Zedeño still managed to delay her departure. First she reached for her purse. Then she started walking round her cubicle, looking for things to take with her. This ‘gathering’ behaviour is apparently common in life-or-death situations. “Facing a void of unknown, we want to be prepared with as many supplies as possible.” Elia Zedeño decided to pick up a mystery novel she’d been reading.
Finally, after an agonizing delay, she reached the last stage in the process. She took action. Ahead of her there would be thirty floors to descend before she reached the ground. Denial and deliberation would continue to hound her at every stage of the journey. But she eventually left the building in one piece, safely.
We know something isn’t quite right. We’ve known this for well over a decade. A financial crisis which included a near extinction-level event for Wall Street and many of our own banks has led to all kinds of extraordinary and never before seen monetary experimentation. The prudent saver has been punished in order to try and save the reckless banker. Interest rates have been driven down to zero – and in some markets even below that. Trillions of dollars, pounds and euros have been conjured out of nowhere to keep the system afloat.
And it has all been for nothing.
The central banks failed for years to conjure up the inflation that was the primary objective of Quantitative Easing. Covid era money-printing finally did the trick.
For sure, we experienced inflation in financial asset prices. The prices of stocks, bonds and prime residential property all rose in the aftermath of the Lehman Brothers collapse. Rich boys’ toys – fine wine, art, classic cars – all appreciated in price, as the amount of money chasing a finite amount of goods swelled, courtesy of the printing press.
But consumer and retail price inflation remained stubbornly quiescent – until the lockdowns forced monetary administrations into overdrive.
Pre-Covid, here is what financial historian Russell Napier had to say:
“If central bankers’ manipulation of prices fails to generate strong private demand and inflation, then the necessary debt to GDP reduction must come in highly destructive ways for the owners of capital. Society will have to choose between austerity, default or the creation of a government demand driven reflation. These are the only three options if central bankers fail to boost growth and also inflation. Austerity would bring depression; default would bring bankruptcy, and a government demand driven reflation would bring some degree of suspension of the market economy. These are painful and difficult choices if central banks fail. [I] believe that society will most likely choose the apparently least painful route and thus we now face a massive structural shift away from a market-orientated economic system.”
To put it more plainly, our central banks failed for years in their mission to generate inflation. Since painful inflation is absolutely required in order to reduce the staggering debt loads of western governments, central banks may now be replaced in this mission by governments themselves. That means the reimposition of capital controls.
The reimposition of capital controls would, in turn, have stark consequences for investors.
“There are many who see the above scenario as ‘the end of the world’ but of course it isn’t. For the man in the street it involves another economic shock but then a ‘democratic’ reflation without the assistance of the discredited [central] bankers. The cycle that results will be full of growth and mainly inflation. It would reduce the debt burdens of many and feel a lot better than the deflation wrought by market forces. The inevitable massive capital misallocation that results from any government driven investment cycle would take many years to become evident and produce negative impacts. This will not seem like the end of the world for most people. However, for the stewards of private sector capital, there will be little to do in such a world of mandated prices and conscripted capital.”
This correspondent was only ten years old when we last had capital controls in the UK. Mrs Thatcher abolished them soon after taking office in 1979. Some readers will remember precisely what life was like under a regime of “mandated prices and conscripted capital”.
If you’re unfamiliar with the phrase ‘capital controls’, Wikipedia offers a useful summary:
“..residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation’s government can use to regulate flows from capital markets into and out of the country’s capital account..”
They could include foreign exchange controls that limit or ban outright the conversion into, or hoarding of, foreign currencies. There might be limits on how much foreign currency you can take out of the country. Your money might be trapped in the UK assuming you get to use cash money at all (the likes of Andrew Bailey at the Bank of England would prefer that you use government-controlled electronic money that might offer a negative interest rate).
Forget buying a property abroad. Forget buying foreign stocks. Forget lavish foreign holidays. Freedom of movement would itself be curtailed.
Is Russell Napier right ? Only time will tell. But given that he might well be, and given that the impact of such controls would be severe on all investors, the time to act is now.
There are lots of moving parts to this story, and if the post-Lehman years have taught us anything, it’s that sensible asset allocation within this unprecedented financial environment is perhaps the most difficult task in the world. Pragmatism leads us to conclude that if anything can happen, your portfolio should be invested in such a way that it will survive whatever might happen. As Voltaire is once said to have remarked,
“Doubt is not a pleasant condition, but certainty is absurd.”
And if you think Russell Napier’s warning about capital controls should be heeded – and we do – then now is also the time to start examining options to prepare for them. If you have the resources to invest in foreign property, or foreign shares, or simply foreign currency, now may well be a good time to start examining such investments, especially under an Andy Burnham administration.
And there is one portfolio holding that longstanding readers will appreciate may have unusual value in this world of potential capital controls. Russell asks,
“Can a deflationary bust caused by shifting capital flows.. be good for the gold price ? Well, rising real interest rates and the rise of the US dollar are clearly negative for gold. However, a shift to the conscription of capital by government to force a government-led investment cycle would be very positive for gold. Gold, the form of capital that is easiest to move without trace, is the most difficult form of capital for governments to conscript. Those qualities will produce many buyers as the nature of the authorities’ response to our deflationary bust become ever more apparent. So how do we weigh up the negative impacts for gold of a rising US dollar and rising real interest rates with the positives associated with increased government intervention in markets ? We wait for the gold price to rise even as the US dollar is rising. That should provide sufficient evidence that the threat of a government-instigated reflation is more than offsetting the negatives associated with.. deflation. Should that reflation succeed, then gold would likely be a major beneficiary as positive real rates of interest would turn into negative real rates that would be sustained by financial repression for perhaps a few decades.”
So hold cash if you must. Avoid bonds. Consider ‘absolute return’ funds, especially systematic trend-following funds, which offer the potential for making positive returns even in dreadful bear markets. And whatever you do, hold gold. And silver. And sensibly priced miners.
We honestly hope that Russell’s warnings overstate the gravity of the situation. But there’s the world as it is, and the world as we’d like it to be. When it comes to investing our capital, we have to operate in the world as it is. And in this world, we simply cannot be too careful. The first step in dealing with any crisis is to acknowledge the crisis in the first place. Well, now the crisis is here, and we owe it to ourselves to take action.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds. The fund was “Highly commended” in Investment Week’s 2026 Fund Manager of the Year Awards.
“After a great blow, or crisis, after the first shock and then after the nerves have stopped screaming and twitching, you settle down to the new condition of things and feel that all possibility of change has been used up. You adjust yourself, and are sure that the new equilibrium is for eternity. . . But if anything is certain it is that no story is ever over, for the story which we think is over is only a chapter in a story which will not be over, and it isn’t the game that is over, it is just an inning, and that game has a lot more than nine innings. When the game stops it will be called on account of darkness. But it is a long day.”
– Robert Penn Warren.
Reporter: “Did you direct Secretary Bessent to intervene in the bond market?”
Trump: “No. Not at all. He’s a very capable man. He wanted to do it. He’s very good at it.. He has a good touch – a very good natural touch – for the bonds and interest. He did that. Yeah.”
Reporter: “Yields have come back since then. Have you talked with him about another type of intervention? Is that something he’ll be doing?”
Trump: “There are many types of intervention. That’s one. The ultimate intervention is our military. If we have to use that, we will.”
– President Trump to reporter at Joint Base Andrews, 21st August 2026.
Get your Free
financial review
People behave oddly in a crisis. First, there is outright denial. When Elia Zedeño heard the impact of an aircraft striking the World Trade Centre eleven floors above her, her first reaction was to remain at her desk. On average, survivors of the tragedy waited six minutes before heading for the exits. Some waited as long as 45 minutes before deciding to do something. Even amid the presence of smoke and the choking smell of jet fuel, roughly one thousand people elected to take the time to shut down their computers.
Then there is deliberation. Amanda Ripley, author of ‘The Unthinkable: who survives when disaster strikes – and why’, writes:
“We know something is terribly wrong, but we don’t know what to do about it. How do we decide ?”
Despite being yelled at by a colleague to leave the building, Elia Zedeño still managed to delay her departure. First she reached for her purse. Then she started walking round her cubicle, looking for things to take with her. This ‘gathering’ behaviour is apparently common in life-or-death situations. “Facing a void of unknown, we want to be prepared with as many supplies as possible.” Elia Zedeño decided to pick up a mystery novel she’d been reading.
Finally, after an agonizing delay, she reached the last stage in the process. She took action. Ahead of her there would be thirty floors to descend before she reached the ground. Denial and deliberation would continue to hound her at every stage of the journey. But she eventually left the building in one piece, safely.
We know something isn’t quite right. We’ve known this for well over a decade. A financial crisis which included a near extinction-level event for Wall Street and many of our own banks has led to all kinds of extraordinary and never before seen monetary experimentation. The prudent saver has been punished in order to try and save the reckless banker. Interest rates have been driven down to zero – and in some markets even below that. Trillions of dollars, pounds and euros have been conjured out of nowhere to keep the system afloat.
And it has all been for nothing.
The central banks failed for years to conjure up the inflation that was the primary objective of Quantitative Easing. Covid era money-printing finally did the trick.
For sure, we experienced inflation in financial asset prices. The prices of stocks, bonds and prime residential property all rose in the aftermath of the Lehman Brothers collapse. Rich boys’ toys – fine wine, art, classic cars – all appreciated in price, as the amount of money chasing a finite amount of goods swelled, courtesy of the printing press.
But consumer and retail price inflation remained stubbornly quiescent – until the lockdowns forced monetary administrations into overdrive.
Pre-Covid, here is what financial historian Russell Napier had to say:
“If central bankers’ manipulation of prices fails to generate strong private demand and inflation, then the necessary debt to GDP reduction must come in highly destructive ways for the owners of capital. Society will have to choose between austerity, default or the creation of a government demand driven reflation. These are the only three options if central bankers fail to boost growth and also inflation. Austerity would bring depression; default would bring bankruptcy, and a government demand driven reflation would bring some degree of suspension of the market economy. These are painful and difficult choices if central banks fail. [I] believe that society will most likely choose the apparently least painful route and thus we now face a massive structural shift away from a market-orientated economic system.”
To put it more plainly, our central banks failed for years in their mission to generate inflation. Since painful inflation is absolutely required in order to reduce the staggering debt loads of western governments, central banks may now be replaced in this mission by governments themselves. That means the reimposition of capital controls.
The reimposition of capital controls would, in turn, have stark consequences for investors.
“There are many who see the above scenario as ‘the end of the world’ but of course it isn’t. For the man in the street it involves another economic shock but then a ‘democratic’ reflation without the assistance of the discredited [central] bankers. The cycle that results will be full of growth and mainly inflation. It would reduce the debt burdens of many and feel a lot better than the deflation wrought by market forces. The inevitable massive capital misallocation that results from any government driven investment cycle would take many years to become evident and produce negative impacts. This will not seem like the end of the world for most people. However, for the stewards of private sector capital, there will be little to do in such a world of mandated prices and conscripted capital.”
This correspondent was only ten years old when we last had capital controls in the UK. Mrs Thatcher abolished them soon after taking office in 1979. Some readers will remember precisely what life was like under a regime of “mandated prices and conscripted capital”.
If you’re unfamiliar with the phrase ‘capital controls’, Wikipedia offers a useful summary:
“..residency-based measures such as transaction taxes, other limits, or outright prohibitions that a nation’s government can use to regulate flows from capital markets into and out of the country’s capital account..”
They could include foreign exchange controls that limit or ban outright the conversion into, or hoarding of, foreign currencies. There might be limits on how much foreign currency you can take out of the country. Your money might be trapped in the UK assuming you get to use cash money at all (the likes of Andrew Bailey at the Bank of England would prefer that you use government-controlled electronic money that might offer a negative interest rate).
Forget buying a property abroad. Forget buying foreign stocks. Forget lavish foreign holidays. Freedom of movement would itself be curtailed.
Is Russell Napier right ? Only time will tell. But given that he might well be, and given that the impact of such controls would be severe on all investors, the time to act is now.
There are lots of moving parts to this story, and if the post-Lehman years have taught us anything, it’s that sensible asset allocation within this unprecedented financial environment is perhaps the most difficult task in the world. Pragmatism leads us to conclude that if anything can happen, your portfolio should be invested in such a way that it will survive whatever might happen. As Voltaire is once said to have remarked,
“Doubt is not a pleasant condition, but certainty is absurd.”
And if you think Russell Napier’s warning about capital controls should be heeded – and we do – then now is also the time to start examining options to prepare for them. If you have the resources to invest in foreign property, or foreign shares, or simply foreign currency, now may well be a good time to start examining such investments, especially under an Andy Burnham administration.
And there is one portfolio holding that longstanding readers will appreciate may have unusual value in this world of potential capital controls. Russell asks,
“Can a deflationary bust caused by shifting capital flows.. be good for the gold price ? Well, rising real interest rates and the rise of the US dollar are clearly negative for gold. However, a shift to the conscription of capital by government to force a government-led investment cycle would be very positive for gold. Gold, the form of capital that is easiest to move without trace, is the most difficult form of capital for governments to conscript. Those qualities will produce many buyers as the nature of the authorities’ response to our deflationary bust become ever more apparent. So how do we weigh up the negative impacts for gold of a rising US dollar and rising real interest rates with the positives associated with increased government intervention in markets ? We wait for the gold price to rise even as the US dollar is rising. That should provide sufficient evidence that the threat of a government-instigated reflation is more than offsetting the negatives associated with.. deflation. Should that reflation succeed, then gold would likely be a major beneficiary as positive real rates of interest would turn into negative real rates that would be sustained by financial repression for perhaps a few decades.”
So hold cash if you must. Avoid bonds. Consider ‘absolute return’ funds, especially systematic trend-following funds, which offer the potential for making positive returns even in dreadful bear markets. And whatever you do, hold gold. And silver. And sensibly priced miners.
We honestly hope that Russell’s warnings overstate the gravity of the situation. But there’s the world as it is, and the world as we’d like it to be. When it comes to investing our capital, we have to operate in the world as it is. And in this world, we simply cannot be too careful. The first step in dealing with any crisis is to acknowledge the crisis in the first place. Well, now the crisis is here, and we owe it to ourselves to take action.
………….
As you may know, we also manage bespoke investment portfolios for private clients internationally. We would be delighted to help you too. Because of the current heightened market volatility we are offering a completely free financial review, with no strings attached, to see if our value-oriented approach might benefit your portfolio – with no obligation at all:
Get your Free
financial review
…………
Tim Price is co-manager of the VT Price Value Portfolio and author of ‘Investing through the Looking Glass: a rational guide to irrational financial markets’. You can access a full archive of these weekly investment commentaries here. You can listen to our regular ‘State of the Markets’ podcasts, with Paul Rodriguez of ThinkTrading.com, here. Email us: info@pricevaluepartners.com.
Price Value Partners manage investment portfolios for private clients. We also manage the VT Price Value Portfolio, an unconstrained global fund investing in Benjamin Graham-style value stocks and real assets, and also in systematic trend-following funds. The fund was “Highly commended” in Investment Week’s 2026 Fund Manager of the Year Awards.
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