Bill Holter: Credit and Currency Chaos
Tom welcomes back an absolute icon to the show, Bill Holter of JSMineset. Bill discusses how the credit markets are smarter than equities. At some point, there will be sovereign risk problems, which will impact premiums on yields. The Fed balance sheet is supposed to be shrinking, but that requires someone to want to buy these assets.
The ECB is forced to sell good credit to buy poorer debt like Italy’s. The problems today are larger than any one central bank. Currencies globally are all based on credit. Once credit starts to collapse, you will see currencies fail. That process can turn into hyperinflation.
We’re seeing real estate prices decline in many countries including China and people are having problems paying mortgages. Historically, whenever the Fed tries to raise rates, they’ve broken something in the system. Higher rates expose the weak debts in the system.
Money velocity is just now showing signs of life after twenty plus years of decline. This means some people now consider cash to be risky. People should consider buying what they may need over the next couple of years now.
Russia is a nation operating with low debt, while the United States reached “Banana Republic” levels of debt a while ago. The sanction’s plan was to bankrupt Russia, but that immediately failed as the Ruble was bought up.
The BRICS movement towards new currencies backed by commodities means a much weaker West. The West is far behind in real growth and manufacturing. We’re going to see bank runs on a huge scale.
Metals sentiment continues to be poor, however on a positive note, the supply appears to be drying up. Premiums are higher, and it’s difficult to make large orders without waiting a month for delivery.
He believes the nation will be divided even further due to the FBI raid on Trump’s residence. Much of the actions of the left are only causing further loss of confidence in the system.
Time Stamp References:
0:00 – Introduction
0:40 – The Credit Markets
3:19 – Italian Debt & ECB
5:28 – What Breaks First?
6:58 – Money Velocity Matters
8:45 – Redefining Confidence
10:17 – Spending & Inflation
13:44 – Ruble & the Dollar
16:37 – More IRS Agents
17:57 – BRICS+ Currency & Gold
20:39 – Deglobalization
22:12 – Metals Sentiment
25:33 – Interesting Times
28:39 – Treasuries & China
34:37 – Wrap Up
Talking Points From This Episode
- Credit markets and their connection to currencies.
- Money velocity and the increasing risks of hyperinflation.
- Western countries dependence on debt compared with the BRICS.
- Metals sentiment and why metals supplies appear to be drying up.
Bill Holter writes and is partners with Jim Sinclair at the newly formed Holter/Sinclair collaboration. Prior, he wrote for Miles Franklin from 2012-15. Bill worked as a retail stockbroker for 23 years, including 12 as a branch manager at A.G. Edwards. He left Wall Street in late 2006 to avoid potential liabilities related to the management of paper assets, as he foresaw the Great Financial crisis coming. In retirement, he and his family moved to Costa Rica, where he lived until 2011 when he moved back to the United States. He was a well-known contributor to the Gold Anti-Trust Action Committee (GATA) commentaries from 2007-present.
Bill has retained a working relationship with Miles Franklin and can help with your precious metals needs, including transacting, shipping, storage, and even safe deposit boxes in non-bank vault facilities.