David Jensen: Jamie Dimon is Acting Fearful of What the Markets Have To Bring
Tom welcomes back David Jensen. David is the owner of Jensen Strategic and a Mining Executive and Metals Analyst. David provides Palisades with a comprehensive presentation on the state of the economy.
David discusses Jamie Dimon’s recent concerns regarding an economic downturn driven by persistent goods price inflation and the Federal Reserve’s liquidity reduction efforts. Jensen, blocked from Twitter and LinkedIn, now shares his insights on Substack. Dimon appears uncertain regarding the economy, as exemplified by his large stock sale and comments on keeping money in JP Morgan. They also review the Fed’s limited control over long-term interest rates, despite its influence on the overnight rate and ongoing bond purchases.
Interest rates may rise to 7%, possibly due to the weight of the national debt, while other financial experts anticipate even higher rates. David examines historical patterns where an increase in the M2 money supply leads to inflation, drawing parallels to the 1970s.
The discussion also touches on London’s 1987 control over the gold and silver markets, the effects of inflation through increased currency supply, and the contrasting expressions of suppressed inflation data and actual economic conditions.
Jensen highlights the dangerous level of dependency the economy has on credit, with a total debt of $96 trillion. An interest rate shock could impose a staggering interest burden, challenging the solvency of banks.
The conversation also covers the correlation between bonds and stocks, revealing a shift from financial instruments to tangible assets like precious metals due to the erosion of currency value. The yen carry trade, a financial strategy involving borrowing at low Japanese interest rates and investing in higher-yielding U.S. markets, is also discussed. As interest rates have risen, this trade has become less profitable, threatening the financial stability of funds involved.
Wrapping up, Jensen emphasizes the significance of real assets, such as gold and silver, as a unit of fair measure, especially as public awareness of the Bank of England’s promissory note trading system grows. He notes the increasing lease rates for gold as a sign of market stress and concludes with a metaphor pointing to the urgency of navigating the impending economic challenges.
Time Stamp References:
0:00 – Introduction
0:40 – Bans & Substack
6:23 – Why is Dimon Afraid?
11:42 – Cash & Capital Ratios
13:06 – Fed & Economic Metrics
14:28 – Corporate Bankruptcies
17:22 – 70s & Inflation Concerns
21:56 – Inflation Since 1987
32:23 – Current Money Supply
33:46 – GDP “Growth”
36:52 – Root of the Problem
44:57 – Rate Damnation
46:48 – Net Forward Outlook
52:00 – Gold’s Coming Role
54:03 – Japan’s Coming Crisis
1:01:45 – Defensive Actions
1:06:33 – Wrap Up
Talking Points From This Episode
- Jamie Dimon, CEO of JP Morgan, voiced his distrust in the Federal Reserve’s approach in the past four weeks and highlighted the extreme rise in goods price inflation.
- Higher interest rates and rising large corporate bankruptcies are leading indicators that point towards an impending economic downturn.
- Precious metals and real assets are becoming increasingly popular as people reallocate their portfolios away from paper-based assets in response to currency inflation.
David Jensen, P.Eng., LL.B., MBA, is a Professional Engineer with a degree in Engineering from the University of Waterloo in Canada. He worked through 1993 on the F-5 Fighter Overhaul program and the Bombardier Regional Jet programs. Mr. Jensen then graduated with an LL.B. degree in corporate and commercial law from the University of Calgary and an MBA from Univ. of B.C., majoring in Logistics and Supply Chain Management.
Returning first to aviation, then, after reading Austrian School Economics, Mr. Jensen transitioned to the mining industry in 2004. First through his mining industry consultancy, then as Vice President of Corporate Development for Western Copper Corp., and most recently as President and COO of Skyline Gold.
Mr. Jensen currently serves as President and COO of a private mining company and provides strategic, operational, risk assessment, and precious metals consulting services through his consultancy, Jensen Strategic.