Jaime Carrasco: Global Currency Chess Game in Progress
Jaime discusses how the repo market functions as a leading indicator of financial turmoil. This system of trust has broken down between banks requiring Fed intervention.
All the Fed can do is throw money at the system like a monkey. We are getting near the end of the road like in 1933 since we have reached the maximum use of debt. Historically the only way forward is to undo the currency reserve and pull the plug on the old system.
Jaime expects an ongoing and expanding economic crisis. Markets have gone through there the first decline, and we are likely to get a rally since Trump’s response to this crisis seems reasonable. However, uncertainty is keeping the systemic risk quite high, and the banking system is likely facing liquidity issues. We will need a global currency reserve reset, but who is going to control the new system. There is a chess game afoot behind the scenes over who and what will control the next financial system. Bankers understand that gold is the ultimate form of money.
We are now in a deflationary cycle, and eventually, the debts will start to escalate at an ever-increasing rate. Oil is of concern, and there are significant disputes between Russia and Saudi Arabia.
Central banks don’t have to use proper accounting, and while many claim to have gold on the books, in reality, they have most likely leased that gold out. Historically this is what happens when bankers get the run of the system.
Fortunately, we have the blockchain, which allows us to set up financial systems outside of the conventional method without the need for bankers.
Talking Points From This Week’s Episode
• Repo markets signaling crisis.
• Fed has one tool, throw money at problems.
• We have entered a new deflationary cycle.
• The economic crisis will continue until a reset occurs.
• Jaime discusses a few juniors that he feels are massively undervalued.
Jaime Carrasco is portfolio manager at Canaccord Genuity Inc. in Toronto. From 2014-2018 he worked as Director of Wealth Management and Associate Portfolio Manager for ScotiaMcLeod. Before this, he worked for Macquarie Group, CIBC Wood Gundy, BMO Nesbitt Burns, Gordon Capital, and Merrill Lynch.
Jaime is a leading Canadian investment professional with 25 years of experience providing wealth management and investment counsel to affluent families, businesses, and institutions. He has garnered a reputation for questioning and challenging the status quo and exploring the most innovative investment strategies.
Jaime, whose mother tongue is Spanish, also speaks Italian and French and completed a BA in political science and economics at the University of Toronto in 1988. While a student, he worked for CS Yacht, a company that built luxury sailboats, thus spending his summers as a skipper for members of the Canadian establishment. Jaime credits this experience, and having survived sailing through Hurricane Bob in 1991, for learning lessons that have become a metaphor for his financial investment strategies;
“Like one’s financial wealth, sailing is not about controlling the wind, but rather about adjusting the sails.”