Matthew Piepenburg: A New Currency System is Emerging
Tom welcomes Michael Piepenburg from Matterhorn Asset Management to the show. Michael discusses how everything is backward and nothing is real anymore. During Alan Greenspan’s time at the Fed everything changed and Wall Street has become a circus. Today’s policies would have been unthinkable back in the 90s. Fundamentals barely matter and the new solutions are toxic.
Matthew explains how value investing today has become distorted because everything is momentum-driven.
The Fed has other magic tricks in reserve like SRF which is QE under a new name. Tapering is no longer possible and they will only give it lip service. We passed 100% of Debt to the GDP level back in 2019 and it’s only worsened since.
The U.S. will print whatever it wants and thus the value of the currency will be destroyed. At a grass root level, inflation is starting to hurt people. This inflation is exported and we’re making a mockery of the reserve currency. This will end badly.
Basel III was created to curtail some of the leverage in the banking system but the Fed continues to backstop many banks. Wall Street and the Fed have a toxic relationship. Markets are artificial and this will continue until inflation becomes too painful.
A new Bretton Woods restructuring is coming and they are using the pandemic to justify spending. The financial problems today are blamed on Covid and the fifty years of money printing are overlooked. Central Bank Digital Currencies will simply be a temporary band-aid on a broken system. Ultimately this will be a tailwind for gold.
Inflation today is over twelve percent when calculated as done in the 70s. They want high inflation since this is the only politically viable way of addressing some of the debt issues. The market believes in the narrative of transitory inflation. Once faith is lost gold will take off.
Gold is currency insurance. Price matters but very soon preserving purchasing power will matter more.
Time Stamp References:
0:00 – Introduction
0:34 – Nothing is Real
5:09 – Valuation Metrics
6:37 – Fed Tricks
10:29 – MMT Debts Matter?
12:56 – Debt to GDP
16:49 – Gold & Repos
27:24 – Foreign Repos
31:53 – IMF, SDR’s, and Gold
39:38 – Eye of the storm?
45:22 – Silver
48:28 – Wrap Up
Talking Points From This Episode
- Market distortions, valuations, and why everything is momentum-based.
- Fed’s magic tricks and unsustainable debt levels.
- CBDCs, inflation, the end of the dollar, and gold.
Matthew Piepenburg is the Commercial Director of Matterhorn Asset Management AG and the author of the popular book, “Rigged to Fail”. Matt is fluent in French, German, and English. He is a graduate of Brown (BA), Harvard (MA), and the University of Michigan (JD). His widely-respected reports on macro conditions and the changing behavior of risk assets are published regularly at SignalsMatter.com.