Bill Holter: The Fed Must Inflate or Die
Tom welcomes back an absolute icon to the show, Bill Holter. Bill works and writes alongside the legendary Jim Sinclair at JSMineset.
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Bill discusses the current liquidity situation with the Reverse Repo system. Banks can sleep at night with their funds being stored with the Fed while earning a return. However, the Fed can’t allow interest rates to go negatives since that would indicate the dollar is worthless.
JP Morgan has a large derivative concentration which carries 3.3 trillion in counterparty risk. Globally, everything is a promise today as the world runs entirely on credit. Small failures can cascade like dominoes. The Fed can’t truly taper and should they try we will see the next round of Q.E. within a few weeks. The Fed will likely attempt a small rate hike but multiple hikes seem unlikely.
The situation today is completely different than when Paul Volcker raised rates in the 80s. We’re far more in debt than back then and the U.S. had plenty of collateral at that time. In today’s world, there is massive leverage and every available asset is already encumbered.
Eventually, excessive money printing will completely dilute the currency and we already see that occurring with inflation. The Fed is completely out of means to limit inflation. Many countries are abandoning the dollar as quickly as possible.
He notes that more people are wanting to get their dollars out of the system and into gold. It’s almost like a mini bank run. Inflation is causing part of this run but people are beginning to understand that something is very very wrong.
People become concerned with inflation when everyday items and taxes rise quickly. We’re now a full year into fairly drastic price rises. Many narratives are failing including transitory inflation and those around vaccines.
Comex’s open interest has been declining and there appears to be less interest in futures. There are increasing numbers of deliveries. The numbers don’t add up. If you understand that all the news is fake and that basically everything is a lie then why would you believe any of the numbers? Soon people are going to count their wealth in ounces not dollars.
Time Stamp References:
0:00 – Intro
0:36 – Credit Markets & Repos
2:06 – U.S. and Negative Rates
3:02 – J.P. Morgan Derivatives
5:42 – Taper Expectations
8:20 – Volcker Vs. Today
11:45 – Inflation and Fed Tools
13:10 – Getting Out of the System
15:53 – Inflation Perceptions
18:04 – Actuarial Deaths
19:24 – Credit & Confidence
23:56 – Comex Open Interest
28:05 – Wrap Up Talking Points From This Episode