In The News Today

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Bill Holter’s Commentary

Alisdair MacLeod describes inflate or die with the “pin” of higher interest rates hovering right next to the enormous pile of debt which must be serviced. It’s only a matter of time!

Money Supply And Rising Interest Rates
January 06, 2022

The establishment, including the state, central banks and most investors are thoroughly Keynesian, the latter category having profited greatly in recent decades from their slavish following of the common meme.

That is about to change. The world of continual Keynesian stimulus is coming to its inevitable end with prices rising beyond the authorities’ control. Being blinded by neo-Keynesian beliefs, no one is prepared for it.

This article explains why interest rates are set to rise substantially in this new year. It draws on evidence from the inflation crisis of the 1970s, points out the similarities and the fact that currency debasement today is far greater and more global than fifty years ago. In the UK, half the current rate of monetary inflation for half the time — just for one year — led to gilt coupons of over 15%. And today we have Fed watchers who can only envisage a Fed funds rate climbing to 2% at most…

A key factor will be the discrediting of this Keynesian hopium, likely to be replaced by a belated conversion to the monetarism that propelled Milton Friedman into the public eye when the same thing happened in the mid-seventies. The realisation that inflation is always and everywhere a monetary phenomenon will come too late for policy makers to stop it.

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Bill Holter’s Commentary

Inflation of the things we need and deflation of the things we already have?

This Time It’s Different

January 7, 2022

They should have known better.  Fed Chair Jay Powell and Treasury Secretary Janet Yellen, that is.

They spent the better part of 2021 saying consumer price inflation was ‘transitory.’  The two of them are most responsible for this inflation mess.  How could they have been so wrong?

Now the scourge of raging consumer price inflation is here to stay.  This, no doubt, will be a persistent theme in 2022.  Moreover, the Fed’s efforts to tame and control it will be a magnificent source of folly.

To begin, central planners, including central bankers, believe they’re masters of the universe.  That they possess the tools to, in Omar Khayyam’s words, “remould it nearer to the heart’s desire.”

The reality is central bankers are always reacting.  And much of what they do is merely an attempt to cleanup messes of their own making.

Ben Bernanke, then Fed Chair, first commenced the great quantitative easing (QE) experiment in late November 2008.  At the time, the Fed’s balance sheet was approximately $800 billion.  Now, just over 13 years later, the Fed’s balance sheet is over $8.7 trillion – more than 10 times higher.

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Bill Holter’s Commentary

How many “simulations” in the past have become real? You can be sure all sorts of criminal activity will be erased (as well as many digital assets) should a scenario like this come to pass. What better way to hide the crimes than burning down the restaurant? As we have said before, when the lights go out, “you will have what you have…and that’s all you will have”!

International Finance Leaders Hold ‘War Game’ Exercise Simulating Global Financial Collapse. Should We Be Worried?
January 7, 2021

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High-level international banking officials and organizations last month gathered in Israel for a global “war game” exercise simulating the collapse of the global financial system.

The tabletop exercise was reminiscent of “Event 201” — the pandemic simulation exercise that took place in October 2019, shortly before COVID-19 entered the global scene.

The “Collective Strength” initiative was held for 10 days, beginning Dec. 9, 2021, at the Israeli Finance Ministry in Jerusalem. It was relocated to Jerusalem from the Dubai World Expo over concerns about the Omicron variant.

Israel led a 10-country contingent that also included treasury officials from the U.S., Austria, Germany, Italy, the Netherlands, Switzerland, Thailand and the United Arab Emirates.

Representatives from supranational organizations, such as the International Monetary Fund (IMF), World Bank and Bank of International Settlements (BIS), also participated.

Described as a simulated “war game,” the exercise sought to model the response to various hypothetical large-scale cyberattacks on the global financial system, including the leaking of sensitive financial data on the “Dark Web,” hacks targeting the global foreign exchange system, and subsequent bank runs and market chaos fueled by “fake news.”

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