Video Infoblog: Fed Broke Another Central Bank, Global Sovereign Debt Crisis & Financial...

10 Aug 2024 #Fed #economy #debt

146,603 views • 10 Aug 2024 • #Fed #economy #debt

Michelle Makori, Lead Anchor and Editor-in-Chief at Kitco News, interviews Edward Dowd, Founding Partner of Phinance Technologies, who warns that the Federal Reserve finally broke something as interest rates remained at 23-year highs for over a year. Dowd explains that during this rate-hike cycle, what ended up breaking was another central bank – the Bank of Japan. He outlines the consequences of this and says the clock has started counting down towards a global debt crisis. Dowd shares his macro outlook while also weighing in on geopolitical tensions and potentially identifying the next ‘Black Swan’ event. He also gives his outlook on banking, projecting more stress and consolidation in the sector. Dowd warns of a scenario that could open the door to a central

Transcript

Coming Up

0:00

this is the global sovereign debt bubble the everything bubble what just happened in Japan took a lot of us by alarm and

0:07

uh we now think that the the clock has been set for the global unwind of the debt and it's going to in conjunction

0:14

with a weakening US economy I'm predicting it just the clock started uh we think it's going to manifest over the

0:20

next 24 months and our economic indicators started rolling over again in March they've gone down every month

0:26

since March and then here we are going into the most cont IAL election ever and

0:31

something broke China's economy is imploding and it's very very bad there

0:37

so they need to one of the greatest fears the Chinese power elite have is their own people so the classic tactic

0:44

is when all El fails take take them to war the time frame between crises is getting shorter and we need to keep

0:51

accelerating the debt growth even faster so that's why it's getting it's getting very precarious every time they do

0:57

something it buys less time to fix the system so this is this is this is a very dangerous time I believe liquidity is a

1:05

big problem in the global financial markets and as that becomes more apparent we'll see more financial turmoil we're going to see Bank

1:12

consolidation resume and my prediction still holds there'll eventually be six

1:17

Banks uh or you know eight to six Banks and that's when it would be easier to introduce it Central Bank digital

1:23

currency Warren Buffett is not in cash for a 20% pullback that's not what he

1:29

does he's in cash because he's going to take advantage of what happens when this

1:35

unravels and and my guess is you don't hold that amount of cash if you're waren unless you think a big financial crisis

1:41

is coming what I can tell you with with with a great confidence is we're going to have Financial havoc and turmoil

1:48

coming [Music] soon on the spot with Michelle mccy is

Introduction: The Fed Finally Broke Something

1:56

brought to you by Swan Bitcoin hello I'm relle mcy thank you

2:01

again for joining us with the interest rates at the highest level in 23 years for over a year now markets have been

2:09

bracing for the economic impact of that strain for the FED to break something my

2:15

next guest says that the FED did indeed break something and that was another

2:20

Central Bank the FED broke the bank of Japan and now the clock has started

2:25

counting down towards a global debt crisis here to explain this and more and

2:31

give us his outlook on the markets gold and Bitcoin is Edward Dow Ed is the founding partner of Finance Technologies

2:38

he's over three decades of experience in finance including working as a portfolio manager at Black Rock the world's

2:45

biggest asset manager he's also the author of cause unknown Ed nice to have

2:50

you back with us thanks for joining us again Michelle great to be here thank for having me on again Ed very good to

2:56

have you back with us before we get into where we are now now with the fed and

3:01

the bank of Japan and interest rates I want to pick up where we left off last time and you were on in late March of

3:08

2023 we just had three of the four largest bank failures in US history with

3:14

the midst of the banking crisis and you were expecting an emergency rate cut by July from the FED following those

3:21

banking collapses now instead we got the bank term funding program and other

3:26

Creative Solutions but there was no rate cut in fact the FED hiked rates there

3:31

were three more 25 basis point hikes after that were the rates peing at the 5

3:36

and a quarter to 5 and a half% range about a year ago and the FED has held steady since so let's begin with what

3:45

happened there why you weren't correct why didn't that rate cut happen in your opinion yes yes Michelle we did have uh

3:54

a u a misstep in our prediction we were wrong on the interest rate cuts the in

3:59

fact raised a few more times the good news is they prevented a bank run the Federal Reserve instituted the bank term

Fed's Actions and Economic Indicators

4:05

funding program because the Assets in their held to maturity account were way

4:11

underwater and people were starting to get nervous and that's why we had those bank failures so what the FED did is

4:16

Lent uh uh the banking system short-term loans to prevent these Bank runs and

4:22

they unfortunately took away th that those loans in March 11th of this year

4:28

they they ended the program and the at the time that we made the call the credit uh markets hadn't yet

4:36

deteriorated now we are in the part of the economic cycle where credit is deteriorating and the FED is not going

4:42

to give loans against bad credit on their on the bank bcks so uh that's that

4:48

that's one thing we were wrong on the other thing we were wrong on we were calling for a recession in q324 of last

4:55

year our economic cycle indicators which is our Pro proprietary uh

5:00

blackbox uh leading indicators showed a recession uh coming in that time frame

5:07

uh and it it what happened in October along with the fellow reserves Bank term funding program the government uh went

5:14

on a SP seen the deficit explode they Juiced

5:20

the economy and they created government jobs at the same time they were also

5:26

manufacturing payroll numbers it's been well documented that the payroll numbers have been re down uh after every month

5:32

to the tune of a million and a half jobs so and Jerome Paul recently even stated

5:37

the payroll numbers are in question two meetings ago he indicated that there's some question about that so what we did

5:43

get in our economic indicator starting in October was a bounce and we saw our economic indicators bounce but what's

5:50

important to understand is they bounced and never got above the zero line which is expansion so whatever the juice that

5:56

the government did and the FED fixed it kind of didn't get us into expansion it kind of

6:02

delayed the recession so to speak and our economic indicators started rolling over again in March they've gone down

6:08

every month since March and then here we are going into the most controversial election ever and something broke and

Global Debt Crisis and Japan

6:14

our expectations before the bank of Japan crisis was that we were going to see a little correction into the

6:22

election then a rally out of the election and as the economies continued to weaken we would see uh the you know

6:28

the real problems of emerge what just happened in Japan took a lot of us by alarm and uh we now think that the the

6:36

clock has been set for the global unwind of the debt and it's going to in conjunction with a weakening US economy

6:43

so what we don't know are what the policy responses are going to be on the other side of this which are coming and

6:48

have to come um as soon as one more thing as soon as the markets blew up

6:54

last week uh or into this week the expectations quick went to emergency

7:00

rate cuts the Federal Reserve came out on Monday and indicated they're waiting for more more data the FED is lo to

7:07

lower interest rates primarily because once the global financial markets catch

7:12

wind of the FED lowering interest rates and ending the rate height pause and we'll see a a big big correction in R

7:19

risk assets which they want to avoid right so it comes a point where bad news is actually bad news right that when the

7:26

FED is forced to cut then the market start to interpret that as a sign that things are really not going as well as

7:32

they would appear uh you mentioned that we had basically just new artificial

7:38

unprecedented ways of stimulus new Band-Aids put on the economy be it uh

7:44

the bank funding program or other ways that sort of just kept things or

7:49

changing the data or manipulating the data or getting the data incorrect depending on your interpretation there

7:55

that sort of kept things afloat for a little bit longer I I really want to unpack the whole fed Breaking the Bank

8:02

of Japan but before we do that and get into detail there where are we now in

8:08

terms of what what you think the FED is going to do so the interest rate markets quickly

8:15

predicted emergency fate Fed rate Cuts uh I I of course pay attention to that

8:21

but I also wanted to hear what the FED had to say they came out on Monday uh uh Bulls be the Chicago fed president

8:28

basically came out and said uh this uh one bad payroll number is

8:33

just one bad payroll number that happened on Friday we need more data if we see the economy weakening will act

8:40

which which was to me messaging that the FED is on a hold and not going to do any

8:45

emergency rate Cuts unless unless the feedback loops are so bad from what just

8:50

happened in Japan that the stock markets and the and the financial markets start to uh crater absent that the FED is

8:58

doing nothing until September right and uh we did get some

9:03

positive data with jobless claims looking better than expected that sort of helped the markets Rebound in the

9:09

short term since that Monday sell off again we're we're going to get into that uh a little bit more so let's get into

9:15

this idea that you said uh the FED essentially broke the bank of Japan

9:21

explain what you mean by that and perhaps start by giving us the background of Japan's economy and the demographics and why it had rates so

Yen Carry Trade

9:29

long solo for so long yes so Japan is one of the major

9:34

central banks that have been coordinating uh easy money for the last uh 14 years since the great financial

9:40

crisis it's the uh the Federal Reserve the ECB and Bank of Japan these are the three and they've been passing off the

9:47

Baton of uh injecting liquidity into the global system and when I say injecting liquidity injecting debt because debt is

9:54

money you create a credit you inject liquidity into the system so they've been one of the

9:59

uh three legs of the stool and they've been keeping their interest rates uh essentially at zero for decades because

10:06

they had a demographic problem and a bubble burst in the late 90s so uh what

10:12

happened uh with the Federal Reserve hiking interest rates very quickly uh to

10:17

5 and a half% caused the bank of Japan's currency to weaken because they did not

10:23

raise rates uh along with the Federal Reserve and this interest rate differential caused the currency pled in

10:30

Japan and several weeks ago it got as high as 161 us to Japanese Yen which is

10:37

levels we hadn't seen since the 90s so the bank of Japan has 260% debt to GDP

10:43

and a huge demographic problem some of our demographic work shows that they just hit a new acceleration phase in in

10:51

a demographic uh death spiral that's going to bottom sometime in the in 2030

10:57

32 so there in trouble and it's been one of my theories and a lot of people on

11:03

Wall Street that the global debt bubble the release valve eventually will be a currency crisis somewhere and this just

11:10

occurred in the Bank of Japan so now they have this Hoban choice of saving their own economy or saving the Global

11:16

Financial system and this is where we are so it's it's this is is kind of the

11:21

beginning of the unwind there'll be policy responses it can happen slow or fast right now I'm predicting it's just

11:28

the clock started uh we think it's going to manifest over the next 24 months we do think the US

11:34

economy is weakening and this is a bad toxic brew that suggests risk assets are

11:41

something you want to be lightening up on in your portfolio or the you know if you haven't already done it you should

11:46

do it on rallies well we did have the the bank of Japan walking back talk of

11:51

further rate increases after roiling the markets uh one of the senior uh Bankers

11:58

there uh promised not to raise rates when markets are unstable this was the uh

12:04

Bank of Japan Deputy Governor Ida um and that of course led to a shop

12:09

recovery in the Tokyo stock prices and a fall in the yend uh and as we mentioned the markets uh were really royed by that

12:18

surprise decision to raise rates for decades and of course that then impacted

12:23

the so-called Yen carry trade help our viewers understand what that is and why

12:29

that initially caused the sell-off in global risk assets and and whether you

12:34

think this Yen carry trade is fully Unwound now JP Morgan came out today and said

12:40

they think 75% of the Yen carry trade is unwind uh that's probably fiction in my

12:45

humble opinion uh this is Yen carry trade's been going on for decades you could you could make the argument that

12:51

Japan the Japanese Financial system is one giant Yen carry trade so the Yen

12:57

carry trade for your viewers have been understand it is because of the interest rate policy in Japan for decades uh you

13:05

would borrow in Yen and then you would uh buy Assets in other countries in

13:12

other currencies and you could uh lever that many many times to uh uh collect

13:18

the spread that trade blew up after Decades of being um used by many many

13:26

big pocketed players large institutions I would say the the Japanese financial institutions are probably the biggest

13:32

owner of that trade you know they they borrow in their own currency and then go buy assets abroad uh not making loans to

13:39

the Japanese economy because they have a demographic uh deflation going on there so that's that's the situation we have

13:45

trillions of dollars in assets that are levered and the trade is going the wrong

13:51

way so it kind of creates a a giant Margin Call uh the good news is the Bank of Japan came out and said they're not

13:57

going to raise again the problem is if you look at their currency it went from 161 to 142 which by the way when when

14:05

currencies move like that that just creates turmoil in and of itself it's now Rising again it's approaching 148 uh

14:12

so if they continue to play along and not raise rates they'll have another currency crisis on their hand so that

14:18

they're they're crying a rock in a hard place and again that's why I think this will be slower rather than faster but I

14:26

think I think the the Bell just got wrong and it's the beginning of a financial turmoil and heightened

14:32

volatility especially going into this most recent uh us election that's coming

14:37

up uh there will there'll be a giant pause in business decisions uh until we

14:42

figure out who's going to be uh sitting in the White House seat so there's just a lot of uncertainty going on right now

14:49

across the globe not to mention the global uh military conflicts the Ukraine

14:55

war tensions in the Middle East and then there's always the possibility that China which has a demographic problem

15:01

itself they hit their wall in 2020 uh that was that was because of the one

15:06

child policy they had had for 20 years so basically China's economy is

15:11

imploding and it's very very bad there so they need to one of the greatest fears the Chinese power elite have is

15:18

their own people so the classic tactic is when all us fails take take them to

15:24

war so that's why we've been seeing a lot of these these Chinese time

15:29

Anese uh you know threats going on Warren Buffett himself sold sold out of Taiwan semiconductor stock he listed War

15:38

uh in Taiwan with China as one of the reasons he sold his stock so this is not this is not fanciful talk this is a real

15:45

problem that could explode and ignite at any moment wow okay uh let's focus on

15:50

the geopolitics and then go back to the bank of Japan here because you've just said some very interesting things uh

15:56

Warren Buffett we know is sitting in a lot of cash at the I believe he's got more t- bills than the FED right now uh

16:02

so you are expecting or forecasting China to move into Taiwan

16:09

during this period of time now I'm not forecasting that it's a real possibility

16:16

given what's going on in China and Warren Buffett himself when he sold out of his Taiwan semiconductor position

16:22

said that in an interview you can Google it war was one of the considerations so

16:27

I would say Warren Buffett's more in you know than I am so I'm speculating here it's definitely a possibility we do have

16:34

tensions in the Middle East we have tensions in Ukraine and right now

16:39

there's talk of uh Israel and Iran getting into it and China I believe was

16:45

said that they will back Iran if that happen so there's a lot of hot spots that could go off at any moment that

16:50

could add to the the current uncertainty we're seeing but make no mistake without without even the global tensions we have

16:56

problems we have problems uh the De Bu both down L right and we've had several guests on

17:03

the show saying that if you were let's call it a nefarious actor on the world

17:08

stage nefarious in the eyes of the US if ever you were going to take action now is a really good time to do this

17:14

especially as things move closer towards an election an election which is

17:20

unprecedented in so many ways including weaponizing of the justice system

17:25

assassination attempts on leading candidates switching out candidates uh with a few months to go before the

17:32

election and we're still not even 100% convinced what the Democratic ticket is so with all of the uncertainty and

17:38

Division and toxicity in the US a lot of people have come on this show and said if you were China now is your time to

17:45

move into the South China Sea or take on Taiwan if you're Iran this is a good

17:50

time to potentially escalate things before you have a president Trump in in power which may take a stronger stance

17:57

against actions in the Middle East and elsewhere uh Russia Ukraine if you wanted to resolve that one way or

18:03

another this is probably the window to do that so I agree no shortage of geopolitical potential flash points that

18:10

could explode at any minute but if you were to hedge that I I I know you're saying it's a possibility we all

18:17

recognize that it's a possibility but how high do you rank

18:22

that as the thing that is the Black Swan event that sort of triggers a crisis

18:29

here well let's be clear what happened in Japan last week was a Black Swan event that's a that's one Black Swan

18:36

that just went off and then and we're going to see the Ripple effects for over the next uh months years to come so that

18:44

that just that was dropping a boulder in a pond and we're Rippling out we don't know what the KnockOn effects are what's

18:50

interesting about Japan is typically speaking they had a they basically had a mark a market crash an 87 type crash

18:57

Banks went down 30% their Market imploded and we haven't heard of any brokerage firms in trouble that went

19:03

bankrupt during the 87 crash they went bankrupt so there's a lot of settlement issues that have not uh been cleared yet

19:10

we don't know who's holding the old maid in Japan what bank so and and in this most recent Valley in the NASDAQ the

19:16

bank stocks do not really participate in it so the knock on effects are just beginning so that's Black Swan event

19:21

number one Black Swan event number two is what you just said potential escalation or hot spot or or new hot

19:28

spot if I had to give a probability of that occurring before the election I I

19:34

would Peg it at 30% that's pretty high 30% is a pretty

19:39

high probability of considering the chaos that that could unleash okay so

19:44

these are potential events that could still happen and worse and let's go back to the event that did happen and see

19:51

where we are with that so how exactly was it that the FED is to blame for the

19:57

bank of the Japan being for to raise its interest rates what's the relationship that well so every rate hike cycle and

20:05

every rate lowering cycle so when they lower rates they create a credit bubble

20:11

that's that's we created the dotc bubble then they reinflated and created the real estate bubble now 14 years later

20:18

this is the global sovereign debt bubble the everything bubble and uh finally the

20:24

FED raised interest rates after 14 years of keeping it near zero

20:29

in in all interest rate hikes they break something and it's not it's not that they do it on purpose something just

20:35

breaks because there's in these bubbles excesses and frauds occur that then get

20:40

Unwound and we see who's swimming naked and there's knock on daisy chain effects and there's a lot of uh Financial panic

20:47

and turmoil so the FED didn't purposely wreck Japan it's just a consequence of

20:53

them raising interest rates to 5 a half% eventually Japan uh

20:59

the release valve was the currency and Japan finally had to raise rates Japan

21:04

didn't want to but their currency forc them to and and and this goes back to how this you know Global debt of Ponzi

21:12

scheme works it needs Constant Credit creation constant debt flow and new money and eventually when the debt gets

21:19

too big um it's like a it's like a Game of Thrones you're going to have a currency crisis and this just appeared

21:26

in Japan so what does it mean um how does this trigger them this potential

21:32

debt crisis like how do you see it playing out well well so what just happened was a massive deleveraging of

21:39

the Yen carry trade people went bankrupt we haven't found out who went bankrupt yet uh we're going to then get a

21:46

contraction in liquidity for two reasons one uh what just happened in the markets

21:52

to the weakening US economy so credit is Contracting the lifeblood of financial

21:58

markets is liquidity and that's Contracting as we speak you got to

22:03

remember M2 went negative year-over-year growth in November of

22:10

2022 and um that uh set off bank failures in March very quickly that even

22:16

shocked me and so the full effects of M2 going negative there's always a delay in

22:22

monetary policy so the FED hiked M21 negative in in at the end of 22

22:29

18 months later is usually when the policy uh lag starts to take its real effect that was May of this year so this

22:35

is this is this is a very dangerous time I believe liquidity is a big problem in the global financial markets and as that

22:42

becomes more apparent we'll see more financial term one all right so Ed last time you were here speaking of the

22:49

banking crisis you did expect um a consolidation of the banking sector as

22:56

we would be seeing more and more failures and ultimately you said we'd land up with around six banks in the

23:04

United States which would then pave the way for a central bank digital currency a cbdc to be issued that crisis fewer

23:12

Banks potentially Ubi Universal basic income in a really bad recession sort of

23:18

facilitates the way to a cbdc being issued and we sort of unpacked the horrors of the dystopian future that a

23:24

cbdc could lead to before we get into the cbdc part of the Ang of the conversation what's your outlook now

23:30

what's your read on the banking sector as it stands so the good the when I was on

23:35

your show last time I said this happens one of two ways fast or slowly that Fed was able to patch over the duration

23:42

problem that the banks had meaning their portfolios were upside down with uh a duration

23:48

mismatch what they're not going to patch up is a credit problem we're now in the

23:54

credit problem of the cycle and Banks loans are going to start to go sour and they're going to have to uh report those

Banking Sector Outlook and CBDC Concerns

24:01

losses so the FED did a good job in delaying uh the banking crisis so hats

24:08

off to them we'd rather see this unfold slowly than fast when it happens fast it

24:13

creates chaos uh and and even the powers that be lose control so uh I'd rather

24:20

see a slow unwind rather than a fast unwind and I expect as the economy

24:25

continues to weaken we enter into recession um we're going to see Bank consolidation resume and my prediction

24:33

still holds there'll eventually be six Banks uh or you know eight to six Banks

24:39

and that's when it would be easier to introduce it Central Bank digital currency well you know we're already

24:45

seeing the banks take strain we've got unrealized losses at Banks across the country rising to over uh $520 billion

24:53

at the end of the first quarter of 2024 that's up from $478 billion

24:58

at the end of uh the previous quarter of 2023 50 Banks saw unrealized losses on

25:05

their investment security portfolios exceeding at least 50% of their Capital

25:10

equity in the first quarter of 2024 and that's according uh to the US Banks and realized losses on investment Securities

25:17

screener so we're already starting to see that it's not getting a lot of attention um there's also a recent

25:23

report by consulting firm Claris Group which analyzed around 4,000 US Banks and

25:29

found that 282 Banks face the Dual threat of commercial real estate loans

25:35

and potential losses tied to higher interest rates and the majority of those banks are smaller lenders with with less

25:42

than10 billion in assets so we're starting to see again problems in the

25:48

banking sector you're saying that at some point we're going to go from all of these

25:54

Banks to six to eight big banks of the United States uh last time I think you

26:00

were predicting that that could happen in as soon as a year give us an approximate and again I always give

26:07

credit to people that come out here make a for cost and put a timeline on it as well but give us an approximate timeline

26:14

as to when this could happen and how exactly this could play out let me let

26:20

me clarify there won't be just six to eight Banks but the majority of banking will be done with six to eight Banks

26:26

there'll be some banks left but they won't have a lot of depositors um I expect this to let's

26:33

give it 12 to 24 months and and and you got to remember in the great in the

26:39

great financial crisis this happened fast a bunch of marriages shotgun

26:44

marriages happen overnight Marl Lynch disappeared Leman Brothers won puff be Sterns won puff uh this this and AIG

26:52

essentially went bankrupt this could happen F fast but I'd like to see it happen more slow over two years with

26:59

sort of some sort of control uh you know I I know that sounds insane but we don't

27:05

want to live in a world where financial markets are crashing 50 60% in in a

27:10

month we just don't want to live in that world uh I don't think we want to live in a world though that only has six to

27:16

eight Banks and the control that comes along with that and as you say that then uses the way for a central bank digital

27:22

currency to be put forward in a much more seamless way

27:28

uh we don't want to live in that world either but you know uh the more time we have not to panic the more time we can

27:35

monitor resistance and you look you and I were on here a year ago and look at

27:40

all the uh awareness of Central Bank digital currencies as being something that people should be alarmed about we

27:46

have politicians introducing bills so the good news is the slower it goes the

27:51

the resistance that we can mount to it the faster it goes people will Panic into it I think so I'm actually quite

27:59

pleased in the progress that was made over the last year candidates are highlighting uh the dangers of a central

28:06

bank digital currency so the issue is at least out there as opposed to where it was a year ago where people were really

28:12

not even talking about it as much as they are now right that that is the upside is that there's a lot more

28:18

awareness about Central Bank digital currencies and a reminder to our viewers that is a form of fiat currency issued

28:23

by a country's Central Bank which essentially allows the bank to control

28:28

every transaction saying what transactions can and cannot happen and it also uh creates uh complete

28:37

transparency there's no anonymity there's no privacy every single transaction can be viewed and then it

28:43

also would arguably allow for what some say is fine-tuning of monetary policy

28:49

where they could just um click away some of the money supply or click back in the money supply by just taking out uh some

28:56

of the money in everybody's individual wallet to Central Bank digital currency a lot of potential negatives there

29:02

um why would fewer Banks help facilitate that process uh it giv people less choice not

29:09

every bank would be be set up for the Central Bank digital currency it's just Central planning requires fewer bigger

29:16

players so it's easier to implement if there's a lot fewer players to impose

29:21

this Supply so it just it's an operational thing it's just easier to do

29:27

right and and as you was saying look we have had a lot more awareness about this which is a positive um certainly when

29:34

people like former president Trump bring up a cbdc it starts to gain headlines and he actually addressed this very

29:40

recently at the Bitcoin conference that just took place in Nashville I think we

29:45

have a sound bite from that we can play that now next I will immediately order the treasury Department and other

CBDCs

29:51

federal agencies to cease and desist all steps necessary cuz you know there's a

29:57

thing going on in in your industry they want to move the creation of a central

30:03

bank digital currency it's over forget

30:09

it cbdc there will never be a cbdc while I'm president of the United

30:17

States does that give you any uh hope here I mean do you still think a cbdc is

30:24

inevitable no I don't uh but what what what's great is the issue has gotten a

30:30

lot of um awareness and Trump just by saying that it's fantastic and uh Bobby

30:38

Kennedy has said the same thing and so we have candidates across the globe

30:44

talking about the dangers of the cbdc which is great they all seem to be Republicans though you've got Governor

30:50

Ronda Santa Senator Ted Cruz House Majority Whip Emma um as we said uh

30:56

president Trump and okay Kennedy and independent but I haven't heard anyone on the Democratic site speak against a

31:04

cbdc well that's because they're Control Freaks and they would love that tool to be able to implement all sorts of uh

31:14

crazy agree policies they they they seem to have a belief system that if you don't agree with them you're evil and

31:20

they want to impose any way they can their belief system on the general populace that's that's my personal

31:26

opinion that's why Democrats will never be against against the cbdc so does that mean that if we have a democratic

31:32

Administration in power that then increases the odds of a cbdc being passed even though there's a motion and

31:38

poell has said it would need to go through Congress yeah that the the chances are higher so if you're in if you're I think

31:46

voting Democrat this time is insanity at this point given what we're seeing come out of uh Cala Harris's mouth and her

31:53

new VP pick Tim Waltz they're both uh socialist they both believe in uh uh Dei

32:00

they believe in taking from those who produce and giving it to those who don't I mean it's it's it's communism

32:06

like all right well back back to cbdcs you know there is progress happening in

32:12

other parts of the world regardless of what the US is doing we know that according to the Atlantic Council

32:18

Central Bank digital currency tracker 134 countries uh representing 98% of

32:24

global GDP are exploring a cwdc uh in May of 2020 that number was

32:30

only 35 so certainly a big acceleration there and currently 68 countries are in

32:35

advanced phases of exploration 19 of the G20 countries are now reportedly in

32:42

advanced stages of cbdc developments um we've also got a new report from the

32:47

Bank of Canada suggesting that uh Canada's Central Bank sees digital currencies as necessary to maintain

32:54

monetary sovereignty and financial stability as the use of cash

33:00

declines the bigger Point here Ed is that if the rest of the world goes along with this can the US not can the US be

33:09

left out uh the us is going to be probably

33:14

where the resistance mounts from so if we fail at at this then it's a global

33:20

eventually it's a global slave res surveillance State the cbdc is the Lynch pin of that digital

33:26

ID if if everything you do is track it's it's a disaster for the individual

33:32

Freedom it's also a tool to implement crazy Progressive policies you know if

33:37

people are worried about methane from cow farts they could then Institute um you know beef quotas and you can't ring

33:44

up your groceries at the at the register because that's how deep this will go if they have this kind of h control so we

33:52

have to oppose this at all costs I mean that that if if we get close to this uh

33:57

you'll be hearing me hearing me talk more and more about it but right now uh I'm I'm I'm very hopeful it's not going

34:05

to happen in the US and if it doesn't happen in the US the other the other countries will will follow along

34:10

eventually right the ultimate form of control as you say government can then

34:15

Monitor and track everything you do from you know eating too much meat to taking too many flights and then they can just

34:22

program that currency to not work for those transactions you don't even have a choice in the matter or it would work

34:28

but with a very extensive excessive premium added to that transaction decentivize people from doing it it's

34:34

terrifying and we did see I always like to point this out because it's so important to remember how we saw

34:40

tremendous government overreach during uh the pandemic during covid and an

34:45

example uh Canada where the truckers who were protesting against the vaccine were

34:51

essentially taken out of the mon Financial system their bank accounts were frozen and anybody that was

34:56

donating to them had their bank accounts Frozen that required an emergency act

35:02

and it can still be done without a cbdc but with a cbdc it's just so much easier to do click of a button and that's that

35:09

and that just the idea of that can deter people from voicing opinions that uh may

35:15

be seen as cancelable in today's day and age all right but we're hopeful that a cbdc perhaps may be delayed with the

35:23

increased awareness you did say though that the way to bring out of C whatc is a crisis and you didn't say that within

35:30

12 to 24 months you do see a scenario where we have six to eight Banks left so

35:36

you do expect more collapses in the banking sector what is your macro

35:41

Outlook then how does this play out um and you can start off with with the shortterm Outlook ahead of the elections

35:48

and then what you're seeing happening in the next two years yeah so short term

35:53

you know again this is the economy the way we measured started rolling over from close to the zero line

35:59

non-expansion going back into recessionary levels in March um the the

36:05

structure of the market and this is technical mumbo jumbo but what we see from the structure of the market is a pullback into the

36:12

election uh you know anywhere from 10 to 30% and that's that would be scary but

36:18

it's not a Calamity and then a rally after the election and by the way any

36:23

kind of pullback into the election favors Trump uh a rally after the election and from that rally there'll

36:30

there'll be continued economic data coming in that's bad then we think that's when the real uh potential for

36:37

the collapse to begin would be sometime towards the end of this year going into January so that's our shortterm

36:44

medium-term prediction and from there we'll have to observe what happens but that is going to be where we think it

36:49

really starts to unravel as in 20125 and at the and if that is that occurs and we're right and there's a

Macro Outlook

36:56

crisis in 2025 financially we'll see um potential talk of a cbdc because you if

37:03

you want to implement something you do it in a crisis and a Ubi because depending upon how bad the job layoffs

37:09

are uh there'll be a lot of people who are scared and they might try to tie a Ubi Universal basic income to a

37:16

cbdc and that's how I would do it if I wanted to implement it so you're seeing uh a potential

37:24

shortterm pullback here um but ultimately beginning of 2025 where do

37:31

you see Equity markets and again I get a lot of this depends on how the geopolitical situation plays out and who

37:37

wins the US elections well it depends on how quickly we unravel so we're we think that the

37:42

clock started last week uh economically we're already going to go into recession but now we have uh Financial plumbing

37:49

problems uh that are now becoming apparent so we get this correction into the election the rally could last

37:56

several months uh but it it we may go back to a uh

38:02

close to the all-time highs my guess is no and then we roll over and fail and that's when the real Financial damage

38:08

begins and the FED will be well into a rate cut uh cycle by then if I'm

38:13

correct so what do you think a gold does during this phase in in a financial uh

38:21

uh Panic there's usually a um knee-jerk reaction to sell everything so gold will

38:27

have a pullback but not like it did in the financial crisis uh in 2008 it had a 50% pullback I'm seeing gold pullback

38:34

maybe 25% great buying opportunity uh so gold long term we're bullish on uh

38:40

because whatever happens uh when it becomes apparent the econom is rolling over we're having uh a global uh

38:46

financial crisis there'll be a policy response and so we have to see what that policy response is and how effective it

38:54

could be and how inflationary it's going to be so we're in the this roller coaster ride a deflation then a a

39:00

monetary uh fiscal response that then then is inflationary so we're going to have this roller coaster of inflation

39:06

deflation going forward right now we're in the beginnings of a uh deflationary period as the um credit cycle starts to

39:15

worsen and uh so gold uh I like long term um obviously if you're in the stock

39:23

market Warren Buffett has indicated what you should do he's a got largest cast position ever in the history of uh

39:31

Berkshire hathway he owns 4% of the US Bill Market Warren Buffett is not in

39:36

cash for a 20% pullback that's not what he does he's in cash because he's going

39:43

to take advantage of what happens when this unravels and and my guess is you don't hold that amount of cash if you're

39:49

Warren unless you think a big financial crisis is coming and you know an

39:54

indication that we're close to the bottom would be when Warren Buffett starts uh issuing uh billions of dollars

40:01

to Banks to save them with very favorable terms to himself like he did in the gray financial crisis he picked

40:07

the bottom so wait for Warren to start buying stuff is my humble opinion on stocks the article of Omaha he does have

40:14

a track record there the article of Omaha not a big fan of Bitcoin um what are your thoughts on how Bitcoin could

40:20

perform during all of this well Bitcoin uh unfortunately uh is correlated to

40:26

liquidity and in the liquidity crisis Bitcoin will go down but I think Bitcoin long term should be part of everyone's

40:33

uh portfolio it's just a question of how much I don't like putting all my eggs in one basket but longterm I'm I'm I'm

40:39

bullish on bitcoin longterm I'm bullish on other cryptos but you know they will not perform well in a they're not be

40:46

they will not be a store of value in a financial Panic what's a real store of value is what Warren Buffett owns 3mon

40:53

six-month T bills giving you 5 a half% pay you to wait that's traditionally in

40:59

financial panics that's where everyone goes to in the short term and when the

41:04

liquidity injections begin when we start to see the rate Cuts accelerate what is

41:11

your outlook on bitcoin there I know you said it's bullish for gold those that

41:17

are for Bitcoin would argue that the same case could be made for Bitcoin as uh the liquidity needs to be soaked up

41:25

by a store value which may not do its job during a selloff but when you start

41:30

to have the liquidity injected into the markets what do you think that does for Bitcoin right so people going to remember when the FED starts cutting

41:37

rates it's not bullish it's actually quite bearish and the FED doesn't want to cut rates because that means they're

41:43

seeing something that's bad and typically speaking there's a 18-month lag on monetary policy so if you

41:49

remember the co war that we had in March uh April of 2020 where the FED went on a

41:55

SP uh money printing spree in conjunction with government spending they now they the two are linked you

42:02

print money the government spends it so that created inflation that really didn't start taking off until 18 months

42:09

later under Joe Biden concurrently now we have the interest rate hikes 18month

42:15

lag hitting in May when the FED does respond when the FED does respond there'll be an 18-month lag that

42:21

financial markets will move ahead of that but the real uh liquidity will start impacting the economy 18 months later Financial markets will anticipate

42:28

that but there'll be damage first then anticipation of uh the policy responses

42:33

but we have to see what the policy responses are when they come and uh how big and then again back to the Bitcoin

42:40

question could that then be a positive bit Bitcoin will do well absolutely

42:45

Bitcoin will take off in that scenario Ed last time we spoke you said that the dollar will fail up explain if

42:54

that is still your position and what you mean by that absolutely the dollar has a

42:59

four-year cycle the way that we measure it my friend Tim wood is a Cycles analyst the dollar hit a high several

43:06

years ago and it's uh going to hit a fouryear cycle low sometime next year but if you look at the long-term chart

43:12

of the dollar um since the great financial crisis it's been uh higher uh

43:19

highs and and higher lows we expect the low in the dollar uh to be higher than

43:25

the last four-year cycle low and if that's the case the next uh run up in

43:31

the dollar will take us to new all-time high so as the Global Financial system contracts it's it's long-term bullish on

43:37

the dollar and if the dollar ever needs to get Unwound as the reserve currency of the world it'll fail up right now

43:43

these bricks are talking big about uh dollarization the problem is if you

43:49

dollarize overnight you will have a a deflationary depression in your country

43:54

so that's why long-term um on the dollar because the dollar uh is a a debt based

44:00

Fiat World Reserve currency it goes up when credit is uh long-term Contracting

44:07

and the growth of the dollar is kind of at reached its peak so uh when you see the dollar going down that's that's

44:13

that's that's liquidity being injected in the system the money supply growth is going you see the dollar going up that's

The Future of the Dollar and De-dollarization

44:18

contraction long term under a dollarization scenario the dollar will

44:23

go up but you're saying long-term you're bullish on the dollar and at the same

44:31

time discussing dollarization so what do you mean by that you exactly what I mean is the way the

44:38

dollar system was uh perpetrated it was flooded into the Global Financial system is over 14 trillion in Us doll

44:45

denominated debt held by foreigners so to to to extinguish that debt you're

44:50

going to need dollars to do it so the dollar fails up it doesn't fail down

44:57

that's that's one of the misn numbers so the dollar relative to other currencies will appreciate value is what

45:05

you're saying but ultimately it'll lose its uh place as king of the reserve

45:11

currencies if I'm understanding you correct correct and at some point it and

45:16

if we ever get into uh if we don't take care of this deficit problem you know right now I'm not worried about the

45:22

deficit uh in in terms of it you know becoming a credit issue for the US because there's other countries that are

45:28

way worse like Japan 260% debt to GDP we have 120% debt to GDP so relative to

45:35

Japan we're a better shirt so that's that's why I still think the dollar fails up over time um I know it's

45:44

confusing uh uh and mind you if Trump gets in Trump is going to be a weak

45:49

dollar president Trump wants the value of the dollar to go down as he tries to implement some of his policies of

45:55

bringing Manufacturing back to the US so Trump is a weak dollar president uh a

46:00

weak dollar president uh what does that mean for inflation uh it depends on how how it's configured it it could be both

46:07

inflationary or not depending upon uh what happens but I think it'll be inflationary because as he brings back

46:13

manufacturing jobs to the US it'll definitely be inflationary but people have jobs so there's this right you know

46:20

and it depends on depends on the rate of inflation inflation uh isn't necessarily bad if it's slow inflation is super bad

46:26

when as fast right I mean weak a dollar means more manufacturing happening in the US

46:34

allows US exports to compete on the world stage and makes the us more

46:39

independent in terms of manufacturing bringing back all of that back home but

46:44

then you don't get the advantage of buying cheap goods made made in China correct hence inflation but arguably

46:52

more job creation there do you let's get your one of the biggest problems we have in

46:58

this country is we have a bifurcated economy we have the very rich doing well and the Very lowincome people doing well

47:05

via hand handouts um we have a Devastation of the middle class which is the backbone of the US economy middle

47:12

class is getting wrecked so politically this is what we're seeing and so we need

47:17

to fix the middle class or this country is done that's that that's just the

47:22

bottom line you know the whole global debt

47:27

crisis uh markets are going to sell off we've hit the end of the road that

47:34

conversation has been had uh since after the 2008 crisis a few times saying that

47:40

the fed's response is going to lead to this major bigger chaotic mess and yet

47:46

every time we think that it's the end of the road somehow that can gets kick down

47:51

further why are you so sure that this really is the end of the road be it in a

47:57

year's time two years time even three years time what makes you so sure that this really is the end of the road it m

48:03

so the question is can they kick the can down the road one more time I won't know until I see the policy responses but

48:09

what what I can tell you with with with a great confidence is we're going to have Financial havoc and turmoil coming

48:15

soon what I don't can't tell you is that they can kick the can down the road one more time but if you look at ever since

48:22

the great financial crisis uh the government deficit and or the actual

48:27

just debt load of the of the government uh has been floating along the global debt system and since the great

48:34

financial crisis they've had to not only grow the debt constantly but they've had

48:39

to accelerate it at certain times at even faster rates of growth they had to do it during 20145 when there was a

48:46

problem with China uh the Shanghai Accord fixed that then we had the 2019 a

48:53

global uh uh financial crisis that was starting to Bubble they fixed that with the co war and uh and and so the time

49:01

frame between crises is getting shorter and we need to keep accelerating the debt growth even faster so that's why

49:08

it's getting it's getting very precarious every time they do something it buys less time to fix the system

49:14

that's why we're you know it may not be this time may be the next time but we're close and it's it's it's within our

49:21

lifetime unfortunately let's go back to what you said about uh if Trump TR wins the

49:27

election he wants a week a dollar to onshore manufacturing make America great

49:33

Again by building things back in America um what happens if the Democratic party

49:38

wins the election what do you think happens then uh um I think it's this uh

49:45

crazy spend and control economy with surveillance State and uh a purging of

49:52

anybody that is in in the Democratic mind Camp a purging a purging of

49:57

everybody that isn't in the Democratic mind Camp is that what you said that I don't mean they're going to go to camps I mean it's going to be harder and

50:03

harder to get job a lot of the jobs are going to be government jobs so you'll have to be a Democrat that you have to

50:10

you know tow the line it's going to be very hard for people in the private economy to compete with the government's

50:15

spending because the government will become the economy under Harris and uh and Waltz government spending as a

50:22

percentage GDP get got around to 24% during Co it's backed off a bit but I continue to see uh the government

50:29

spending swallowing private uh spending so if you were to uh give us

50:36

your for cost how do you see the election playing out and again so many

50:42

things can still happen so many

50:50

unvariate on my part uh but uh I see this Market correction favoring Trump I

50:58

see Trump getting in it'll be very hotly contested I think the oligarchs are

51:03

nervous about uh playing with the Communists because ultimately the Communists will come for them so I think

51:09

there's been kind of a shift in uh in in attitude with a lot of people who were

U.S. Elections

51:14

against Trump running to Trump now I think the establishment uh uh there's a

51:21

certain segment of the establishment that wants Trump trump in there they've had enough of this disaster scenario

51:26

we've seen with immigration the mishandling of the economy the lying about the economy so I think Trump wins

51:34

uh they'll try to steal it but I think ultimately gets in but it'll be very hotly contested and the country will be

51:40

very divided after the election regardless of what happens and he will then have a

51:45

recession to look forward to in 2025 correct so Ed how are you positioning

51:54

your portfolio in this climate well I don't like to give investment advice but I've been telling people do

52:00

what Warren Buffett does with a certain portion of your uh assets so that you

52:05

can take advantage of the sell off when it comes um it's called dry powder so

52:10

have some dry powder sit back earn five and a half percent and then when Warren Buffett starts getting in the markets uh

52:17

you know you start nibbling watch uh watch what the Oracle of Omaha does as we wrap up here Ed where can our viewers

52:25

learn more about you uh Finance technologies.com spelled with a pH uh also on Twitter at edwardedward

52:34

DOD Edward and getter at edward. well Ed thank you for coming on

52:40

and thank you for giving us your Insight your for costs with a timeline that's always a bold move we appreciate you

52:47

doing that and we appreciate your time and your analysis we look forward to having you back on soon Ed out thank you

52:53

so much Michelle great to be here again and thanks than to our viewers as always for watching and a big thanks to our

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54:13

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