Alasdair Macleod: The Current System is Close to Collapse
Palisades Gold Radio: 8-26-2022
Tom welcomes back Alasdair Macleod to the show. Alasdair is the Head of Research for GoldMoney and an advocate for sound money.
Alasdair prefers to focus on the big picture for gold and the economy. We are nearing a bank credit contraction, which will be severe.
GDP is the measure of total bank credit in an economy. He believes a banking crisis is coming quite soon, perhaps only a month or two away.
Alasdair notes, “There is only a snowball in hell’s chance that politicians will stop printing money.” Fixing things would require a fundamental shift in the way government participates in the economy. There are massive risks to bankers if corporations with loans can’t repay.
Aladair outlines his recent article on geopolitics and economic split that is developing. Russia and China both have significant gold reserves. It’s apparent we are making bad policy choices around Russia. Russia is making their energy policies clear to everyone, including those in the Middle East.
It’s clear the West is trying to move away from oil, which is creating opportunities for other countries. The Russian economy works fairly well and has reasonable income tax levels. They still have a few problems around protection of property ownership. The actions of Russia and BRICS nations is designed to reduce and eventually remove the dollar’s hegemonic status.
Alasdair discusses the problems in China, particularly in their housing markets. China has a firm control of their credit and banking system. Long-term, they will likely ride out these issues.
The prices for energy are extremely worrisome, as prices are quite literally off the charts. We also have to consider the probability of food problems this winter.
The Euro trend downwards relative to the dollar is concerning. More concerning is the amount of bonds accumulated by the E.U. will bring significant mark to mark losses as rates rise. The Euro system itself is bust.
Lastly, he cautions that investors should take the opportunity of low prices on gold and silver. Get some insurance in the form of precious metals, you might need it.
Talking Points From This Episode – Why the world is facing a serious bank credit contraction. – The developing economic split between the East and West. – Concerns for the E.U. bond markets and why the Euro system is failing.
Time Stamp References:
0:00 – Introduction
0:47 – Metals Sentiment
5:04 – Reversing Policy
9:15 – Rates, Risks, & Gold
13:08 – Gold Demand Increase?
15:12 – World Splitting in Two
5:08 – Geopolitical Alignments
28:35 – Problems in China
32:32 – Europe, Winter is Coming
38:28 – Political Intentions
40:10 – Euro Parity Breakdown
44:16 – Basel III Purpose
47:27 – Derivative Risks
53:10 – Commodities & Energy
54:52 – Wrap Up