The Ability To Prevent A Crash No Longer Exists

August 10, 2015

Financial writer and gold expert Bill Holter says the powers know that it physically can’t put off a financial crash much longer. Holter contends, “The system has gotten too big. The system has gotten bigger than the creators of the system, if you will. It is bigger than the sovereign governments collectively. It’s bigger than the central banks collectively. There’s too much debt. Too many sovereign governments have bumped up against debt saturation. In the U.S., we are over 100% debt to GDP. We are way over 100% debt to GDP if you include all debt. If you include all the off-book guarantees, Social Security, Medicare, Medicaid and all the other promises, we have blown up as far as debt to GDP ratios. So, the ability to prevent a crash no longer exists.” 

For the people who think central banks can print money to infinity, Holter advises, “People have the belief in central banks because, to this point, it has worked. So, they extrapolate that it will always work. What they are not factoring in is many sovereign governments have reached debt saturation. In other words, many governments have gotten to the point of Greece or Puerto Rico. It can’t take more debt. The problem in Europe is the individual countries can’t print money. The U.S. can print money. The question is will foreigners accept what we print forever? The answer is no.”

Holter says the Fed will print more money. It will be forced to and it will not work the same as other money printing. Holter explains, “The next one, in my opinion, is going to be ‘QE Forced.’ It’s going to be forced on the Fed.”

The recent announcement the International Monetary Fund (IMF) will put off allowing the Chinese yuan to become part of the Special Drawing Rights (SDR) basket of currencies is a bad omen for the U.S. dollar. Holter thinks, “China being pushed off by the IMF until at least 2016 is a slap in China’s face. They publicly and officially requested to become part of the SDR. . . . The IMF, steered by the U.S., basically slapped them in the face. You’ve got to look at this as a financial war. This is a shot by the U.S. saying, no, we are not letting you in the club. It is inevitable that the Chinese currency will become part of the SDR or a reserve currency or ‘the’ reserve currency. It’s inevitable. The U.S. is trying to buy an extra year’s time, and it can’t.”

What can China do to retaliate? Holter says, “I think they have two potential moves. . . . The right time may be in a month or two during weakness in our markets. Remember, this was done by the IMF during very serious weakness in their markets. We kind of punched them on the way down. They have two real answers. They can tell the truth about how much gold they have. They can come out and say they have 10,000 tons or 15,000 or 20,000 tons or whatever it happens to be. The second is China has an awful lot of Treasuries. This is where I think they can force the Fed into monetizing their debt. They would be creating their own exit door. . . . Then, the Fed would have a big choice. Would the Fed buy them? There is your QE forced. Or, do they just let the interest rates go up and the bond market tank? It’s either option A or option B.”

Holter says, in the last year, there have been many big warnings from the Bank of International Settlements and the IMF about a coming financial calamity. Holter says, “I think they are trying to get out in front of this. I think they are telling the truth–the world is defenseless. The central banks, the sovereign Treasuries have fired all their bullets already, and they realize when this next crash comes, there’s nothing that can be done.”


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Minting of gold in the U.S. stopped in 1933, during the Great Depression.
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