Top Three Videos – July 10 2023

Quick Summary Bullets:

Currency and Credit Collapse

• “All of the world’s major Fiat currencies were in the process of failing far faster than many are imagining.”
• The looming credit collapse could potentially tank both stocks and bonds, raising concerns about the stability of the financial markets.
• There is a looming shortage of credit and a crisis in refinancing, particularly in the mortgage field, which could have significant implications for the economy.
• McLeod mentions the potential of a credit collapse and the possibility of a nuclear war in Ukraine, highlighting the significant challenges and risks faced by the global economy.
• “I was sort of hearing stagflation…do you sort of predict stagflation for the West here? Yes, inevitably that is the case.”
• “Americans think our currency is perfectly safe, but the looming credit collapse could lead to a serious problem that is not recognized by many.”
• Central banks are in deep negative equity and are underwater due to their actions of lowering interest rates and buying bonds at the top of the market, posing a major problem for the financial system.
• “It’s not a rise in the general level of prices. It is a loss of purchasing power of the currency.”
• The events in the financial market are potentially cataclysmic, indicating a looming credit collapse that could have significant consequences for stocks and bonds.

Global Economic Imbalances

• “The world is split into two halves, with the economy we all follow (America, Europe, Japan) and the economy we don’t follow (Asia, Russia, China, BRICS), and it seems that the latter will increase quite materially after the meeting in Johannesburg.”
• Foreigners hold a massive amount of US bank deposits, bond investments, and equities, totaling more than $30 trillion, which is greater than the US GDP.
• The history of price volatility in Canadian residential property, particularly in cities like Vancouver and Toronto, suggests that Canada may be facing one of the worst housing bubbles in the world.
• The global banking system, particularly in the Eurozone, is facing significant difficulties and may require rescue due to overleveraged businesses and potential losses, which could further impact interest rates and financial stability.

Safe Haven Assets and Financial Stability

• “The answer for investors is to protect their Capital by getting into physical gold coin or bullion.”
• “The whole credit system is liable to implode and under those circumstances you want to get out of it by getting into real money, that’s hoarding gold.”
• Gold may benefit from the potential credit collapse, as investors may turn to it as a safe haven asset, leading to an increase in its value.
• “The possible benefits of a collapse of the current system is a new system which will allow us to progress Our Lives again.”

Transcript Summary:

• 00:00 Investors should sell their investments and protect their capital as the credit system is at risk of collapsing, which could be difficult for professional investment managers, while the global economy is divided with familiar economies experiencing a credit crunch and Asian economies expected to grow; water utilities in England are facing a severe crisis, the escalating situation in Ukraine could lead to a war driving up commodity prices, and the looming credit crisis combined with the rise in bond yields and distortion of equity markets poses a serious threat to financial asset values, worsened by China and Russia’s plan for an industrial revolution in Asia.
  • Investors should consider selling their investments and protecting their capital as the credit system is at risk of collapsing, which would be extremely difficult for professional investment managers.
  • Alasdair McLeod returns to discuss the latest details and timing of his outlook, with lots to talk about and setting the context for viewers.
  • The global economy is divided into two sections, with the familiar economies experiencing a credit crunch and banks becoming more cautious about lending due to significant risk, while the Asian economies are expected to grow after a meeting in Johannesburg.
  • Water utilities in England, particularly Thames water, are facing a severe crisis due to high levels of debt and difficulty in refinancing, which is indicative of an upcoming credit crisis and shortage of credit.
  • The escalating situation in Ukraine could lead to a war that neither NATO nor Russia can afford to lose, potentially driving up commodity prices and eliminating any hope of lower prices.
  • The looming credit crisis, combined with the rise in bond yields and the distortion of equity markets, poses a serious threat to financial asset values, while China and Russia’s plan to engender an industrial revolution throughout Asia could further worsen the situation for the US.
• 09:11 A potential credit collapse and the undermining of the US dollar as a reserve currency could have significant consequences for the US economy and global markets.
  • McLeod discusses the challenges of the war in Ukraine and suggests that Russia may be the best place to live due to its low taxes and business opportunities.
  • China is looking to invest more in the Asia Pacific region to create a sustainable consumer-based economy, which is causing a divide between Team West and Japan versus Team Asia/BRICS.
  • McLeod  predicts that a credit crunch and potential escalation in Ukraine could lead to stagflation in the West, as seen in previous fiat currency collapses.
  • The potential undermining of the dollar as a reserve currency could make it difficult for the US government to fund its deficit, as foreigners may no longer be interested in maintaining large dollar positions, which could have significant consequences for the US economy.
  • McLeod highlights the potential for a significant credit collapse that is not widely recognized by Americans, emphasizing the importance of the US dollar as an international currency and questioning the rationale behind the substantial investment in US equities.
  • Foreigners holding UK currency may sell it when rising interest rates destabilize the economy, which Americans should consider when looking at the dollar from a foreign perspective.
• 16:25 The looming credit collapse could have a significant impact on stocks and bonds, with the US housing market at a standstill and mortgage rates rising, leading to a squeeze on homeowners and potential decrease in consumer spending.
  • McLeod  discusses the looming credit collapse and its potential impact on stocks and bonds, highlighting the recent yield crisis and the developing crisis in the mortgage market.
  • The US housing market is currently at a standstill with sellers and buyers reluctant to make transactions, while in the UK, the housing market is experiencing re-rating shocks as approximately 20% of housing stock is repriced every year.
  • McLeod  discusses the current state of the US market, noting similarities to the early stages of a bear market and the uncertainty surrounding prices and transactions.
  • As mortgage rates rise, people with fixed-rate mortgages are facing increasing costs and struggling to afford their mortgages, leading to a significant squeeze on them.
  • The lag effect of the credit collapse will have a shorter impact in the US compared to Canada, as the rewriting of mortgages will lead to a decrease in consumer spending and a faster economic downturn.
  • The cost of mortgage finance and the potential collapse of credit will greatly impact property prices, particularly in commercial real estate and private equity.
• 24:23 A looming credit collapse could lead to a major market correction, as banks reduce lending and credit creation, causing a decrease in bond values and potential collapse in stocks and bonds worldwide.
  • Thames water’s reliance on low-rate refinancing and the need for refinancing is a problem not only for the UK but also for utilities and corporations worldwide.
  • Banks are becoming fearful of losses and are reducing lending and credit creation, leading to a stalling money supply and potential collapse in stocks and bonds.
  • The undercapitalization and rising interest rates are causing the value of bonds to decrease, particularly in Europe where banks are avoiding commercial lending and investing in derivatives and bonds with negative interest rates.
  • Central banks, including the FED, ECB, Bank of Japan, and Boe, are in deep negative equity due to their actions of lowering interest rates and buying bonds at the top of the market, which poses a major problem for the financial system.
  • The speaker discusses the increasing unease in the credit markets and the potential for a credit collapse to cause a significant market correction.
  • It is inevitable that a credit collapse will occur in the near future, and investors should protect their capital by taking their money out of the credit system and investing in physical gold.
• 31:58 House prices in London and the price of oil have increased in currency terms, but when compared to gold, the increase is much smaller, indicating currency devaluation; investing in gold is advised as insurance against the impending credit collapse.
  • House prices in London have increased significantly in terms of currency, but when compared to the price of gold, the increase is much smaller, indicating the devaluation of the currency; similarly, the price of oil in dollars has skyrocketed since 1971, but in terms of gold, it has only doubled, suggesting manipulation of the gold price to maintain the perception of its value.
  • The distortion caused by fiat currency introduces uncertainty in assessing the current economic situation, and as the credit system is at risk of collapsing, it is advisable to invest in gold as a form of insurance against the impending crisis.
  • McLeod  maintains their view that the dollar will experience a significant decline in value, and suggests that if the trade weighted index breaks a certain level, it would signal a serious problem for the dollar.
  • McLeod  suggests that the dollar may break a certain level, which could signal to foreigners to sell their dollars and potentially lead to a race to the bottom in currencies.
  • Inflation is not a rise in general prices, but a loss of currency purchasing power, which could be worsened by supply issues and the devaluation of fiat currency, while the Chinese economy’s recovery may impact commodity markets.
  • China needs certain elements for themselves because they trade with the rest of the world and these elements are important for military applications, vehicles, and green energy.
• 40:27 The potential collapse of credit could impact the dollar as a reserve currency, leading to uncertainty and a decline in its value, while gold may benefit.
  • McLeod  suggests that the dip in commodities will not last forever and predicts that the re-escalation of the Ukraine situation by President Putin could cause commodities to improve sooner, which is unwelcome pressure for Russia due to the decline in their trade surplus.
  • There are rumors of a new gold-backed currency being announced at the BRICS meeting, and there have been efforts to create regional trade currencies, indicating a potential shift away from the current financial system.
  • Russia, China, and other Asian countries are working together to extend the Glazier project, which will likely result in the creation of a new currency.
  • The potential collapse of credit could have a significant impact on the dollar as a reserve currency, leading to uncertainty and a potential decline in its value, while gold may benefit from this situation.
  • McLeod  discusses the potential cataclysmic events in the financial market and offers to come back to deconstruct any announcements made at a meeting.
• 45:50 Central banks may resort to credit inflation and massive expansion to rescue the banking system, potentially leading to higher gold prices and undermining currency purchasing power, with the Euro at risk of collapse due to the struggle to recapitalize central banks and the European Central Bank.
  • Central banks are likely to resort to stimulating the economy through credit inflation and massive expansion to rescue the banking system, which could lead to a higher gold price and undermine the purchasing power of currencies.
  • Central banks, including the ECB, are facing negative equity and potential losses due to quantitative easing programs, with the Bank of England being the only one to have a guarantee from the treasury to cover any losses.
  • McLeod  explains that the current credit crisis could lead to the collapse of the Euro, as the central banks will struggle to recapitalize themselves and the European Central Bank due to the multitude of national central banks involved.
  • McLeod discusses the potential collapse of credit, which could lead to a decrease in the value of currencies and a diminished purchasing power of fiat currencies.
  • McLeod  discusses the possibility of a credit collapse leading to a new system that allows for progress in our lives, but acknowledges the challenges and hopes for a better future for our children and relatives.
  • They may consider implementing a new fiat currency, returning to a gold-backed currency, or exploring a blockchain-based currency solution as a response to the looming credit collapse.