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The Inevitable Death of Fiat Currencies-Rafi Farber

Rafi Farber: The Inevitable Death of Fiat Currencies

Palisades Gold Radio:  5-31-2023

Farber discussed the possibility of flooding the market with $1 trillion worth of T-bills if a deal is passed, and the potential effects of this.

 He noted that similar factors were in play during the repocalypse of 2019, such as tax day and quantitative tightening, and that this current situation is worse.

Farber discussed the complexity of the current banking crisis, which is the fifth largest monthly loss for the big banks in deposits ever. He believes that this is due to a combination of deposits going into money market funds, and small scale debt defaults.

He also discussed the IMF's worries about the banking crisis becoming worse, and how the main difference between the 2008 banking crisis and the current one is that the Federal Reserve now owns mortgage backed securities.

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When asked where he saw inflation heading, Farber explained that the paradox of monetary and non-monetary forces on prices is that lower interest rates will initially drive prices down, but eventually the higher money supply will catch up and cancel out any productivity gains in the supply.

This will lead to an exponential growth of money supply that will eventually be unsustainable, leading to the collapse of the banking system.

Farber also discussed the weakening of global currencies, using the British pound as an example. He argued that the UK government's decision to directly finance the government deficit and hand out 70% of paychecks to citizens was "hog wild" and is now leading to a hyperinflationary spiral with food prices at 20%.

He then discussed the 10-year bond being at crisis levels, as the Bank of England now owns the bonds instead of retirement funds. Farber concluded by discussing the importance of paying attention to the current state of the U.S. dollar and other currencies, and the implications this has for the future of the global economy.

He argued that the only way to move beyond the skeletal remains of the Bretton Woods system is to trade in gold, but that governments don't want to do this because it's honest and they benefit from stealing.

 He encouraged people to stay grounded in logic and not overextend themselves, reassuring them that if they do, they will make it to the end of this game.

Time Stamp References:

0:00 - Introduction

0:40 - Ceiling Consequences

5:18 - Liquidity Issues

8:06 - REPOcalypse Thoughts

10:23 - Feds Balance Sheet

11:53 - Banking Deposits?

16:13 - Mortgage Securities

19:12 - Inflation Cycles

22:12 - British Pound

25:49 - Inflation & Metrics

28:20 - The Gold Benchmark

33:40 - BRICS & The Dollar

37:04 - Metal Delivery Months

39:50 - Gold/Silver Ratio

42:24 - Communication Speed

43:54 - Wrap Up

Talking Points From This Episode

- Defaults and deposit problems in the current banking crisis.

- Concerns with the Fed now owning mortgage backed securities.

- Governments don't want to trade in gold because it's honest and they benefit from stealing, so it's important to stay grounded in logic and not overextend oneself.

https://www.youtube.com/watch?v=-1tkE9TkBpE

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