The Fed Must Inflate or Die

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Bill Holter on Palisades Gold Radio

Bill discusses the current liquidity situation with the Reverse Repo system. Banks can sleep at night with their funds being stored with the Fed while earning a return. However, the Fed can’t allow interest rates to go negatives since that would indicate the dollar is worthless.

JP Morgan has a large derivative concentration which carries 3.3 trillion in counterparty risk. Globally, everything is a promise today as the world runs entirely on credit. Small failures can cascade like dominoes. The Fed can’t truly taper and should they try we will see the next round of Q.E. within a few weeks. The Fed will likely attempt a small rate hike but multiple hikes seem unlikely.

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