What happens when protecting a currency conflicts with rescuing financial markets?
Alasdair Macleod discusses the Federal Reserve’s dilemma, the connections between markets, and why he sees gold as money.
At the New Orleans Investment Conference, Jan Baltensweiler of VON GREYERZ (English) spoke with Alasdair Macleod about the future of the monetary system, the Federal Reserve’s dilemma, and gold’s role in protecting purchasing power.
Understanding the Connections
Jan Baltensweiler: Alasdair, where do you find inspiration for your articles?
Alasdair Macleod:
Essentially, I look at what is happening.
I think it is very important to help ordinary people understand what is happening to their currency.
Its purchasing power is declining, and I believe the war against Iran is likely to accelerate that decline, creating problems in the bond market.
“It is about understanding the interrelationship“
between these various markets and what is likely to happen with rising bond yields.
The Fed’s Dilemma
Jan Baltensweiler: Looking ten years ahead, where do you see the monetary system?
Alasdair Macleod: I do not think it will exist in the way it does today. I believe we are heading towards an existential crisis. We are going to see higher prices, higher interest rates and higher bond yields. That could upend markets.
“We’re heading for an existential crisis.”
What does the Federal Reserve do? Does it try to rescue all the zombie businesses and struggling markets, requiring massive money printing? Or does it say: we cannot rescue everything, but we can secure the value of the currency by raising interest rates and accepting the consequences?
“It’s a horrible decision, I think for the Fed.”
I think we are likely to see these pressures over the next couple of months, potentially leading to a bond market crisis. Ten years is too distant a horizon when such significant changes may be much closer.
Why Gold?
Jan Baltensweiler: What first drew you to gold and made you question the monetary system?
Alasdair Macleod: The first gold bull market I knew was in the 1970s. Over the following decades, my understanding of gold, its relationship with credit and the wider monetary system has been improved and refined.
Now, I believe we are on the eve of another currency crisis. Those concerns are essentially what originally drew me into gold and silver.
Jan Baltensweiler: What do you think people get wrong about gold?
Alasdair Macleod: They do not understand that gold is money and all else is credit. If you want to protect yourself, my view is that you have to get out of credit and into gold.
“Gold is money and all else is credit.”
People often think dollar cash is safe.
“But of course, people think that, you know, dollar cash is safe. It’s not because it loses purchasing power.”
The only safe place, in my view, is real money without counterparty risk: gold, and possibly silver as well. That is what people need to understand.
Protecting Your Wealth in an Uncertain Monetary Future
Alasdair Macleod on currency risk, the Fed’s dilemma, and the case for gold—an interview at the New Orleans Investment Conference.
Jan Baltensweiler
jan.baltensweiler@vongreyerz.gold | +41 44 213 62 45
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