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Chris Whalen - Expect Bank Holidays in Europe & Higher Gold
With gold and silver stabilizing, while concerns about the health of the banking system, on both sides of the Atlantic, continue to persist, today King World News interviewed Chris Whalen, who is now partnered with Jim Rickards over at Tangent Capital. When asked about continued money printing and where we are headed, Whalen stated, “Well, I think the dollar continues to muddle along. So I see the dollar continuing as the means of exchange for global commerce, but it’s definitely not a store of value. Nor has it ever been. Hayek wrote this very well in ‘The Road to Serfdome, that in a democracy, no government could resist the temptation of inflation.’ You would have to have a perfect dictator, along a Greek model, and I don’t think we’re going back there.”
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
December 20, 2011
Chris Whalen continues:
When asked if there was a possibility of a bank holiday in the US, where the currency would be devalued, Whalen replied, “Well, you see in the US you already have that built in. The ability of the Fed to monetize assets, seemingly at will, means you’ve already got a devaluation baked in. So you don’t need that dramatic, climactic crisis type of event that you had in the 1930s when FDR arbitrarily devalued the dollar. And it didn’t work, by the way. It had a horrible effect on the US economy and made the Depression much worse.
So we’re constantly punishing consumers and others with this steady double digit inflation rate for consumer goods, energy and things of that nature.
But in other nations, look at the EU, you could have a couple of nations leave the currency bloc, which would, in effect, be that kind of cataclysmic event because it’s a political as well as a financial default. That kind of reminds you of the Latin American period, Mexico, Argentina, that kind of thing, where it’s more of a political event.
You could see bank holidays in Europe as a result of that, no question. But I think it would be mostly because they would have to come up with new currencies....
Continue reading the Chris Whalen interview below...
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“For example if Spain and Greece left the EU, they would probably have to have a bank holiday just so they could physically print enough money to replace the euro. That’s not a minor undertaking, but they could do it.
You would probably have a transition. But imagine the chaos if you start telling tens of millions of people that the money in their pocket is no good.”
When asked if that meant gold is going higher, Whalen responded, “Oh definitely. I don’t trade it, I don’t advise clients on it, but I think all commodities, whether it’s gold or platinum or any of the big industrial metals, are going to continue to be your best hedge against inflation. Some real estate, to a degree, but remembering location, location, location.
I think that’s where I would tell my clients to hide their money. That’s why I’m focused on creating some low beta assets working with Tangent (Capital) next year because I think that’s what clients want. They want less volatility, they want cash flow and they want to put their money into part of the economy that’s less volatile than the high beta world of large cap equities. There is a lot of other equity out there that nobody ever pays any attention to and we’re going to focus on that.”
The KWN interview with Chris Whalen will be available shortly and you can listen to it by CLICKING HERE.
© 2011 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
Eric King
