As the bond market continues to melt down, interest rates rise and the Dollar Index surges above 100, legend Art Cashin gave one of his most important interviews ever to King World News about a Trump presidency, the New World Order, gold, Brexit, the Great Depression, and why we will see panic before the end of the year.
Eric King: “In Trump’s acceptance speech he said that we are going to have massive infrastructure spending. Is that bearish for gold? I don’t think so.”
Gold Market Hit As Druckenmiller Sells
Art Cashin: “No. That on the face of it would not be a reason to sell gold. One of the things that may have concerned Druckenmiller was not so much your scenario of fiscal spending and building roads and highways, but the fact that despite what the Fed has been doing, the money supply has not been showing any velocity. That’s a topic you and I have discussed time and time again and it’s one of the holdups to gold because if it gets no velocity that’s deflationary.
In fact, the largest growth in money stock is in cash — green pictures of dead presidents — and that is deflationary because that does not have a lending factor that money in a bank would have. So those are two deflationary trends in money and that tends to weigh a little bit on gold and doesn’t allow it to fulfill its promise that you would expect in a somewhat inflationary period.”
Eric King: “Victor Sperandeo, a former associate of George Sorors, said to me this will be ‘pure money printing.’ That we are going to print trillions of dollars and build infrastructure — talk about how you view that. Obviously there are going to be jobs created and it will be great for infrastructure, so it will juice the economy, but what are the longer-term ramifications?”
Art Cashin: “On the face of it, it looks good. As you said, there will be jobs created and there will be improvements in roads and airports and so on. However, the other shoe to fall is that Mr. Trump is also committed to revamping the tax code. And those two things should lead to a massive increase in the deficit. And we are already deeply in debt, so people like Rosenberg and others feel like it will have virtually no impact.
On the face of it the stimulus program should be great for the economy, but because you are in such a high level of debt it might not work out that way. He and others point out that if fiscal stimulus were the answer then Japan would be the king of the world with all of those bridges to nowhere that they built. Japan spent a lot of money, built up their deficit, and their economy never really turned around.”
Eric King: “Going back even further than that and looking at the Great Depression, the United States was struggling and then FDR devalued the dollar by revaluing the price of gold higher. Those public works projects then got underway, the massive public works projects that built so much of the infrastructure here in the United States, Art. And that did turn the stock market around. It turned many things around — commodities, etc — but then it rolled over by 1937-1938 and then the war came. Is this infrastructure spending program something that can look good for a little while and then it will just roll over like we saw in 1937-1938?”
Art Cashin: “It can. And the problem (during the Great Depression) was that the thing didn’t click, as it were. It didn’t lead to the next step. You hire people, you do the road projects, you do whatever, and then you want to see them go out and spend and business begin to borrow and banks to lend. And in ’37 and ’38 that never fully kicked in.
U.S. Experiences Second Stock Market Collapse From 1937 To 1938
You had high government officials, in frustration, go to Congress and testify:
“We couldn’t get it started. We just couldn’t get it started.”
For all of the deficit spending, for all of the government programs, it never fully worked. That’s the fear. Again, if you go back to Japan, clearly they spent trillions of Japanese yen in massive building projects and it never kicked in, it never took over. The people continued to worry and hold onto their money.
A Worried Public Is Hoarding Cash
As I’ve told you before, this whole thing about helicopter money and whatnot, if Bernanke flew over your house and dropped a million dollars in brand new money, and you were so worried that you got up and hid it in the garage until you figured out what the economy was going to do…And that is virtually what has happened to us for the past seven years.
They have tried all kinds of increases in money supply but it has never kicked in and people are so terrified that they are not spending, and basically, as I said, the large amount of growth was in cash. So they are putting it in the mattress, not even in the bank.”
Eric King: “Art, for so many years on King World News you have been talking about this lending and spending not kicking in, and you have used that Bernanke analogy over and over again. It’s not normal for you to beat up on a point as much as you have. But earlier you brought up Japan, and then when we covered the Great Depression you discussed 1937-1938, and the the testimonies before Congress from people saying, ‘We just couldn’t get it started.’ Did you know all along that it was going to unfold this way to some degree with the lack of lending and spending? Did you know that from history?”
Art Cashin: “I had a fear of it and it became pretty evident after some of the first things they (central planners) did. It is not a very difficult game. Every week the Federal Reserve reports the Money Supply and the Federal Reserve of St. Louis reports the Monetary Stock, which is the amount of raw money that the Fed adds in.
“We Just Couldn’t Get It Started” – Monetary Stock Plunging
“That Shouldn’t Be”
For a year now, despite all the things you have heard, despite all the programs and ‘pump-priming’ and Yellen and all the doves, the Monetary Stock has not increased all year. That shouldn’t be.
60-Year Velocity Of Money Stock Hitting New Lows
If money has velocity, then you can see the economy begin to move up. If it gets too much velocity, then you get to see inflation. But so far we are not getting a high dose of either. Although, if you ask somebody standing in the supermarket if they have inflation they might give you a bit of an argument. But by government standards it’s not quite there yet.”
Eric King: “Along those same lines, Art, you’ve warned repeatedly about Weimar Germany and the experience of the 1920s. This idea that there can be no inflation and then suddenly it just kicks in and then all hell breaks loose. You’ve warned so many time about that. Is that what’s in front of us?”
Art Cashin: “You will begin to know it. Everybody talks about the Weimar Republic where they actually printed cash money and flooded the system. It wasn’t just the bank reserves — they actually flooded the system with paper money. And amazingly, amazingly, it was a while before that actually kicked in in an inflationary manner. And as you alluded to, I’ve said this time and time again, it’s one of those things like spontaneous combustion — it’s there and it’s there and it’s there and suddenly it bursts into flames. And when it bursts into flames it consumes everything about it. And that’s when you can have a runaway inflation.
But so far it has not burst into flames. And that is why to even some degree the Fed is frustrated, hoping to get inflation up above 2 percent. And they may be in a position where, be careful what you wish for. Because if they get 2 percent and above it could suddenly combust and things could begin to move rather rapidly.”
Eric King: “Art, let me ask you this about the Trump presidency. It seems like for those people out there who, as he said, felt lost, the lost Americans, and for those out there who really felt like they were having globalism shoved down their throats in Europe and in the United States, this seemed to be a moment in time where there was going to be some backtracking. The borders were going to be closed, there would be some protectionism — we all know the plusses and minuses of that — but how did you view this Trump election and him becoming president, the idea that the elite got sand kicked in their face and that this New World Order would be slowed down, if only for a moment?”
Donald Trump’s Shocker And Why Brexit Is Nowhere Near Over
Art Cashin: “I view it as yet one more extension of what looks to be a populist revolt that is sweeping the world. You saw the beginning of it with Brexit, and you have too many pundits on TV saying, ‘Well, that ended quickly in reverse.’ Brexit is nowhere near over. But the reason that markets didn’t continue to spiral (downward) is that they realized that Brexit has basically been postponed. They haven’t gone in and declared Article 50. Once they start the process in motion, the consequences of Brexit are going to be there and they are going to be drastic.
Now, if you take Trump’s election as the second leg of populism, the next thing you look for is the December 4th referendum in Italy. And there’s a good chance that will cause the government to fail and Italy will be right back in the middle of a major European crisis, and we’ll be right back where we were with Greece (only much larger in scale). So this game is far from over and we could see further panic as we head into the end of the year.”
Eric King: “Ahead of what’s going to happen in Italy, because I think that will unfold as you just predicted, Art, a Trump America going forward and this idea that the elites have been pushing globalism down everybody’s throats with NAFTA and so many things that have happened around the world. The globalism and the push to eliminate national boundaries, we’ve seen that in Europe and of course they had talked about combining Canada, the United States and Mexico into one regional unit. This idea that globalism has taken a huge blow here, is that true? Or did it just slow it down? What will a Trump presidency mean in that sense?”
Art Cashin: “We’ve got a lot of things to see. Over the next week or two you are going to see whom he appoints to the cabinet and who holds him under their sway. It would appear, however, because of the size of his commitment, he’s got to address globalization and global trade. He’s got to go back and revisit even NAFTA.
I think some of his early attempts will be reasonably good. He will do some fiscal stimulus, some building and repairing, hopefully getting the tax structure in better order. But that will not be the end of it. He can pivot a bit but he can’t completely abandon it (his campaign promises). People will have to watch what he does.
Now, he may cleverly hire some people and put burdens on their shoulders. If after six months things don’t work out, he can revert to his TV personality and say, ‘You’re fired,’ to show the American people that he’s staying on top. But for now…KWN encourages everyone around the world to listen to one of legendary Art Cashin’s greatest audio interviews ever discussing the gold market at length, including the recent takedown in gold and what to make of Druckenmiller selling, what to surprises to expect in key markets as Trump becomes president, and what impact massive public works projects will have on the United States, inflation, gold, bonds, and much more, by CLICKING HERE OR ON THE IMAGE BELOW.
***KWN has now released the extraordinary KWN audio interview with whistleblower Andrew Maguire, where he discusses the gold and silver smash, at what price the large sovereign wholesale bids are located, and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Greyerz – Historic Shocker, A Difficult Road And A Major Short Squeeze About To Unfold CLICK HERE.
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