The funding challenges ahead

Seeking Alpha/Alasdair Macleod

Repost from 10-15-2021

image showing the blur of high speed money printing press running at full tilt“Funding any term debt in a rising interest rate environment is going to be considerably more difficult than when the underlying trend is for falling yields. There is the additional risk that foreigners overloaded with dollars and dollar-denominated financial assets are more likely to become sellers. Not only are foreigners overloaded with dollars and financial assets, but with bond yields rising and stock prices falling, foreigners for whom over-exposure to dollars is a speculative position going wrong will undoubtedly liquidate dollar assets and dollars. If not buying their own national currencies, they will stockpile commodities and energy for production, and precious metals as currency hedges instead.” [Emphasis added.]

USAGOLD note: Macleod explores the complex machinations behind massive money market mobilizations – in progress even as you read this post. The financial markets, he says, are having difficulty absorbing the massive stimulus created by the federal government and Federal Reserve. Eventually, in his opinion, as global entities and individuals gain a better grasp of the problem, they will move to preserve their purchasing power. He sees precious metals, as noted above, among the beneficiaries.

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