Interest Rates Will Have Rise to Unimaginable Levels.

and you might ask now well how how are gold and silver going to do well gold and silver were probably the well they were the best performing Assets in the 70s when when central banks uh lost the fight against inflation eventually they had to really let rates go to unimaginable levels like 20 in the US Friday June 23rd 2023 Monaco 64 home of alternative economics and

contrain Views so the main question being asked out there now in the economics Financial world is how high will central banks need to uh take interest rates to eradicate or not even eradicate but bring the rate of price Rises down they don't even want to eradicate inflation so we're going to look at that today and uh before I start I like to thank you for your

interest in what I have to say and uh yes we've just gone over 90 000 subscribers it's taken a long time uh last year around December time the channel was growing quite quickly uh the projections were for about a hundred thousand by by this time of of 2023 but for some reason the things have slowed down that's the way YouTube goes we can we're gonna just

keep plugging away and I really appreciate your interest uh in the channel and all your comments I try to look at as many as possible while I still also have to uh delete a lot of the uh spam and the Bots so you might wonder how do you know uh better than all the major economists out there the mainstream economists well I think they're in their

own Echo chamber they're all like Keynes entrained and uh they're they they play the game they they don't want to rock the boat they're well paid they work for financial institutions they they work for think tanks they advice uh government treasuries Finance Ministries so they they keep playing this game and uh they're completely um yes in an echo chamber they might work for the IMF World

Bank bis and uh in my opinion they're totally they've been totally brainwashed and uh you might think oh how is that possible well you just have to look at other sectors of our society especially uh in terms of what's happened in the last three years to the the health situation and you'll see what I mean you look at people who have been questioning how they've been

now Bill Ackman who's a a major Wall Street hedge fund he's even like uh saying maybe we should listen to him so that's why with economics and inflation I I think we've got the same problem uh I guess uh they haven't canceled me uh but uh it's a topic that's very uh misunderstood uh by everyone I would say almost everyone very few really get it and

I always uh go back to the definition of inflation because that too has been corrupted much like a lot of the health industry has been corrupted and uh it's simple inflation is the exorbitant or extra creation of fiat currency out of thin air not backed by savings uh and usually it results in the rise in the general price level general price level because it doesn't affect

every asset or every consumer good the same way there's a delayed effect and that's uh to do with the of course the cantillon effect so what is the cantillon effect we'll quickly uh go over that the quintillion effect is an uneven changing relative prices resulting from a change in money supply which was first described by 18th century Economist Richard cantillon who inspired political economists like Adam

Smith and David Ricardo creating an abundance of cheap money via Banks does not automatically mean that demand for everything will rise simultaneously instead history shows that certain assets take favor of others leading to rising in some areas of the economy and falling prices in others so now I'm going to take you to these charts here it's from yarddenny.com and it gives us the total assets of

the major central banks from around 2008 to present and what's that got to do with the quintillion effect and inflation well uh total assets of the central banks how do they buy their assets well by creating uh currency out of thin air and some people might argue well it's only uh bank money it doesn't go into the economy well eventually it does because they buy government

bonds and and the governments are able to borrow very cheaply because they've kept interest rates low and that puts currency into the system that and we we've seen that the people who were saying two two years ago even in the supposed uh contrarian or alternative economic space like we are they're saying though that QE was not inflationary that QE would not lead to inflation but uh

we just have to go to the cantilian effect and the true definition of inflation so you can see here that the fed's assets went from under a trillion around 800 billion to almost 10 trillion well just under 99 trillion recently uh you can see the ECB uh went from about one and a half trillion to around 9 trillion uh boj uh well that that's an outliers

it's going to continue to rise of course it went from like a 100 trillion it's now almost 800 trillions around 750 trillion yen and even the Chinese they've increased their balance sheet and and that is inflation and back to the cantillon effect and this is what these economists are missing they're only looking at the consequence uh they're only looking at CPI or core CPI and and

uh they're saying oh it's okay if this number drops to three or two percent it's fine we can keep inflating but they're not looking at the money supply and why is it only showing up now well because like cantillon said it doesn't all happen at once so where is all this money going um since oh wait up until recently of course while it's gone into uh

the stock market into Tech Finance uh all the major uh indices of course it's created a bubble it's gone into the bond market we had at one point 17 trillion dollars of bonds that were negative yielding and what does that mean well that means that they bid up the price of these bonds so high that their yields became negative uh we had a real estate bubble

of course they re-engineered the bubble after the collapsible weight uh and uh probably uh bubble in luxury goods too and you can add more and more to it but what's happening now is that all that money supply which is still there they are trying to uh get rid of it like the fed and they're having a tough time and they start getting rid of it last

year begrudgingly and uh earlier this year they had to increase it again so right now the fed's balance sheet is still pretty much where it was in February so they've wasted like uh four four months and this uh money supply is now flowing into real Goods Goods that are measured in the Consumer Price Index also into services and uh when people say oh higher wage demands

is creating inflation that's a load of BS the the people who earn wages salaries they're asking for more because their currency now is starting to show the dilution from all the inflation we've had since 08 the other fallacy I would say is that uh a strong labor market is inflationary how can that be it's ridiculous uh if you have more people working you have more people

producing and you've got more goods and services so that should actually help bring down prices because it increases Supply so that's another Keynes and fallacy so what I'm trying to say here is that uh they're looking at the wrong things the economists the policy makers Central Bankers politicians and unfortunately I don't think they're gonna raise rates enough eventually they will but it will be too late

and it will be a disaster it will be uh much worse than the 70s I think and you might ask now well how how are gold and silver going to do well gold and silver were uh probably the well they were the best performing Assets in the 70s when when central banks lost the fight against inflation eventually they had to really let rates go to unimaginable

levels like 20 in the US a 10-year yield in the US went up to like uh almost 15 percent and the same thing's gonna happen now it's not going to happen tomorrow or next week it's it's going to take a little bit of time because they're going to be always uh in in denial uh and that's the problem uh I see so back to the question

Central bank's battle with inflation enters a new phase of pain you know people are asking how high are they gonna have to raise rates this is a big story today in the ft and it says economists warn that recession will be the price of hitting two percent goals so that's even another Keynes and fallacy to think that debasing the currency by two percent a year is

a good thing I wanted to show you a chart of the bank of England policy rate and I have to thank the Saint Louis fed for this because it goes back all the way to 1694 when the bank of England was uh founded and you can see that the first uh rate they set was four and a half percent uh it went down to around three

percent but pretty much after that for the next uh 125 years they kept it at five percent so right now we are at five percent uh as per the base rate so we're we're back to uh normal levels but notice how how after 1821 uh the rate rate went down and it was uh kind of uh it moved around but it never really went below two

percent uh so the first time it went below two percent was back in uh yep 2009 after the 08 crisis and it stayed there um up until recently it stayed below one percent it did go uh to 0.3.75 but up until uh early last year we were still below one percent so for um 13 years it stayed below one percent and if you look here from

uh the third quarter of 1932 to the fourth quarter of 1951 the base rate or the policy rate basically stayed at two for uh 20 years there is a blip there up to three that was I think at the start of the the War World War II but um they had gone off the gold standard uh England or the bank of England or the UK and

they kept rates at two percent uh which for 20 years and as you can see uh back in the 19th century yes the rate did go to two percent but it never stayed there for 20 years it used to fluctuate with the market I would say he used to fluctuate from two two to five percent as you can see but they kept it uh at two

for twenty years so what was the consequence of uh of keeping those rates at two percent well it created the inflation extra currency out of thin air and yes uh Britain wasn't on the gold standard so is it any wonder that we had uh Rising rates after that after uh the the early 1950s is it any wonder that prices started consumer prices started rising in in

the 60s 70s and to some extent in the 80s and it took rates uh up to 17 to to bring down the uh the inflation of the 70s as you can see I'm sure it was much more than people imagined uh back in the 60s and 70s because they were looking back and they thought oh rates are not never going to go above seven and a

half but they went to 17. so now we've had 12 years which granted is less than 20 about 12 years of uh almost zero rates and all the QE QE is also inflationary it's monetary policy so my uh opinion here my speculation is that it's going to take a lot higher rates to stop the consequence of well 13 years of massive inflation that we've had uh

not just in the UK but everywhere around the Western world and am I saying rates are going to go above where they went in the 70s and early 80s well uh it could very well do so and it will be disastrous and uh already we're seeing the market and the Market's been wrong in this the city of London Wall Street they're saying that the bank of

England rate is going to now top at five and a half maybe six in my opinion they're going to be proven wrong about that too so that's why I think rates yes they're gonna go a lot higher than people thought but it's going to be even even higher than most people in the mainstream thing and the main reason for it is because people have forgotten what

inflation really is and to some extent uh What uh Lenin said about inflation according to Keynes is being proven right again that not one men or women in a million really can can see the process of inflation or understand it and it's still the same it's still true today unfortunately and that's why the middle class or the bourgeoisie is being destroyed because of the the inflation

so with that let's quickly look at where the markets are this morning it's a quarter to nine a.m London time we've got spot gold at 1917 it's up about three dollars Heisman 1919 the low 1910. we've got silver at 22.30 it's up six cents Low's been 2209 the high 22.40. a lot of you will say well High interest rates are going to hurt gold and silver

well it didn't in the 70s 70s and I don't think it will in the next five to ten years because uh they're they're uh fighting a losing battle it's only when they really raise rates to unimaginable levels that we'll probably see a top in gold and silver that's my opinion uh we got the Dow futures down 170 points that's half a percent the NASDAQ 100 Futures

down 82 that's just over half a percent uh the s p uh future is down 25. that's also down half a percent so stock markets a little bit under pressure today to the currencies uh British pound is down 0.4 of a percent at 126.97 uh the euro is down uh a 7 8 of a percent at 108.63 and the dollars down 0.2 versus the Yen 142

80 dollars up uh a quarter of a percent versus the U1 at 721.40. to the other currencies uh Aussie dollar is down one percent at 66.88 uh the dollar is up 0.4 versus the Canadian dollar 132.03 and the Kiwi dollar is down 7 8 at 87.62 so it looks like the dollar is uh rebounding a little bit here today uh General Commodities we got WTI Crude

down two percent at 68.13 uh Brent is down 1.8 percent at 72.90 uh Platinum is up two dollars at uh 927 and high grade copper is down 1.4 percent at 384.30 we're going to look at the bond market now we're going to start with the guilt guilt market so guilt yields the the two-year yield uh yeah that's down two basis points at 505 so they're keeping

that under control for now the 10-year yield is still below four and a half percent uh I wouldn't touch these things I I think yields are going to go a lot higher in the next few years we're in a bear Market in bonds uh back to the US uh treasury market uh we've got the the two-year yield down four basis points this morning at 475 and

the 10 year is at 374. it's down six uh basis points so yeah there's a lot of talk of where rates will go and the fact that uh central banks are having a tough time and that they might actually need to bring in a recession to to stop prices rising that's that's the the next uh yeah that's the next big thing it seems and maybe that's

why uh Commodities are down today but I think Commodities uh precious metals are going to be the place to be much like in the 1970s because we're gonna have stagflation and back then the Keynes didn't understand that either that you could have Rising prices in a moribund economy and it's going to be the same thing again and and I think it's going to be a lot

worse unfortunately because we've had a lot more inflation uh in in the last uh well 15 years or so so there you go uh with that I'm gonna wish you all a very good day take care bye