"William White is saying, between the lines, that U.S. debt is ready to default." - Jim Willie, March 02, 2018
Jim Willie of GoldenJackass.com and T.F. Metals graced us with an early spring blossom this morning by posting another terrific free hour with the Jackass. You can find the downloadable MP3 file at the website [linked here].
Willie reiterated a theme that he also shared recently on a Rogue Money broadcast, that is, the central bank of central bankers, the BIS of Basel, Switzerland, has had it with toxic balance sheets and unpayable American debt disguised as "reserves."
Willie then reminded us that there's more than one way to price oil. Historically, economists look to the Gold-To-Oil ratio as a market predictor of future crises. The falling barrel price and suppressed gold price well betray a Gold-To-Oil ratio gone mad. Oil exporters are feeling the pain.
"The boomerang effect [from low oil prices]," he said, "is that nations are selling off their treasurys. They don't necessarily want to, but they're starting to conclude 'we can't do anything else!' By not raising interest rates, the Fed essentially started the process of removing the petrodollar standard and forcing nations to dump their excess banking reserves."
The Jackass spent quite a few minutes reading statements made several years ago by BIS economist William White. Nothing makes my heart go pitter-patter more than when I hear a modern-day economist recalling the pattern set by his Sumerian forbears:
"The only question is whether we are able to look reality in the eye and face what is coming in an orderly fashion, or whether it will be disorderly. Debt jubilees have been going on for 5,000 years, as far back as the Sumerians."
William White touts quite a few sensible presentations on YouTube. Here is a brief appearance on Bloomberg back when those comments were fresh in the news cycle.
What Willie sees as the potential central bank "debt jubilee" is a pronounced rise in the gold price that will be stipulated by the BIS. A rise in the gold price would restore equilibrium to central bank balance sheets by normalizing the whacked out Gold-To-Oil ratio. Slightly paraphrased, Jim Willie explained:
The BIS is planning to reduce the pain from toxic balance sheets, from oversized debt securities, by raising the value of their gold asset. European bankers will love it; the U.S. won't.
European central bankers will tell the U.S. that your time as an empire is over. Gold will go from $5,000 to $8,000 to $10,000 ... the higher gold price will itself restore the equilibrium of their balance sheets and too bad if America did not have the wisdom to keep her physical gold reserves.
Everybody right now is nervously watching the rising yield of the long-term Treasurys. Willie calls this the "lighting of the fuse." Of course, standing in the shadows is the mysterious Exchange Stabilization Fund. Willie says that Rob Kirby believes that the ESF will do what it always does and ride to the rescue by ordering Wall Street to lick up Treasurys and force the price up and the yield down. But the Jackass is not so sure; he just doesn't believe that the ESF will be able to keep the rate under 3.0%, now with the BIS leading global perception that the U.S. can no longer sustain its debt.
With the Shanghai oil contract due to launch in only three weeks' time, the world will eventually no longer have as much appetite as it used to for Treasurys. Will the ESF be able to conjure another rabbit out of its hat when the audience has left?
Vatican Not Playing Nice
I noticed that, in the TF Metals interview, Willie didn't mention the arch-enemy to the BIS gold liftoff: the Vatican. In an earlier interview here on Rogue Money, the Jackass did remind us that the Vatican has been ignoring BIS direction by continuing to make gold available on the cheap to Russia and China.
In the wake of a BIS re-ordering of the gold price accompanied by a global rejection of US Treasurys, perhaps the Vatican will find a new buyer of her gold in the jilted United States of America. Nevertheless, St. Peter should review how likely it is that a world power in a heap of financial trouble, tarnished with a history of stealing gold even from its allies, and loaded with plenty of firepower would be willing to meekly negotiate a few crumbs of gold from the Roman coffers? When Hitler needed gold, he simply took it. Ask Czechoslovakia.
For those who would like to review previous presentations by William White, I'll leave you with this speech and Q&A posted im 2014. The man makes a lot of sense!