Financial Fantasy Land Continues to Prevent Collapse-Bill Holter

Financial writer Bill Holter says the record stock market does not reflect reality. Holter explains, “This will go on until it doesn’t. Very quietly, this past week, they postponed the “Volcker Rules” for the banking system. The reason they did that is they can’t allow the Volcker Rule to come into place. That would require increased capital ratios.  It would bring mark to market back.  We live in a financial fantasy land, and they need to continue the fantasy to prevent collapse.” 

The recent spending bill passed by Congress, which puts taxpayers on the hook for more than $300 trillion in future derivative losses, is another ominous sign financial trouble is coming.  Holter contends, “It tells me that they know something.  They know something we suspect, and they know something they don’t want to tell us.  They know a crash is coming and they are preparing.  For the Republicans to vote “yes” on this after they won a landslide election is throwing the voters under the bus.  People voted for change and we got change, but it was change into a greater direction of taxpayers being screwed.”

So, how long can this “financial fantasy” last?  Holter, who has more than 30 years experience on Wall Street and finance, says, “I have no idea.  I say I have no idea because I would have thought a complete credit contraction and collapse would have and should have already occurred.  The Federal Reserve with QE (money printing) and the Plunge Protection Team manipulating basically all markets have held it together.  It is being held together with confidence and confidence alone.  So, when will the wheels fall off of this thing?  It could be tomorrow morning; it could be January 5th, the first trading day of 2015.  It could be anytime, but it’s going to happen.”

On the new so-called trading “collars” on gold and silver prices, Holter says it is another tipoff on where the precious metals prices are going.  Holter thinks, “It’s to prevent a disorderly rise and not a disorderly collapse in prices.  How far can it go from here?  It is $6 to $8 below the cost of production.”

On Holter’s outlook for 2015, Holter says, “I think there is going to be a reset of asset prices, a reset of currencies and a reset on the values of everything.  I also think credit will actually seize up in and around this reset.  What I really think you are going to see with a credit seizure is a problem with distribution.  When I say distribution, look what happened this past week in Belarus.  Because the Russian ruble collapsed, the Belarusians, because their currency is tied to the ruble, they went out and made a run on their banks and went into stores and took everything off the shelves.  How are those shelves going to get restocked?  They get restocked via use of credit.  The entire distribution chain runs on credit, and if credit seizes or even hiccups, you could very well see a panic and shelves clean up lock, stock and barrel.”  This same thing could happen in America, as Holter goes on to explain, “This is human nature.  If you see a run on a bank or your ATM’s don’t work or your credit cards don’t work, people are going to take whatever cash they have and buy whatever they can.”

Holter closes by warning, “I suspect what is going to break are the derivatives, the $303 trillion in derivatives that the big banks have, and it will crash the world.  This is not just a U.S. problem–this is an international problem.  When this thing blows up, it will be unlike anything that has happened since the Great Depression and before.  This will be the big one.”

Join Greg Hunter as he goes One-on-One with Bill Holter of Miles Franklin, who specializes in precious metals and global investment strategies.

(There is much more in the video interview.)