Grant Williams: The End Of The Road

Tyler Durden's picture

Submitted by Adam Taggart via PeakProsperity.com,

Grant Williams returns this week to set the context for this week's FOMC meeting, where the Federal Reserve is widely expected to hike interest rates for the first time in nearly a decade. To say he is very skeptical of the Fed's ability to continue to control market forces much longer is a gross understatement:

None of this has been tried before and, to me, that just demonstrates the dangers. Once you get into a situation like the central banks did in ’08 with this panicking -- everyone calls it the Hotel California -- you can’t get out. And, so incrementally, they have to keep doing something. Instead of stepping back and letting free markets and business cycles and forces of nature have their way and flush out all of the impurities in the system, this is what happens. And, yet, this time, for whatever reason, I think since post-Volker, Greenspan has basically started this ball rolling with this knee-jerk reaction to slash interest rates. And, you can kind of understand it, because everyone was still traumatized by the high inflation of the ‘70s. But, they started and they started down that road.

 

And, if you look at a chart of interest rates in the U.S., you can see. It’s just, from 1980—I’ve marked two points on all my charts for presentations. One is the end of the gold standard, August 15, ’71, when Nixon closed the gold window. And, the next is peak interest rates in 1980. And, if you look at those two charts and you see what’s happened with interest rates since, they’ve been on a course to hit zero ever since.

 

But, if you step back from that and you say forget the creeping nature of this and how we’ve gradually got here, try and parachute yourself in and look at the situation, and look at it through clear eyes, you'll say, “Hang on, we have negative nominal interest rates, and we have people queuing up to buy the debt of what are clearly bankrupt governments at negative interest rates.” It would take you no time at all to think, “Well, this is, this is ridiculous. Not only that, but this is the end of the road. It has to end here or near here.”

 

And, so I think that’s where we are. I think we’ve reached the end of the road. That’s not to say the end of the road is a brick wall. We can be trying to turn the car around for a year, who knows, trying to find another way out of this thing. But, we’re there. I mean, believe it or not, we are there. And, so how this thing plays out, none of us know. But, I suspect that the tactics that are going to be employed are going to get more and more desperate, because they have to keep going now. They’re so far in, they have to keep going, and keeping going means doing more and more extraordinary things.

 

It’s a relative game. There are people that have to be invested. And, so you can herd them by taking away the chance of investing into one thing, i.e., putting rates at zero so you can’t just put your money in cash or short-term Treasuries. By doing that, you know, psychologically, you’re going to herd them somewhere else, and that’s been into the stock market, it’s been into asset prices, which is fine. But, it’s not a temporary removal of that ability to put stock in cash. You have to keep that away from them, because if you give it back to them, if you give them back that option, it’s going to mean interest rates are at much higher levels, which is going to screw all the debt payments. They are going to run for the hills faster than you can imagine, because none of this stuff is what you would choose to invest in, all things being equal. You wouldn’t invest in the S&P where it is now, after the run it’s had. God knows you wouldn’t invest in government bonds where they are now. You might take a long hard look at asset prices and think, “Well, you know what, actually, I might buy some base commodities here, because they’ve been just completely slaughtered.” But, you certainly wouldn’t be investing in the two things that they need you to invest in, which are government bonds and equities.

 

So, that’s the real problem. And, the fact that they realize that tells me that we are getting to the end of this road, because that credibility is not something they can maintain forever, particularly when they’ve boxed themselves in with negative interest rates.

Click the play button below to listen to Chris' interview with Grant Williams (59m:06s)

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max2205's picture

Nobody cares about interest rates.....WAR has triumphed again

 

 

stocktivity's picture

Blah, Blah, Blabber, Bullshit.   It's all Bullshit!!!!

Money Counterfeiter's picture
Money Counterfeiter (not verified) stocktivity Dec 15, 2015 9:03 PM

And when China is forced to stave off revolution and defend the Yuan?  China is in a collapse.  Think they know about cheap money by now.

Cognitive Dissonance's picture

"And, so how this thing plays out, none of us know. But, I suspect that the tactics that are going to be employed are going to get more and more desperate, because they have to keep going now. They’re so far in, they have to keep going, and keeping going means doing more and more extraordinary things."

Desperate men do (increasingly) desperate things. This ain't over by a long shot. There are still miles to go before the Guillotines come out.

Manthong's picture

I have a sneaking suspicion that they won’t hike.

Not hiking extends the market fraudspace levitation a bit longer.

Taking away a tiny hike imposed now will do nothing when equity prices start to align with reality.

Their solution, er, reaction to the post-bonus season crash will be more QE.

kill switch's picture

THEY WILL NOT .....................................................................

Stuck on Zero's picture

All governments enter new ventures, such as Q.E., welfare, military intervention, and others, with bold visions of benefits.  They never enter with an exit strategy.

philipat's picture

IMHO, despite dismal macro data, they will increase rates just to show they can and so as not to lose what little crdibility they still have. The made up jobs and CPI data were precursors to smooth the way.

The PPT will be on high alert and Wall Street, which controls 70% of all equity transactions, will be on its best behaviour (Unless it wants to lose access to free money and higher returns on excess reserves). The fact that it doesn't make any sense is irrelevant..you think they care about Main Street?

AGuy's picture

I have a sneaking suspicion that they won’t hike."

The Fed that cried Wolf!

Bernanke gave a statement that the Fed will probably have to use negative rates. My guess is that by the spring will be in Negative rates. The Junk bond market is imploding and shale drillers are scramble to hire law firms that handle bankruptcies. A lot of banks are going take a fall when the shale drillers default. Currently they continue to lend more so the drillers can service thier debt, so they don't have to mark them as NPLs, atleast until after the bankers get their yearly bonuses.

 

 

 

tarsubil's picture

The lies will get worse and worse until we'll look back at Bagdad Bob as a hero of honesty and forthrightness.

Consuelo's picture

 

 

China has been in 'collapse', since long about sometime in 2008 - if one is to believe the financial punditry whom always invokes that nation, largely because they've never done/seen/dealt with anything related of or to, China, but I digress...   China knows about a lot of things.   They also know how to DO a lot of things - many of which they're Doing right now all over the globe, whilst armchair experts on everything China sit here in the special universe that seems to revolve around the U.S. and it's world reserve currency status, and dictate how it's all going to shake out...   What nonsense.   'Revolution'...?  You'd best pay attention to the harsh reality here in the U.S., which sits right underneath a thin veneer of 'deep markets' and (perceived) 'stability'.  You're but (1) dislocation away from Turd-world status, which when in motion, will make restless Chinese 'peasants' and the next metropolitan area 30 miles from your house, look indistinguishable from each other.

 

tarabel's picture

 

 

China only knows how to do one thing:

Con some western industrialist into doing it for them.

And the well is running dry.

Money Counterfeiter's picture
Money Counterfeiter (not verified) stocktivity Dec 15, 2015 9:03 PM

And when China is forced to stave off revolution and defend the Yuan?  China is in a collapse.  Think they know about cheap money by now.

PutinLover's picture
PutinLover (not verified) stocktivity Dec 15, 2015 9:48 PM

You sound thoroughly disgusted and ready to just wash your hands of this entire precious-metal-investing-gonna-be-rich nonsense.

C'mon, let's meet in the back and I'll take your entire load of crap off your hands for a few hundred bucks.  You can make that car payment, take the wife out for dinner and get a fresh start.

Dame Ednas Possum's picture

You've made quite a name for yourself in the past 2 weeks and 4 days since your account became active.

Are you a volunteer or do hasbara pay you?

MrNosey's picture
MrNosey (not verified) max2205 Dec 15, 2015 9:01 PM

The real agenda will be exposed shortly and the population will find out who really runs our world……

http://beforeitsnews.com/conspiracy-theories/2015/12/is-russian-presiden...

highandwired's picture

That story about Putin is so stupid, yes, he's a time travelling mutant!  The real question is...is Angela Merkel Adolph Hitler's daughter? 

Manthong's picture

Actually Putin is just your everyday, run-of-the-mill ectoplasmic shapeshifter.

..and Merkel is the great great grandniece of Vlad the Impaler.

 

tarabel's picture

 

 

Don't be silly. Merkel was an East German attempt to produce a Margaret Thatcher clone that would then be used to hang out in lesbian bars and talk up communism as a way of embarassing the Iron Lady.

She was scheduled for demolition but the paperwork got lost with the fall of the Berlin Wall.

Demdere's picture

The problem is $ moving to better investment environments.

This is a crashing kleptocracy, why leave money here to be stolen? Gold on far shores until the rubble stops bouncing.

o r c k's picture

Unless we hear the helicopters

Dragon HAwk's picture

Who wants to have a baby when the whole world looks like it is about to blow up.

Ms No's picture

Central Banks are the enemy of humanity and they shouldn't exist at all.  In addition to their enslavement of countries they have failed at their mandates.  Believing in the Feds good intentions is more naive than believing that ISIS smuggled a plumbers truck out of the US without help. 

CHoward's picture

EVERYTHING has become total bullshit.

SixIsNinE's picture

 except music - try these on for size :

ibizaglobalradio.com

ibizasonica.com

be-at.tv

dancetrippin.tv

Turn it UP !

JerseyJoe's picture

Cool!   Fema should hire these guys for their camps and also have video game competitions to help keep the sheeple from getting restless.  Sprinkling is some feelgood drugs...and have FEMA sheeple happily lolling in the camp.  

Just sayin' - Life's a party in the FEMA camp!   LOL

SillySalesmanQuestion's picture

The FED will not raise rates tomorrow, it has already been leaked to the markets world wide...everything is green and good. BTFD.

Celotex's picture

Why does no candidate in any debate ever call the Fed out?

Duc888's picture

 

 

 

So much ISIS bullshit.  Like they operate in a vacuum.  Who funded, trained and supported then against Assad?

 

You see?  No one will even go there so all this time is wasted on the boogy men called ISIS.

FreeNewEnergy's picture

ding ding ding, winner!

You've been watching the debate too. What a clown show. The rules of the debate are that nothing spoken can be about anything other then defesting ISIS.

Like this article proposed, this is the end of the road.

Deal with it.

PutinLover's picture
PutinLover (not verified) Dec 15, 2015 9:44 PM

Out of the goodness of my heart I'll purchase your old Maples and Silver Eagles for five bucks apiece.  Even if silver drops below five bucks spot, the offer stands.

Shoot me a PM if you need to unload some metal to make your car or house payment.

P.S. - For the one ounce gold pieces I'm at 85 bucks, but only for the folks really hurtin' who need to make a payment or maybe a liver transplant.

Wild Theories's picture

you are so much heart man

god bless you

tarabel's picture

 

 

He makes it up on shipping and handling.

agNau's picture

The way you talk it sounds like you may be a banker.
How about if all of us here get together and take you out for dinner?
Yummy.

FreeNewEnergy's picture

Silver will have a 12 handle. My prediction will be correct and I will buy as much as possible.

enloe creek's picture

Might be $8.50.   Seriously that is about where it is beaded

JerseyJoe's picture

Because the price fairy told you?   

 

Boing_Snap's picture

Silver may hit $12, on paper, you will just have to wait 3 months to get delivery of physical, if you use a reputable dealer. RCM and US mints are having month or more delays now as it stands.

Who knows where they will push the price, the best thing to do is accumulate over time. Certianly the last 15 years PMs have been the investment to have, the last 5 years stocks. However throughout a lifetime, gold wins hands down.

http://www.newsmax.com/Finance/MikeFuljenz/gold-Dow-inflation-stocks/201...

August's picture

12 is great.  A chance to sell all my on-the-FATCA-books Perth Mint silver at break-even.

Too bad I don't have any cash at all to buy off-the-books phyz.

Hohum's picture

Fed can keep control because the players want to be controlled.  They don't know what else to do.

lasvegaspersona's picture

The freegold perspective says they want us in paper, even paper gold. Paper gold actually supports the system.

They cannot survive physical gold acquisition. There is a point where the gold derivative market snaps.

As GLD loses gold, as the S&P tanks, as the price of gold falls and as confidence is lost we get closer to the end.

Whether we get a slow, typical hyperinflationary event or a silent derivative disaster is hard to predict. The math says only one thing...'this ain't working.'

JerseyJoe's picture

Agreed - There is a new exchange out there that I have to believe refiners are moving to (not to mention China buying refiner's output before it sees the fake paper market) - the Allocated Bullion Exchange (ABX).   They have 11 non-bank secure vaults around the world and 23 hour trading.   This exchange cannot be front run by the bullion banks because everyone is blind to both the buyers and sellers.  

The evidence of a shift in where new supplies are heading is that the CRIMEX inventory just keeps declining with very little being deposited.   Also the supply is also evidenced by the chronic backwardation at the LBMA - showing if nothing else the price is to low to attract sellers with guaranteed money being left on the table   

TPTB are definitely trying to slow the decline.  December was a great example.   To "Stand for Delivery" an investor must first pony up the full dollar amount of the contract and all associated fees.   So where did all these claimants, with cash and contract in hand, go to in December???   At the beginning of the month, there were multiple claimants per ounce of registered gold?  There were more than enough contracts standing for delivery in just December to flush CRIMEX dry of Registered (for sale gold) by multiples of the available inventory!!!   

The only explanation as to how all these contracts disappeared is that they must have been cash settled to hide the problem this paper scam is confronting - they are running out of gold and silver.

Here is a great website to watch the action (note at then end of the Inventory table, there are links to see the actual withdrawals and the holding of the bullion banks.

http://troyozgold.com/precious-metals-precis/

From here you can also calculate the potential claimants per ounce which recently broke north of 320 paper claims per ounce.   Commentators have indicated this ratio of paper to physical has never gotten this high before - not even close.   

China and the ABX are drawing off the feed supply for this scam and it is breaking.  (Day after day - nothing or very little is happening to CRIMEX gold AND more importantly, very very little is being deposited into this scam.  CRIMEX silver is also evaporating. )   

 

 

Cacete de Ouro's picture

WARNING: Allocated Bullion Exchange is a scam being promoted by Andrew Maguire and the Australian backers of a failed gold business in Australia that is called Australian Bullion Exchange. Do not believe anything that is written by this 'JerseyJoe' about ABX. Australian Bullion Exchange has had a number of failed launches of its coin store in the past and is the farthest thing from an exchange.

Earl the Milkman's picture

Long time ZH reader, first time poster.  Loaded up on some VIX calls today...just don't see how this charade makes it through tomorrow.  Way I see it, tomorrow we either get higher rates and the market pukes, or the Fed loses serious credibility and maybe people wake up and see we're all Japan...

But on the other hand, could be totally wrong and see the algos take the S&P to 2100 by the end of the week.  This may be my last time playing in the casino.

frankly scarlet's picture

what if rates are only raised for Main Street but the wink and nod applies to Wall Street by some behind the scenes maneuver like the reverse repo that has been bailing out (unofficial QE) the TBTF holders of broken oil derivatives?

squid's picture

I have ZERO frickin idea what will happen tomorrow.

I have been wrong so many times.....its humbled me.

 

I DON'T KNOW what granny will do tomorrow.

 

Squid

bozoklown's picture

the beginning of wisdom

worbsid's picture

OT: I watched some football over the week end and was most interested in the stands ... they were full, absolutely full.  When you see a NFL football stand half empty, then worry.  Till then, party on dudes.