In the Discussion:
- The Euro Has A Fatal Flaw
- Japan's Situation Is Insane
- China Is a Ponzi Scheme
Cliff Küle sat & listened to admired economist Frank Veneroso (AE). In this rare appearance, Veneroso provided a boardroom full of portfolio managers with a very informative & entertaining discussion. The audio link that we provide (below) can't replace actually being there, but hopefully, you can gather much of the message.
Veneroso started by telling us all not to worry so much about the United States. The debt & deficits are manageable if the political will to deal with them shows up soon. Then he provides the numbers to show that Europe has already had a massive bank run that has gone under the radar of Krugman (DA), other economists & the lamestream media. Europeans pull their money out of banks of PIGS countries (Portugal, Italy, Greece, & Spain) & deposit the money in banks of core-based countries like Germany. The money does not have to leave the country; a German bank in Spain can take the 'wired' deposit from the Spanish bank across the street. Please listen carefully when Veneroso explains that the Euro has a fatal flaw in its structure .. that will keep it from ever being a legitimate reserve currency (& there is a tremendous amount of money that went into Euros over the years with the view it provided diversification of 'reserves').
There has been 'capital flight' to Japan (of all places - the one currency with the worst metrics). With the level of 'monetary overhang' that already exists in Japan, this situation is beyond INSANE. The danger of an inflationary 'feedback loop' is perilous .. yet authorities figure they can deal with it later .. & focus on the Euro crisis now.
China's Ponzi economy also faces possible inflationary peril. More credit creation & infrastructure investment may be the last thing that China needs, but it is the only tool their central economic planners 'know'. Extra money creation in China at this time, will produce severely restricted returns & an inflation psychology.
The developing scenario that Frank Veneroso sees may seem bullish for the U.S. $, except that the problems of paper (FIAT) currencies are becoming so clear that the idea of saving any fiat currency as a 'reserve' may become viewed as pathological (not exactly his words .. Cliff Küle has often tried to say that faith in paper currencies, issued by authorities that are unhindered by any constitutional restriction, is the road to monetary debauchery. Our theme is 'long-term' oriented. Mr. Veneroso's theme might be expressed as: the 'long-term' is getting closer).
Veneroso's theme is incredibly bullish for the long run value of gold.
[Cliff Note: Mr. Veneroso is not a 'gold bug', as are some of the people we feature. He is an economist that lets his views be formed by the numbers. He is one of the analysts that sticks to our theme that '2+2=4'. Although we have tried to provide you with an outline of his long presentation, there is a wealth of information left for you to hear for yourself. Our outline may be biased. We welcome you to glean your own insights.]
Cliff Küle Interviews are for education & information only & should not be considered as a solicitation to purchase or sell any securities. The investments & strategies discussed on the program each involve their own unique risk factors which are not discussed. Neither Cliff Küle's Notes, nor any of its related companies, shall be liable for any losses arising out of any material in this program. Invest at your own risk. 2012 © Cliff Küle’s Notes
