Zero Hedge today excerpts an interview done by Grant Williams' Real Vision with fund manager Kyle Bass, highlighting an observation Bass says he heard from a leading central banker a few years ago.
Bass quotes the central banker speaking about the central banking fraternity this way: "So we're all trying through our treasury and our Fed to get the rest of the world to not devalue against us, while we quietly attempt to devalue ourselves against them, and it's all this race to the bottom. It is the beggar-thy-neighbor policies that we all talk about. And I believe that there is no way out."
Of course assertions that the world's debt has gotten out of control and will have to be devalued are not new. A decade ago the Scottish economist Peter Millar wrote an incisive study on the point, arguing that such devaluations are required regularly in fiat currency systems to avert catastrophic debt deflations:
Four years ago the American economists and fund managers Paul Brodsky and Lee Quaintance wrote a paper surmising that currency devaluations and an upward revaluation of gold were already the long-term objectives of the world's major central banks so they might reliquefy themselves:
A week ago Gold Newsletter editor Brien Lundin made a similar point -- that the United Kingdom's withdrawal from the European Union was not in itself a reason for gold to rise but that the devaluations of currencies that likely would follow was very much a reason:
Of course if currency devaluation is or becomes central bank policy, gold is the traditional mechanism for it, with silver serving as gold's flamboyant publicist.
It is hard to see such an event as anything but a last resort for central banking, a repudiation of the financial system and the unleashing of hyperinflation on the world. But being so corrupt and tyrannical, the system does seem to need repudiation.
Zero Hedge's excerpt of Real Vision's interview with Bass is posted here:
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