- Bill Holter: Confidence Going to Break Biggest Debt Bubble in History
by Greg Hunter’s USAWatchdog.com
Financial writer Bill Holter says revelations this week from the DOJ Inspector General about the FBI spying on everything Trump, and the ongoing criminal investigation on the origins of the Trump Russia hoax, are going to be a disaster for the financial markets. Holter explains, “We are financially and socially inside the gates of Hell. If you see big name arrests, and obviously from the previous administration all the way up to the top, you are going to see an awful lot of happy people and an awful lot of freaked out people that could lead to civil war. From a financial standpoint, I don’t see how markets can stand up with the amount of leverage in the system. At this point, they are already having a problem holding that leverage up. Just from the standpoint of foreigners looking at the U.S., foreigners will probably pull their capital hard and fast.”
If you want to see real trouble brewing behind the scenes in the banking world, look no further than the repo market, where banks get funding and liquidity on a nightly basis. Some nights, $100 billion or more is doled out to keep the system from locking up. Unlike the financial meltdown in 2008, hedge funds now make up 20% of the repo funding market. Here at the end of the year, Holter says few institutions have ready cash on hand and have leverage many times over. Holter contends, “Assuming the numbers are real, hedge funds are prone to bank runs. Hedge funds are prone to large liquidations. The banks who have been funding the overnight repo market now seem to fear a run in the hedge fund market. . . . To me, it smells like a bank run in the making. If the credit does not get through to these hedge funds, this means they have to unwind positions. Their positions are leveraged seven, eight or ten times over. That means if they are forced to sell, they would have to sell $10 of assets to get $1 of cash.” Meaning the markets could crash.
Holter goes on to explain, “Markets have moved higher based on the use of credit, leveraged credit, leveraged derivatives. If you take the credit out from under it, it’s not dollar for dollar. It’s five dollars, ten dollars or twenty dollars for every one dollar of credit that gets pulled. That’s how much will have to get sold. The credit has held the markets up, but if credit is not forthcoming, then you will see a market crash. You will see forced selling. This is a microcosm of inflate or die. This is part of it.”
Holter has long said, “This is the biggest debt bubble in history.” He says we are in the perfect geopolitical and financial storm that can shake people to the core. Holter says, “I believe it breaks confidence. Others say arrests and indictments will increase confidence. I agree with that in the long term, but initially, it breaks confidence, not only in the United States, but outside with foreigners. If there are no arrests, we live in a complete banana republic land. . . . This was and is a coup attempt. . . . This is by far the most intricate coup attempt in the history of history. If they don’t do something about this, then what does that say about our form of government? . . . Confidence is going to break, and confidence is what markets basically rely and trade on. Confidence is the largest factor in the credit markets, and the world runs on credit.”
So, is this why so many top money managers and financial experts are telling people to buy gold? Holter says, “They see that confidence is going to break. . . .What kind of asset doesn’t get affected, and not only affected negatively, but it gets affected positively? The answer is gold and silver. They are non-liability money. They are not issued by anyone. . . . It is real money.”