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Alasdair Macleod: An old-fashioned credit crunch is here
By Alasdair Macleod
GoldMoney, Toronto
Monday, August 21, 2023
Globally, further falls in consumer price inflation are now unlikely and there are yet further interest rate increases to come. Bond yields are already on the rise, and a new phase of a banking crisis will be triggered.
This article looks at the factors that have come together to drive interest rates higher, destabilising the entire global banking system. The contraction of bank credit is in its early stages, and that alone will push up interest costs for borrowers.
We have an old-fashioned credit crunch on our hands.
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A new bout of price inflation, which more accurately is an acceleration of falling purchasing power for currencies, also leads to higher interest rates. Savage bear markets in financial and property values are bound to ensue, driving foreign investors to repatriate their funds.
This will unwind much of the $32 trillion of foreign investment in the fiat dollar that has accumulated in the last 52 years. And the BRICS' deliberations for replacing the dollar as a trade settlement medium could not come at a worse time. ...
... For the remainder of the analysis:
https://www.goldmoney.com/research/the-global-bank-credit-crisis?gmrefcode=gata
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