With the US Dollar Index encountering some serious selling recently, today one of the savviest and most well-connected hedge fund managers in the world told King World News that “This is going to be a horrific time for people in the West.” He also surprised KWN when he warned, “there is a serious risk that the type of riots we have seen in Spain, Greece, Cyprus, Egypt, and parts of Italy may be imported into the United States and various other Western nations.” William Kaye, who 25 years ago worked for Goldman Sachs in mergers and acquisitions, had this to say in this chilling and powerful interview.
Eric King: “Bill, can you talk about where we are headed with this Orwellian nightmare?”
Kaye: “Well, it’s not good. Most end games don’t end well, and certainly this one is destined to fall into that category as well. It’s certainly not going to end well for the 99%. The unsustainable rally in stocks which is being fed with the cocaine being supplied by the Fed’s disastrous QE policy, is destined to unravel….
“There has been talk of ‘tapering.’ Well, at some point they will need to withdraw the stimulus. It will either be a deliberate action on the part of central planners, or they will be forced to because they lose control of interest rates. There is a massive risk that it could end up being the latter of the two scenarios because foreign nations, particularly China, are increasingly uneasy with their exposure to US financial assets.
So, as the Chinese turn even more aggressively into net-sellers of US Treasuries, the only thing that can happen is that interest rates will rise. The Fed will simply not be able to monetize all of this (debt) because that would be highly inflationary. And when we do get inflationary expectations re-anchored higher, which we will at some point, this will be the death knell to the charade that’s going on at the moment. Meaning, this fantasy will collapse.
The glue that is keeping things together, which is also allowing stock prices to continue to go higher, is excessively low interest rates. Yields by historic norms are far too low, especially given the true financial condition of the West.
As yields regress to the mean, and in markets they always regress to the mean, it’s basically game over for the West. Western stock markets will collapse and so will consumer demand. Home demand, consumer spending, and the economy will literally collapse. This is going to be a horrific time for people in the West, Eric.
The risk is that it leads to significant social unrest, with more and more people taking to the streets in Western countries. They will be doing more than just voicing their displeasure with the fact that their future and their children’s futures are being lost. I think there is a real risk that things get more violent.
This is a scary predicament, particularly given the technology that exists which is in the hands of the sociopaths who are currently in charge of things. So, things could get very, very nasty. This is a risk that people need to consider. When the masses are under duress, what typically happens is they take to the streets and things can get very ugly. But the bottom line here is there is a real risk that chaos will explode on the home front in these Western nations. Meaning, there is a serious risk that the type of riots we have seen in Spain, Greece, Cyprus, Egypt, and parts of Italy may be imported into the United States and various other Western nations. ”