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McAlvany Financial Group CEO David McAlvany on why Federal Reserve policies creating a weak dollar are the cause of rising commodity prices.
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That's it says don't blame supply and demand for these high oil prices finally dollar -- the Federal Reserve it's keeping it weak David macro any joins.
You know -- Dave on my Fox News -- We had such a great response to -- -- I had the -- -- -- kind enough to come back on fox does is David good to have you back thank.
It could greatly that you.
Because -- a -- could should just explain this state how this is the real phenomenon going on here.
What you've had really the last ten years of other business cycle correction.
There has been in the process of unfolding in the Fed has tried to smooth out this natural business cycle correction.
And they've accommodated and every turn.
We've had QE1 QE2 Operation Twist of late but if you go back to the previous Fed Chairman.
We also had rates set extremely low between 2003 and 2005.
Which led to a -- allocation of money too much money going to housing.
And what are we end up with in 2006 and seven housing bust that bubble and then -- bust.
What we've had as intervention when we really need -- just the markets to sort themselves out.
And and that's really what we have now is there's -- deflation in the offing but with monetary policy measures which are inherently inflationary.
Being thrown out so you end up seeing the evidence of that and various commodities.
And I think frankly oil about a hundred dollars a barrel -- a part of that is the activity of the -- in the marketplace.
All right now and again as you reminded me is welcome and talks -- that it.
There are other factors there is supply and demand is fear of -- brand going to blow it -- that I understand.
The fear widths are not getting budgets are just reckless fiscal policy.
Is it it did we look like a joke to the world our dollar is cheap and editing dollar denominated.
Is cheap -- -- cost more of those cheaper dollars to buy.
Things priced in dollars a light oil.
Tangentially guests and win them.
We have expensive oil expenses -- It's a -- and -- you have -- -- this fiscal nightmare in front of us we've got the immediate death -- of over fifteen trillion.
By Labor Day it's estimated -- that'll be close to sixteen point four trillion.
And we've got to keep rates slow so the Fed is doing everything they -- spending money they don't have creating it literally out of nothing to go monetize Paper.
And make sure that the treasury markets are healthy that the mortgage -- securities markets are healthy.
I mean you know last week he EU -- -- -- -- monetized mortgage backed securities to the 223.
Billion dollars where -- get the money -- that.
Exactly right -- president stealth.
Without -- -- -- QE3.
Another quantitative easing on their part to come into the market but no one reported.
Yeah and and and granted it was it was that an extension of the balance sheet by -- 21 billion always thought it was something he's -- credit has jumped -- because it's.
Well and and that's our fear is that they're not dealing with chump change as they come into.
The 2013 20142015.
Timeframe they're gonna fight like mad to keep this thing alive.
And there is going to be dire consequences the world over what happened play that out from it.
OK so if you Begin to print money here.
There's over fifty countries around the world that are dollar so a little bit of inflation here is radical inflation elsewhere.
And just like we have the Arab Spring and -- literally this is a street vendor begins with a street vendor -- -- upset about the rise in the -- cost of sugar.
You Begin to see the same thing in Latin America you Begin the same see the same thing throughout Asia.
It as a result of our monetary policies and the inner connectedness dollar being world reserve currency and all these dollar us countries.
There's a huge inflationary impact.
It lets say it's not as big -- deal of press in the United States we can pay 1015% more for bagging groceries 2030% more for -- bag -- -- isn't gonna kill us.
That literally it's the difference between being -- feed your family elsewhere that's where becomes very politically.
Contentious that's the stuff of which revolutions are are -- on -- thank you very very much.
Going to be with -- same you know -- about.
