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Fleckenstein Capital’s Bill Fleckenstein on the impact on the economy of Federal Reserve policies.
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Says the Federal Reserve should be quote prosecuted for war crimes for everything it has done to the economy over the past 25 years.
While he sees major problems with economic policies here and abroad he has found what he calls.
These growth story up the next decade and it's in one spot on the globe.
We're we're gonna save that for last because that's kind of apprised of this this whole segment joining us out of Fox Business exclusive this is bill -- inside his president.
A -- and sac capital and author of the Greenspan's.
Bubbles.
I gotta tell you bill I couldn't agree with you more -- mean the Fed has two responsibilities.
Wanted.
Is to stabilize the dollar and two was to keep unemployment down and how -- it done in those two responsibilities over the last four years I what you wins.
Well I'm.
Just to be crystal clear -- its financial war crimes they next and they are real -- qwest's financial war crimes.
Basically.
Since Greenspan took over the Fed in 1987 it it took about.
For five years for them to begin to really pursue -- policy.
But ever since then we've been pursuing a reckless policies which led to an equity bubble that a real estate bubble.
And then -- pass the time after Bernanke and east policy in the same policies -- the other central banks of the planet doing the same thing.
And they continue to.
In the last 45 years politicians and may promises that we can't keep.
And bad debts have been -- accrued in future liabilities of accrued and none of these can be paid off funding raised near retirement age to eighty.
Probably would be a solution but.
First get the kelp or some variation on -- theme so first you have to be -- of the people say hey everybody's like geo and it's been memorize and now let's deal with the facts but.
On then of course we have to have people at a understand apartment or -- be willing to stand up and talk about it.
You know it's interesting.
That totally rational ideas that you talk about there are people who say -- but it had to be done because the whole system would have gone down etc.
etc.
but now what we have is still a very cracked foundation upon which.
We've built -- of a newer structures so we're still kind of stuck in the same place the question then becomes.
Do you anticipate bill as you watch -- fed after fed from Greenspan to Bernanke do what they've done.
Do you anticipate the so called QE3 quantitative easing three where they'll figure out some other way to prop up this market to think that's coming.
Well for -- -- you're exactly correct they're trying to build lot of broken foundation.
And yes but they will pursue QE3.
Date date -- don't think that their policies.
Created the problems.
They think the problem secure magically.
And their policies.
Solve the problems so Bernanke sees himself as the savior he thinks the Fed causes depression he doesn't give any credence to the fact that the the bubble before.
The depression caused the depression he doesn't understand the Fed policies because the bubbles that we had.
Which some of us could see in real time and warned they would lead to these kind of problems he doesn't see that so yes there'll be QE3.
And and there will be the rest the world will do something similar I would expect our soul so bill when and how.
Does all this come back to -- it's all this money for -- 2.5.
Trillion dollars.
Well and no one knows and I'm certain that Smart enough to know but I I can tell you I think that.
This -- been going on a long time not just Greenspan who are not the gold standard in 1971 it has taken a long time to ruin it.
The dollar with this paper money center but.
I think sometime the next couple years I can't tell you win or what the catalyst will be.
What was the exact catalyst to -- Greek over Greece over -- since we don't know.
But I think at some point the bond markets of the world will -- suddenly start to worry about the consequences of the policy.
And not be worried about the the imminent collapse of some.
Bank system but well -- -- -- -- explodes what happens that.
Well then then we will have a crisis and in a crisis.
Then that's when some politicians hope we will have enough of them we'll stand up and say listen.
You all been lied to.
For 25 years -- party -- because we -- we had a free lunch and we made promises we can keep and now we got to deal with them.
I think people in America are Smart and strong and if that they're honest and everybody has to chip in in.
And you know give up something.
Then what will solve the that the problem but we it has to be where the bond market has taken -- printing press away from the Fed.
And other countries as well these bond markets are joke but they continue to go higher because people are scared of something -- Why well they -- and that's amazing that with such low yields you're still watching people -- into the ten year.
So -- what what is the trade that's making you money right now.
What have you done to make money for your fund for your clients -- -- driving this is what people want to hear about where is the opportunity.
What what welcoming fresh for the most part I mean it's gonna sound kind of boring.
You know ever since I close my short only fund and early 09.
I understood the consequences of the of what it happen would be for the Fed to print money.
I didn't believe they would necessarily need any good economic outcomes so I've tended to own gold and gold oriented type investments.
That's worked pretty well despite despite the fact everyone seems to hate gold on the most of the TV channels.
On.
That's kind of work it doesn't work every day and -- big draw downs like gold seen for the last six -- seven months.
But that's how I try to protect myself from these insane policies of the world central bankers okay.
Bill flight and trying to get all the places in the world has got to be a last question we run out of time -- -- all the places in the world.
I didn't believe the place that you thought was -- fifth fifth spent -- that having covered an emerging markets for many years.
I don't know visible as I put my money but tell us what it is.
Mongolia.
-- why did David.
GDP growth.
Last year was 17%.
In Mongolia.
She simply they have the resource is the world wants.
They just kind of been discovered that cap ex is going into the country now.
And even if China slows down dramatically it's not gonna matter there's only two point seven million people in Mongolia.
And -- -- gonna -- be able enjoyed a wealth of GDP growth.
In in some kind of double digits for the next five to ten years.
There -- trying to pursued to -- democratic policies little flap now by corruption and things like that.
But the country is.
Doing everything you want as an investor.
And that's so lost some friends of mine and I -- put together company to be able invest there because regrettably it's not their it's not so easy to make an investment there.
It's fascinating to watch this is a guy who has been always -- -- some people say good to see you bill thank you for being here.
The book is Greenspan's bubbles and -- -- inside if you have a problem Mongolia take it up with him -- with a big.
Bill good to see thank you very much -- -- yeah.
