Podcast: Play in new window
| Download (Duration: 22:50 — 16.0MB)
FTMWeekly Radio Interview with Author, Robert Wiedemer
Audio Transcript — Saturday, February 12, 2011
FTM (Jerry Robinson): All right, well, joining me on the line is Robert Wiedemer. He’s the president and CEO of The Foresight Group, and he’s the author of the Wall Street Journal best-seller, Aftershock: Protect Yourself and Profit in the Next Global Financial Meltdown. Bob, it’s great to have you on “Follow the Money Weekly Radio.”
WIEDEMER (Robert Wiedemer): Well, thanks for inviting me, Jerry! It’s great to be here.
FTM: Over the last week, Bob (maybe over the last two weeks), I have been seeing Treasury bonds yields have jumped to their highest levels in almost a year. We have been seeing levels on the 10-year Treasuries hitting 3.7%; the 30-year yields are hitting about 4.7%; leading some economists to believe that rates are beginning to track even higher over the coming months. My concern here, Bob, is that the Federal Reserve does not have the will or the foresight to slow their easy money policies and their relentless money printing—which is going to lead to massive inflation. What do you make of the recent moves in the U.S. bond market, and how much faith do you have that the Federal Reserve will react quickly enough to suck out the excess liquidity that they’ve created?
WIEDEMER: Well, I think, as you say, the recent moves are partly (obviously) an expectation of inflation. I’m not sure if we won’t see a pullback in yields, though, shorter term. But longer term, clearly, you’re going to find inflation becomes the overriding factor—because I don’t think the Fed can pull the money back. As one of my friends in the Fed has said, “Inflation is not something that’s forced on you; it is a choice.” And the reason we tend to choose inflation, it is the easy out; it’s a fairly easy way to try and grow the economy. The other alternatives are not as easy, whether it be taxes or so forth, and so that’s why they tend to go into that trap. As you said, it’s hard to (quote) “pull the liquidity out once you’re doing it,” because every time you do that you’re going to slow the economy down; you’re going to create problems; and again, there’s no easier out at that point. And you have to, of course, pull the inflation trigger back, or the money supply spigot back even harder, making for a much harder pullback than if you’d just not done it in the first place. So, it gets harder and harder to pull it back, because you’re having to hit the economy harder and harder than if you just never opened the spigot in the first place. It’s a little like a Chinese finger trap: don’t put your finger in it. It will be very difficult to pull back out.
READ THE FULL TRANSCRIPT HERE