The David McWilliams thread


I don’t think the USD will collapse completely as there is nothing to replace it. I just think the Fed will be forced to continually monetise endless quantities of treasury debt until we cross the rubicon in their balance sheet. The fact that they are adding junk bonds to their portfolio now is hastening this day of reckoning. Every municipal bond and corporate bond that they buy is degrading their balance sheet.

Now, the central planners will say they don’t need to mark to market and they don’t need capital. They object the thesis that high debt causes low growth which leads to a feedback loop that destroys the credit system. But to me, socialism is always wrong and Von Mises and Hayek showed this convincingly. Unfortunately socialism is the cancer that never dies until it destroys everything and you are queuing up for rotten fruit and mouldy bread. But I digress…to me the Fed is just a giant hedge fund with 100-1 leverage. Once this loss of confidence in the happens, there is no way to restore it without letting interest rates go up which will initiate a gigantic credit default.

Eventually the market will stage a run on the Federal Reserve but I don’t know exactly when this will happen. My guess is it will happen in the next few years though.


How does one position oneself? What are the real options? Precious metals and so on?


I don’t give investment advice but if you are lucky enough to have significant investable assets, then I would maintain a diversified portfolio to include cash, property, precious metals and equities with exposure to same.


What about guns ‘n’ beans?
As for property, would you prefer a discrete cave in the hills, or a defensible compound on a plain with a good view of anybody approaching?

Asking for a friend.


Gallows humour :slight_smile:


I’d like a castle keep with high speed internet, a courtyard full of well-trained soldiers, a surrounding moat, and a village of expendable serfs.


Apologies to the good people of Limerick - I couldn’t resist.


On the original topic I wonder if it would be safe to put your moolah in the An Post Saving certificates - surely the obvious hypocrisy and the enormous political outcry that would follow would make it difficult for even this crowd of chancers to put their mitts on them?


McWilliams has the same understanding of the ECB as your average Taxi driver

I didn’t see the original article but that’s some boo boo

Sir,– David McWilliams argued that existing loans in the Irish banking system, particularly mortgage loans, can be refinanced at lower rates using cheaper funding from the European Central Bank (ECB) (“Why an Irish mortgage costs ¤80,000 more than a German one”, Analysis, October 10th).

This is not correct.

It is true that the ECB offers banks long-term funding at low interest rates through refinancing operations as part of their monetary policy tool. But this does not apply to mortgages. This long-term refinancing by the ECB is “targeted” towards lending to non-financial corporations and to households excluding loans for house purchase.

In other words, as stated by the Central Bank of Ireland before, the stock of mortgages held by Irish banks is not “eligible” toward the borrowing allowance in the ECB’s longer-term refinancing operations.

It is without argument that interest rates for mortgages and SMEs are higher in Ireland compared with other jurisdictions in the EU.

However, it is also true that Ireland has one of the highest capital requirements for banks in the euro zone which increases the cost of capital.

For example, banks in Ireland hold on average twice the level of capital for performing mortgages and SME loans compared with banks in Germany.

In addition, it is more difficult to enforce security in Ireland for what is supposed to be secured lending, which makes it more costly to lend. – Yours, etc,


Chief Economist,

Banking and Payments

Federation Ireland,

Dublin 2.


In addition, it is more difficult to enforce security in Ireland for what is supposed to be secured lending, which makes it more costly to lend. – Yours, etc,

And insurance rackets vs the sympathetic courts.