Macro Expert Hugh Hendry Suggests the U.S. Government Freeze Withdrawals from American Banks Due to Currency Panic and Capital Flight
The US financial sector and economy as a whole have received a stern warning from the hedge fund manager and macroeconomics specialist Hugh Hendry.
According to a recent interview with Bloomberg Markets, Hendry maintains that widespread fear and the subsequent flight of capital from the US banking industry is perfectly warranted.
According to Hendry, the US government may be persuaded to intervene to stop people from withdrawing their money from the banking system if the M2 money supply, which measures liquid checking account funds, continues to fall.
“Panic may be a useful emotional response sometimes. I think you should freak out… Currently, M2 is falling at its fastest-ever rate. Bank deposit balances are what makeup M2, not lending.
The Treasury and the Federal Reserve may have to step in and limit your ability to withdraw funds from US banks if things escalate to that point.”
Hendry argues that worries about whether the FDIC would protect savings beyond $250,000 are just part of the reason why investors are fleeing US banks and that a blanket guarantee on deposits would not address the issue.
Investors and savers are pulling their money out of the banking system in search of higher returns. I don’t want to be extreme, but the Federal Reserve Act of 1934 did seize private gold holdings in the United States.
Fed and Treasury officials are probably thinking about putting a lock on US bank deposits at this time. “The very long Treasuries, the most hated securities in the world, are now a good investment. I know everyone is worried about inflation. This was a supply shock, and supply shocks need the continued expression of bank lending. The reverse is happening to us. Two to three standard deviations below the ETF, the super longs are trading.
Although I haven’t caught the Bitcoin fever, I can see how it may appreciate by a factor of three or four in the next five years as an asset class.”