Alasdair Macleod: "Fiat Currency System: 18 Months Before it Dies"

Macleod warns that Middle East-related shortages of diesel, ship bunkers, and kerosene could disrupt logistics and drive inflation, alongside drought-related crop shortfalls in Europe and blocked Ukrainian grain exports. He also says the East-West pipeline, which carried roughly four or five million barrels of oil a day, is out of action and will take at least a month to repair; separately, he argues oil could rise well above $200 a barrel, perhaps reaching $300 or $400, though he cautions that sufficiently high prices could crush demand and halt the economy.

Macleod says G7 rate increases are reactive and will not prevent rates or bond yields from rising further; he points to the 10-year Treasury yield’s return above 5% within an hour or two after briefly falling following a rate hike. He predicts yields will rise substantially and argues that a move above 5% could trigger a securities-market crisis, prompting unprecedented QE or an equivalent measure.

Macleod connects pressure on government finances with risks to fiat currencies: he argues highly indebted governments cannot afford high rates and may respond to insolvency by collapsing their currencies, while quarter- or half-point rate increases would not prevent it. He also says confidence in the dollar could be undermined by Trump’s call for rates no higher than 1% and by diminished U.S. influence, and points to the Dutch central bank’s reduction of U.S.-held gold from 31% to 18.5% as part of wider concerns about gold custody.