Jamie Carrasco: A Monetary Shift is Underway that will Kill the Dollar
Jamie has a financial background in Canada as a credit analyst; this gives him a good understanding of the credit cycle and economics. He likes looking at the finances of the world from a geopolitical perspective. He says, “The Chinese use two symbols for danger, one signifies danger and the other can indicate wealth. We are on the cusp of some massive changes and the birth of a new system.”
The petrodollar is the glue of the current monetary system which goes back to 1971 when the dollar was unpegged from gold. There was a massive destabilization period that followed this change. The petrodollar is based on getting OPEC and the Saudis to price oil in dollars. It pegged the monetary system into a credit cycle which has built from that point forward. The world needed dollars, so they started to buy U.S. debt.
China and other nations are increasingly moving away from the dollar. They are creating their own systems such as the Petro-Yuan. This credit cycle will become unwound as various countries stop using petrodollar debt. In essence, the mechanics of the change are already in place. At some point soon they will lose control of the interest rate cycle. Central banks have control of the overnight rate, but the buyers ultimately control the longer-term bonds. Once power is lost there will be a rapid compounding effect of stagflation. The bottom line will be higher costs of living and there will be a transfer of assets to hard assets like commodities.
Central banks are manipulating every market and inflation is showing up in the stock market. If gold was keeping up it should be much higher. As interest rates rise all markets will be forced to find their true value. He thinks that blockchain technology is a most disruptive invention which will adversely affect the financial industry.
Talking Points From This Week’s Episode
• Petro-dollar is in decline and power shifts are occurring.
• Credit cycle will increasingly unwind as bond yields move higher.
• Stock markets and pensions will be in trouble and stagflation is coming.
• Cryptocurrencies will unite the world on a financial level.
• A transfer of fiat assets is coming to gold and gold stocks.
Jamie Carrasco is portfolio manager at Canaccord Genuity Inc. in Toronto. From 2014-2018 he worked as Director of Wealth Management and Associate Portfolio Manager for ScotiaMcLeod. Before this he worked for Macquarie Group, CIBC Wood Gundy, BMO Nesbitt Burns, Gordon Capital and Merrill Lynch.
As a leading edge Canadian investment professional with 25 years of experience providing wealth management and investment counsel to affluent families, businesses and institutions both in Canada and Latin America, Jaime has garnered a reputation for questioning and challenging the status quo, and exploring the most innovative investment strategies.
Jaime, whose mother tongue is Spanish, also speaks Italian and French and completed a BA in political science and economics at the University of Toronto in 1988. While a student, he worked for CS Yacht, a company that built luxury sailboats, thus spending his summers as a skipper for members of the Canadian establishment. Jaime credits this experience, and having survived sailing through Hurricane Bob in 1991, for learning lessons that have become a metaphor for his financial investment strategies;
“Like one’s financial wealth, sailing is not about controlling the wind, but rather about adjusting the sails.”