Audio Interview Art Cashin On A Trump Presidency, The New World Order, Gold, Brexit, The Great Depression And Why We Will See Panic
As the bond market continues to melt down, interest rates rise and the Dollar Index surges above 100, legend Art Cashin gave one of his most important interviews ever to King World News about a Trump presidency, the New World Order, gold, Brexit, the Great Depression, and why we will see panic before the end of the year.
Eric King: “In Trump’s acceptance speech he said that we are going to have massive infrastructure spending. Is that bearish for gold? I don’t think so.”
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Art Cashin: “No. That on the face of it would not be a reason to sell gold. One of the things that may have concerned Druckenmiller was not so much your scenario of fiscal spending and building roads and highways, but the fact that despite what the Fed has been doing, the money supply has not been showing any velocity. That’s a topic you and I have discussed time and time again and it’s one of the holdups to gold because if it gets no velocity that’s deflationary.
In fact, the largest growth in money stock is in cash — green pictures of dead presidents — and that is deflationary because that does not have a lending factor that money in a bank would have. So those are two deflationary trends in money and that tends to weigh a little bit on gold and doesn’t allow it to fulfill its promise that you would expect in a somewhat inflationary period.”
Eric King: “Victor Sperandeo, a former associate of George Sorors, said to me this will be ‘pure money printing.’ That we are going to print trillions of dollars and build infrastructure — talk about how you view that. Obviously there are going to be jobs created and it will be great for infrastructure, so it will juice the economy, but what are the longer-term ramifications?”
Art Cashin: “On the face of it, it looks good. As you said, there will be jobs created and there will be improvements in roads and airports and so on. However, the other shoe to fall is that Mr. Trump is also committed to revamping the tax code. And those two things should lead to a massive increase in the deficit. And we are already deeply in debt, so people like Rosenberg and others feel like it will have virtually no impact.
On the face of it the stimulus program should be great for the economy, but because you are in such a high level of debt it might not work out that way. He and others point out that if fiscal stimulus were the answer then Japan would be the king of the world with all of those bridges to nowhere that they built. Japan spent a lot of money, built up their deficit, and their economy never really turned around.”
Eric King: “Going back even further than that and looking at the Great Depression, the United States was struggling and then FDR devalued the dollar by revaluing the price of gold higher. Those public works projects then got underway, the massive public works projects that built so much of the infrastructure here in the United States, Art. And that did turn the stock market around. It turned many things around — commodities, etc — but then it rolled over by 1937-1938 and then the war came. Is this infrastructure spending program something that can look good for a little while and then it will just roll over like we saw in 1937-1938?”
Art Cashin: “It can. And the problem (during the Great Depression) was that the thing didn’t click, as it were. It didn’t lead to the next step. You hire people, you do the road projects, you do whatever, and then you want to see them go out and spend and business begin to borrow and banks to lend. And in ’37 and ’38 that never fully kicked in.