My topic will be “Fiat Currency, Infinite Credit, Finite Trust”. I’ll also take part in the Precious Metals Panel, taking place Saturday October 31 from 11:50am. Meet me at VON GREYERZ’s Booth #432, or arrange a one-on-one meeting in advance with Jan Baltensweiler at jb@vongreyerz.gold.

Introduction

Regular readers of MacleodFinance will be aware of a looming debt crisis affecting all G7 member nations and beyond. This crisis is unique for modern times, being a widespread government financial crisis and not a private sector one in its origin. The outstanding question has been which of the G7 dominoes will topple first, and will it knock all the others down?

We appear to have the answer: France. Headlines tell us of a far-right takeover in the French senate, and there’s a presidential election in six months. Students are rioting out of control. But this is not unusual for France; the problem the media misses is the government debt bomb in the process of exploding.

The chart below reflects the growing risk of a French default on its debt, whereby the buyer in effect pays an insurance premium as protection against default on a 5-year bond. In the last month, this CDS has risen from 33.75, an increase of 136%. It is screaming crisis.

France’s debt situation

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In recent weeks, open interest on Comex gold and silver contracts has struggled higher but is still close to deeply oversold territory. This reflects speculators putting just a toe in the water. Using their language, they are yet to be fully convinced that the debasement trade is on, so they believe gold and silver are vulnerable to rising bond yields. Hence, the opportunity for market makers and bullion bank trading desks to cover shorts and attempt to build neutral to long positions. But open interest tells us that this shakeout has its limitations:

As a measure of an oversold market, open interest is still struggling to rise above the extreme levels at the end of the 2011—2015 bear market. The fact that market makers have been trying hard to close their bears and go long tells us that they expect prices to rise from here and need to be positioned accordingly.

To confirm the bullish thesis, deliveries on the October contract expiry rose sharply: 11,465 gold contracts representing 35.66 tonnes, and 2,125 silver contracts representing 330.47 tonnes. So far, in 2026 600.6 tonnes of gold and 9,000.65 tonnes of silver have stood for delivery. Furthermore, China’s customs data records 1,141 tonnes of gold imported by end-August and there’s a further 80 tonnes of monetary gold added to the PBOC’s official reserves.

To summarise, while Western retail demand is virtually non-existent, China and other Asian nations are using the opportunity to get out of the dollar and into gold in huge quantities. Who is right: the big money from central banks downwards, or the little people who have a record of buying at the top and selling at the bottom?

We will leave that question hanging and move our attention to bonds. All bond markets are in crisis with yields rising to levels exposing the bankruptcy of the dollar-

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“In this exclusive interview, I sit down with Alasdair Macleod to discuss rising interest rates, bond yields, U.S. Treasuries, the stock market, gold, silver, the U.S. dollar, mining stocks, commodities, and the risk of a major financial crisis.

”Alasdair explains why he believes interest rates and bond yields could move much higher, why 5% yields may already create serious problems for the financial system, and what that could mean for U.S. equities, the dollar, and precious metals. We also discuss whether the stock market could face a major decline, whether the Fed will be able to intervene again, why Alasdair remains extremely bullish on gold and silver, the risk of food shortages, the possibility of a Venezuela-style outcome, and whether bond yields could eventually rise above 10%.”

In the mid-eighties, a regulatory event occurred in London which was termed Big-Bang. Banks moved into securities markets buying brokers and jobbers: brokers advised investors and managed their portfolios, while jobbers are known today as market makers. The reason that London was the epicentre of this change and not New York is that US banks were still constrained by the Glass Stegall Act which separated commercial from investment banking. This restricted investment banking and stock market trading activities in New York, but the big US commercial banks were free to do so in London.

Futures and options activities boomed both in regulated exchanges and unregulated over the counter markets. This did two things: it introduced limitless capital into securities trading and also bank credit creation provided the necessary capital. The very thing that Glass Stegall banned in the 1930s, which was the expansion of credit for securities trading putting depositors’ funds at risk, returned in London and gradually gained ground in New York until Glass Stegall was finally repealed.

It radically changed the way securities markets operated. Instead of expanding bank credit out of thin air to lend to businesses, bank credit was created for securities trading. And it brought a paper culture into trading which was fundamentally different from the physical securities and commodity markets which operated before.

It was embraced by the US authorities who saw it as the means to suppress commodity prices through paper expansion. That would reduce producer and consumer price inflation while the dollar bedded in as gold’s replacement. And with respect to gold, the expansion of paper supply would ensure that the horrors of the 1970s — for the dollar that is — would not be repeated and gold would be relegated to non-monetary roles.

The current market

Paper markets are just another form of credit. After all, the definition of a bank is that

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We have lived with macroeconomics for so long that we know of no other system. It was designed by Keynes purposefully to give governments justification for economic intervention, whether it be industrial or by monetary manipulation. The reason was a misdiagnosis, the apparent death of classical economics which was wrongly blamed for the Great Depression. That was actually due to the newly established Fed pumping up a credit bubble which ended spectacularly with the Wall Street crash of 1929.

President Hoover followed by President Roosevelt pursued a policy of intervention which simply prolonged and worsened the slump. It contrasted with previous slumps, notably that of 1920—1921 when President Woodrow Wilson refused to intervene, following the policies of previous presidents. He let the economy sort itself out, which it rapidly did as economists of the day understood and predicted.

In the 1930s, Keynes thought long and hard about why it was that America and much of the world was driven into depression, dragging the rest of the world down with it. Prices were collapsing, banks were going bust, and unemployment had soared. The problem for employers was that output prices were falling more rapidly than their costs. And they could only stay in business if workers suffered substantial cuts in their wages. Keynes’s socialist leanings rejected this market solution in favour of seeking a better system, one in which governments intervened to prevent such a catastrophe from happening again.

The problem was that he had to demolish the central tenet of capitalism, which is the

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“Alasdair Macleod thinks the endgame of the fiat currency system is accelerating rapidly, being pushed to the brink by wars, supply shortages, and a blindly corrupt political class hellbent on keeping the paper game alive to the bitter end. Alasdair lays out his timeline to collapse and explains how we can all protect ourselves from the coming storm.”

00:00 Coming Up
00:48 Fiat Currency Endgame Approaching
09:50 How Will Silver Hold Up?
13:39 The East is Positioned to Survive
20:17 Do Central Banks See What's Coming?
24:13 Stack Gold or Silver?
28:42 Digital Currency Won't Work
33:36 Will Gold's War Premium Kick In?

It is now clear that the US government has a funding problem. And it extends also to all the other G7 members, whose debt funding costs are all rising in unison. To put it into context, at current yields debt interest on US government bonds is the equivalent of half the USG’s current on-budget revenue. The only mitigations are that there is debt yet to mature with lower yields, and that about $8 trillion of the gross $40+ trillion is owed between government departments.

The US government is hostage to yet higher interest rates and bond yields, driven by a mixture of geopolitical factors and concerns over the inevitable slump in business activity together with soaring prices triggered by the crisis in the Middle East. The danger is that they are combining to set a debt trap for government finances, where higher rates beget yet higher rates. This is reflected in the long-term chart of the US long bond:

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“Alasdair Macleod warns that escalating Middle East tensions could trigger a far broader economic shock through fuel, shipping, food, and global logistics disruptions. He argues that shortages of diesel, kerosene, and ship fuel could drive essential prices sharply higher while simultaneously pushing economies toward recession.

“Macleod also warns that foreign demand for U.S. Treasuries could weaken just as Washington faces massive refinancing needs, potentially creating a debt trap and higher bond yields. Against this backdrop, he says major investors are accumulating gold as concerns over currency and counterparty risk intensify.

“He ultimately argues that markets may be underestimating the risks building across energy, debt, currencies, equities, and precious metals.”

INTERVIEW TIMELINE:
0:00 Intro
1:30 Geopolitical conflict
23:06 US debt crisis
35:30 Macleod Finance

The consequences will be to drive economic activity into a serious downturn along with far higher producer costs for energy and energy derivatives, particularly fuel for product distribution and farming. Separately and adding to price pressures is a perfect storm brewing for food prices; a combination of poor crop yields due to drought, Ukraine’s grain exports being cut off, and a vicious el Niño.

It is the worst of worlds for central bankers in the G7. To tackle higher consumer prices, interest rates must be increased: that’s one of their two mandates. But an inevitable slump in business activity and the increase in unemployment requires

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“Alasdair Macleod tells Paul Buitink the Fed’s latest hike does not buy time. He gives the fiat system about 18 months. A 10-year yield above 5% could burst an equity bubble bigger than 1929.

“Energy and food shocks from war, drought, and blocked grain will push inflation higher while governments cannot afford the rates needed to stop it. Rescue QE would then destroy currencies.

“AI valuations look unsupported next to cheap Chinese rivals such as DeepSeek. Dutch gold leaving New York, after similar German and French moves, suggests the metal may not be there. Trust in the dollar is fading; gold is the exit.”

Timestamps
0:00 Opening clip: crash stages and gold custody doubts
2:18 Fed hike to 4% — does it buy time?
5:00 Energy shortages, logistics, food and winter risks
8:28 Oil in gold terms; fiat purchasing power
12:00 Equity crash, bank credit, Keynesian rescue
13:00 Stage one / stage two of a crash; 1929 parallel
16:10 Sponsor break / gold ad
16:11 Can AI and Musk “grow out of” the debt?
19:41 Why “18 months” — complacency vs crisis now
21:47 Why 5% on the 10-year matters for stocks
24:54 Bretton Woods 2? Why a gold reset is unlikely
27:00 Politics over economics; Trump and the Fed
28:55 Wars, Gulf energy shock, much higher yields
30:22 China, gold standard, low Chinese yields
31:12 Dutch, Norwegian, Japanese bond selling
32:34 Dutch gold move from New York; NY Fed custody
35:00 Bundesbank, Banque de France, “gold that isn’t there”
36:00 Property rights, frozen reserves, loss of trust
38:19 Trend: dump dollars, buy gold in the market
39:43 Outro and Substack plug

Hormuz and Bab el-Mandab closed is only the start. They remain closed until the US leaves the region. But without US security, tribal and sectarian Arab uprisings will spread.

The closure of Hormuz and now Bab el-Mandab by the Houthis, plus the damage inflicted on the Saudis’ East-West pipeline to Yanbu is about to hit global energy markets hard now that US strategic oil reserves are effectively depleted. Furthermore, with the Saudis, Kuwaitis, Qataris, Bahrainis, and the UAR losing nearly all their oil, gas, and derivatives income the ruling families face a major financial crisis.

We have become increasingly familiar with the crack spread, which has risen from its normal $10-$15 margin over crude oil to $70:

The crack spread reflects the loss of global refining capacity, much of which is locked up in the Persian Gulf plus Russian refineries being damaged by Ukrainian drones. The additional problem now emerging is of significantly higher oil prices for the reasons stated above.

Demand for the downstream products extracted from oil is mostly inelastic, meaning that higher prices don’t reduce demand. Diesel, kerosene, and ship bunkers are vital for global logistics over land, air, and sea respectively. Diesel is also essential for farming, mining, and transport. And heating oil which is similar to diesel and kerosene will see increasing demand during the northern hemisphere’s winter which is now approaching. Therefore, we are likely to see crack spreads being maintained or even increased as oil prices rise, accelerating their price increases even more.

So far, financial markets have been remarkably complacent appearing to accept US Government war propaganda over verifiable facts. Not only have the US and Israel lost their war against Iran, but they cannot admit it — particularly ahead of the US mid-terms on 6 November and Israel’s general election on 27 October.

The closure of Hormuz continues and will do so until the US withdraws from the region. Even then, oil industry experts say that it will take years for the Gulf to return

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After three weeks of being on pause, the Fed’s increase of its key interest rate by ¼% on Wednesday to a 3.75%—4.00% band was the signal for precious metals to resume their new upward trend. The Fed’s move was a mirror of the ECB’s ¼% rate increase on 10^th September but was not followed yesterday by the Bank of England which decided yesterday to keep its rate on hold.

A narrative that consumer price rises are muted despite oil supply disruption was developed as justification for the BoE’s wait-and-see policy. More likely, both the Fed

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MacleodFinance is giving the fiat currency system about 18 months before it dies. This article explains our reasoning, and the sequence of events as best as can be judged.

“The point to grasp is that in a debt trap, bond yields tend to rise exponentially, and politics prevents a solution.”

Introduction

Let us start with the economic background. The first thing to notice is that there’s a commodity bull market underway with the World Bank’s Total Index up over 30% this year, and Bloomberg’s commodity index up 48%. This is usually described as evidence of a commodity cycle, but a better description is that it reflects a declining purchasing power in the US dollar in which they are priced and of all other fiat currencies in our dollar-based system. We need to bear this in mind with what is to follow.

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“On this episode of the WTFinance podcast I had the pleasure of welcoming back Alasdair Macleod. Alasdair Macleod has over decades of experience in financial markets, with a focus on monetary history, systemic risk, and the enduring role of gold. He is one of the most respected voices on sound money and wealth preservation.

”During our conversation we spoke about the current situation in the economy, the geopolitical crisis we're working through, Scott Bessents buyback, why yields could go to 20% and more. I hope you enjoy!”

0:00 - Introduction
2:13 - Overview of Markets and Economy
8:05 - Geopolitical crisis
10:11 - Scott Bessent buyback?
14:18 - Where would yields go?
21:05 - Take down the rest of the world?
32:05 - Is there a way out?

“Are fiat currencies facing a complete collapse within the next 18 months? Alasdair Macleod issues a dire warning about the changing of the financial guard, while the US national debt crosses a staggering $40 Trillion in record time.

”In this vital update, we break down the accelerating debt spiral. With Egon von Greyerz forecasting an $80 Trillion US debt by 2036, is there any historical precedent to stop the bleeding? We look back at Andrew Jackson—the only US President to reduce the national debt to zero—and examine what options the US has left today.

”Meanwhile, the Eastern Bloc and China are accumulating physical gold at an unprecedented pace. But where does that leave us? With a stagnant reserve of just 80 tonnes for over a decade and a half, we explore what it would take for Australia to transition to a new gold standard before the fiat system unravels.

"The Greatest Buy Signal in a Generation": Protecting your generational wealth.”

“The time for speculating to accumulate wealth is past. It is time to seek protection from the crumbling cliff edge that’s the 55-year-old fiat currency system by getting out of all forms of credit into gold and silver.”

In this article, we highlight the dangers from US and G7 bond yields inevitably rising above current levels. The fact is that the US along with other G7 member nations are irretrievably bust, increasing risks for holders of all fiat currencies. Meanwhile, with markets asleep to these certainties, the adjustment is bound to be sudden with highly destructive consequences for personal wealth.

Nowhere is this danger more acute than in equities.

The US debt position

There’s no doubt about it: Bessent is in deep trouble. A glance at the chart above

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It has clearly broken out on the upside. The reason is simple and always leads to the

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CHAPTERS:
Here are the chapters for this video:

0:00 Introduction: Rising bond yields and global debt crisis outlook.
0:56 The situation in Iran and potential for conflict.
3:58 Impact of oil price and energy shortages on the global economy.
11:30 Risks in the tech sector and data center expansion.
13:43 Geopolitical shifts: SEO summit and shifting alliances.
16:13 Monetary and fiscal policy, gold market, and the Japanese carry trade.
20:00 Central banks, gold property rights, and the New York Fed.
28:44 The carry trade and US Treasury debt holdings.
37:07 Analysis of the Japanese Yen and carry trade collapse.
41:43 The Japanese stock market and credit bubble risks.
47:58 Commodities, copper prices, and future inflation expectations.
53:30 Decline of the US dollar in global foreign exchange reserves.
58:08 European political instability and potential conscription discussions.
1:06:24 Central bank gold purchases, specifically China.
1:11:15 Conclusion and final thoughts from the speakers.