Lawrence Lepard: Setting the Scene for Infinite Q.E. – The Fed’s Next Move?

Tom welcomes back Lawrence Lepard of Equity Management Associates back to the show. Larry discuses the current inflation outlook and compares it to the 1970s, noting the current driving forces are different but "rhyme" with the past. Expectations play a significant role in inflation, with people believing prices will rise. The International Swaps and Deals Association (ISDA) has written to the Federal Reserve Board suggesting that the market for treasuries is becoming less liquid, which could be problematic. The ISDA recommends eliminating the Supplementary Leverage Ratio (SLR), allowing banks to buy more treasuries without repercussions and potentially monetizing federal deficits. This move would increase money supply growth, currency dilution, and demand for sound money investments. Mr. Lepard believes that the US federal budget deficit will continue to rise, with the current administration accelerating fiscal irresponsibility. He predicts that sound money assets like gold and Bitcoin will increase in value, with gold potentially reaching $3,000 per ounce by year-end. The Federal Reserve is balancing three mandates, but its emergency powers have led to increased leverage and complex trades. The federal government's debt is not sustainable, and when investors take notice, it could lead to a sharp repricing of bonds with significant consequences for the economy. Lepard is optimistic about a return to sound money standards post-hyperinflation but sees no signs of this happening soon. He believes that gold can go as high as $10,000 per ounce and encourages investors to allocate a good portion of their assets in things the government can't print. The current market conditions provide an opportunity for investors to consider selling stocks and buying gold as protection against economic uncertainty and stock market volatility. Time Stamp References0:00 - Introduction0:36 - Inflation Outlook8:06 - Fed & Expectations10:08 - Infinite Q.E. Endgame12:02 - Crossing The Rubicon20:50 - End of the BTFP26:03 - Fed is Trapped32:30 - Bananna Republics & Cans36:47 - Currency Failure List48:30 - Market Tops & Liquidity53:49 - Hard Asset Mkt. Sizes58:08 - Commodities & Risks1:04:07 - Investor Time Horizon1:08:22 - Inflation Vs. Returns1:10:50 - Wrap Up Talking Points From This Episode Contrasting inflation today with that of the 1970s. A possible method being discussed to deploy additional stealth easing via the banking system. The importance of having sound money when markets are near all-time highs to mitigate risk. Guest Links:Newsletter: http://eepurl.com/gOf1dTWebsite: http://www.ema2.comTwitter: https://twitter.com/LawrenceLepardBitcoin Speech: https://www.youtube.com/watch?v=czdPJpRa9KI Lawrence W. Lepard is the Founder and Managing Partner of Equity Management Associates. He has spent his entire 38-year career as an investor, principally focusing on venture capital opportunities. Before co-founding EMA, Mr. Lepard spent 13 years at Geocapital Partners, in Fort Lee, NJ. There he was one of two Managing General Partners and was responsible for several venture capital funds. Before Geocapital, Mr. Lepard spent seven years at Summit Partners in Boston and California, where he was a General Partner at Summit I and Summit II. Mr. Lepard received his BA in Economics from Colgate University, and he received an MBA with Academic Distinction from Harvard Business School.