PAUL SINGER: Developed countries are hopelessly and utterly insolvent

Billionaire hedge fund manager Paul Singer, the founder of $US27 billion Elliott Management, went off on central bank monetary policy at a hedge fund conference on Wednesday. 

Speaking at the inaugural Tel Aviv Sohn Conference, Singer said that since the 2008 financial crisis developed countries have been propped up by a “cult” of central bankers, according to Tweets from Bloomberg TV’s Elliott Gotkine.

He said that the balance sheets of developed economies are hopelessly and utterly insolvent once long-term entitlements are added in, according to the Tweets.

Singer has previously said that prices of stocks and bonds have been “distorted” by central bank monetary policy.

And if central banks decide they need to do more — such as another round of QE — Singer thinks that everything would go to hell. This is something he’s warned about before.

Here’s an excerpt from his fund’s second-quarter letter: 

Central bankers may not have the tools to combat a renewed slump. After all, with interest rates already at or near zero almost everywhere in the developed world, what would be the effects of new rounds of QE, other forms of money printing, or negative interest rates in more places? Is there no level of monetary extremism (a substitute everywhere in the developed world for the sound, sustainable pro-growth policies which are nowhere to be seen) that would cause a riot point in investor confidence in governments and paper money? Unfortunately, history has shown that governments that have abused the power to create “money” have always, eventually, paid a huge price for their profligacy. That is certainly a chapter yet to be written in this ongoing extraordinary story. Governments and central bankers need to pray (if they are not quietly doing so already) that there will not be a new recession or serious market dislocation before the economies of the developed world somehow suddenly rise with much more robust growth rates than we are seeing at present.

At the Sohn conference, Singer recommended that investors own gold to protect against inflation. He noted that it’s an investable asset that’s been treated “unfairly,” according to the Tweets.

“Gold is the only real money,” Singer told conference attendees, according to Reuters. He recommended that investors allocate about 5% of their portfolio to gold.

Singer’s fund owns gold through options, the Reuters report said. 

Here’s a round up of Bloomberg TV’s Middle East editor Elliott Gotkine’s Tweets from the conference: 

 

 

 

 

 

 

 

 

 

 

 

 

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