QB Asset Mgmt's Brodsky: Geithner Should Be Next Fed Chair

Wednesday, 08 May 2013 08:02 AM

By John Morgan

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The next Federal Reserve chairman will lead a historic conversion of the global monetary system, and the only candidate armed with both diplomatic skills and the right international banking contacts to get the job done is former Treasury Secretary Tim Geithner, according to veteran asset manager Paul Brodsky.

In his April newsletter, Brodsky, co-founder of QB Asset Management, said it is clear current Fed Chairman Ben Bernanke will step down in January, according to Casey Daily Dispatch.

He predicted currency upheavals would trump the need for traditional expertise in dealing with domestic economic policy by the next head of the Fed.

Editor's Note:
Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

"Neither growth nor austerity nor gloom of night will stay these currencies from their appointed devaluations," Brodsky said. "Bank balance sheets must be preserved; ergo sufficient inflation must be manufactured."

According to Brodsky, aggressive monetary intervention by the Fed will soon cause fear among net savers, who have nowhere to go as the economy contracts and as interest rates are already near zero.

"Geithner will save the day and bring glory to the Obama presidency by reducing the burden of debt repayment while maintaining the nominal integrity of debt covenants and bank balance sheets," Brodsky predicted.

"The only way to accomplish this would be by destroying the currencies in which those debts are owed. Net debtors will rejoice and net savers (all 1 percent of them?) will suffer…"

By the time it becomes apparent who will be anointed the next Fed chairman, Brodsky said it would already be too late to buy physical gold and resources to protect against a wholesale currency makeover.

"The only play remaining for financial asset investors looking to get full value after the reset would be shares in precious-metal miners and natural resource producers holding reserves in nature's vault."

Dan Steinhart, managing editor of "The Casey Report" at Casey Research, noted Janet Yellen, current vice chairman of the Fed, seems to be the consensus favorite among Fed observers to replace Bernanke.

But Steinhart said various experts at Casey Research agree with Brodsky that governments have "no choice but to continuously accelerate money creation, which will lead to a reset of the global financial system sooner rather than later."

In that eventuality, Steinhart said the Fed does not need someone with Yellen's academic and policymaking credentials to be its next chairman, but instead will require a diplomatic banking insider.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

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