A recession is ‘positive’ for equities; Biden’s Infrastructure Bill will benefit these assets – Nomi Prins
Nomi Prins thinks that the Fed will continue to print money to benefit Wall Street. Yet stock market may benefit from this.
Prins is a former Wall Street banker turned investigative journalist and author. Her upcoming book is Permanent Distortion. She spoke with David Lin, anchor and producer at Kitco News.
“[Since] 2008, and then in a magnified way since 2020… the Federal Reserve has led other central banks into this exercise of creating money out of nothing,” explained Prins. “And what that’s done is it’s inflated financial assets so much more quickly than the real economy has been able to keep up… Central banks around the world have created $41 trillion worth of money from nothing, and effectively that money has been leveraged. It’s gone for Wall Street, it's created a lot of new billionaires.”
She went on explain that most people suffer from money printing and inflation. This in turn causes civil unrest.
Prins affirmed that this distortion is permanent. Central banks will keep printing money to enrich financial insiders.
Although Chairman Jerome Powell recently embraced hawkish language, Prins is wary of the Fed’s posturing.
“[There] will be some movement in rates upward, but it is bluster to the extent that I think [Powell] would really like… for inflation to come down, for him to be able to take credit, and for the market to go back up,” said Prins.
She was blunt in her judgment of equities markets. “[What] the markets really want is cheap money,” she stated. “Everything else, every other headline, just doesn’t matter. So, if
there’s a recession, or the Fed thinks there’s a recession… that is positive for markets, because all the markets really want is cheap money.”
Prins explained why she left Wall Street.
“I just didn’t like what Wall Street was doing,” she explained. “… I didn’t like the risk management practices that were going on… but a lot of shady stuff was going on and I just really did not want to be a part of it anymore.”
However, Prins is hopeful about sectors of the real economy.
“I very much like anything that touches… the new energy space, and also to a certain extent infrastructure,” she said. “So, if you look at the new energy sector, we have $550 billion of allocations for the latest infrastructure bill… of which a significant portion of money is going towards infrastructure in electric grids, 70 billion [USD] is going into EVs in particular.”
She pointed to lithium and cobalt as commodities that will see increased demand, as people buy more electric vehicles.
To hear Prins’s forecast for decentralized finance and cryptocurrencies, watch the above video.
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