One of the legends in the business, 50-year veteran Jean-Marie Eveillard, warned King World News that the grand central bank experiment might end badly and there is a possibility of “extreme outcomes.”
Eric King: “There’s talk now of helicoptering in trillions of dollars. Looking at the bigger picture for the West, you are a student of Austrian economics and you’ve said all along that we can’t print our way into prosperity or create more debt to get rid of the debt problem we have. And when you look at this so-called solution of helicoptering in trillions of dollars, that’s not going to solve anything. That’s just going to take this nightmare and make it worse.”
Jean-Marie Eveillard: “It (the behavior of central bankers) is mindless and I think there will be unintended consequences. I suspect that it might end badly, and we have to worry about the long-term. I want to be careful here because I’m so old that I’ve been in this business one way or the other for a little more than half a century…
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Jean-Marie Eveillard continues: “Equities are very historically expensive. The fact that interest rates are zilch cannot continue forever, so I suspect that one needs some protection against risks.
Friederich Hayek of the Austrian School of Economics got the Nobel Prize in economics in 1974. The title of his speech in Stockholm was ‘The Pretense of Knowledge.’ In other words, what Hayek was saying is that central banks should not pretend they know what will happen. And the risks that things will not turn out fine are large enough that investors need some protection.
There Is A Possibility Of ‘Extreme Outcomes’
Somebody once said, ‘What matters is not what the odds are that this or that will happen. What matters is what the consequences would be if this or that were to happen.’ And if I’m right and those risks turn into reality, the consequences would be so difficult that people would need some protection against what the late, great Peter Bernstein called ‘extreme outcomes,’ because I think there is a possibility of extreme outcomes.
There is a risk that at some point that investors will say, ‘If the economy is not good and if corporate profits are not good, equities are a problem.’ And there is the matter that we will not have short-term interest rates at zilch and some bonds in Europe and Japan having a negative yield forever because that is completely unprecedented.
And money is not supposed to be free. The price of money is probably the most important price. And it is being manipulated in a very artificial manner by central bankers. And so far…To continue listening to the remarkable KWN audio interview with Jean-Marie Eveillard, the man who helps oversee $90 billion, CLICK HERE OR ON THE IMAGE BELOW.
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