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Rick Rule continues:


“One of the things that comes to my mind is that what has passed for quantitative easing and refinancing in this market, is, in effect, counterfeiting.  We have a situation where one of the biggest buyers of government bonds is the government.


In the United States, as an example, we took in between 40% and 45% of the federal budget last year by way of tax receipts.  We took care of the other 55%+ of the budget by borrowing half of the deficit, and in the second instance by printing money which we used to retire government bonds.  In other words we bought our own paper.


I guess that’s fine as long as it works....


Continue reading the Rick Rule interview below...




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“We’ve talked on your show before about the root word of confidence being ‘con,’ and certainly the liquidity that’s in the market right now tends to breed confidence.


But when the public, and in particular the savings public at large, comes to understand that quantitative easing is actually counterfeiting, that’s when you will begin to see confidence cave and the collapse in confidence will be epic.  That’s what has me nervous.


Another thing that has me worried is the wave of municipal defaults in the US.  One of the things that concerns me, and I’ve believed this for a long time, the new subprime mortgage debt may end up being subprime municipal debt.


Coming back to confidence, for those who are looking for signs of a collapse in confidence, if past is prologue, you should examine our experience in 2008 and begin to look for immediate signs of structural stress.  Look for very, very short-term credits between banks drying up. 


Look for short-term or overnight lending rates going up.  Look at the peripheral assets, things like junk debt, emerging market debt, emerging market equity prices, look for those to decline sharply as the leveraged players at big banks and brokerage firms shut down their trading books as a response to the decline in availability of short-term credits.


Those are certainly the signs that occurred in 2008, and I think that’s the best analogue we have for what we need to be looking for now.”   


Rule also added: “From my viewpoint, what I’m doing about this is holding cash, most of it in the form of US dollars, and in particular, I continue to increase, on down days, my holdings of gold.  Gold and silver are the only historical medium of exchange that are simultaneously a store of value.


Gold and silver are also the only medium of exchange that can’t be counterfeited by the collective.  So I continue to be a goldbug.  If this crisis of confidence, that I think is likely to occur, does occur, I would suspect that although the gold price would be extremely volatile, it will vastly outpace the alternatives.”


The interviews with Jean-Marie Eveillard (oversees $50 billion), Michael Pento and Gerald Celente are available now.  Also, be sure to listen to this week’s line-up of other KWN interviews which include MEP Nigel Farage, Dr. Stephen Leeb, Rick Rule, Eric Sprott and Art Cashin ($612 billion UBS) by CLICKING HERE.


© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.


Eric King

KingWorldNews.com

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