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Michael Pento continues:
“The developed world, and specifically the European bloc at this juncture, is out to believe that you can default on your debt through inflation. They believe this will not only somehow save their economy, but also keep interest rates low.
That belief is completely antithetical to the truth. It makes no sense in the real world of economics, and it is doomed to failure....
Continue reading the Michael Pento interview below...
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“In the US, as I pointed out last week, in my latest piece, the Labor Department indicated there were 350,000 initial jobless claims. But I noted that in the raw data there were an additional roughly 70,000 jobless claims that were not included in that total.
Right on cue we saw a huge spike in unemployment, which once again brought the Federal Reserve and QE3 back to the table.”
Pento also added: “In his KWN interview, Eric Sprott was discussing the two choices Europe faces. The bottom line is that either of those choices is a default. Europeans have to default for the simple fact that they owe more money than they can ever possibly repay.
The amount of debt outstrips Europe’s tax base many times over. So we are no longer talking about if Europe will default, but rather how they will default They are looking at either an explicit default, which is a restructuring of their debt, or an implicit default through inflation.
Clearly Europe has, at least at this point in time, chosen inflationary default. But in either case it is a default and when you default on your debt, interest expenses must increase dramatically. This is exactly what I foresee happening in Europe. You cannot print money and create inflation and keep yields low forever.
The worse part is when you choose the inflationary default, you always end up destroying your economy to a much greater degree than when you explicitly default. The other problem Europe faces, under the inflationary default, is that their interest rates will not only go higher but they will stay higher for a much longer period of time.
Unfortunately that’s exactly where we are headed in Europe, but let’s not forget the United States. The US is about two years behind Europe’s pernicious path. We are now over 100% debt to GDP, and if we want to know our future, all we have to do is look across the Atlantic because that’s exactly where we are headed.
It is the height of stupidity and hubris to believe that the entire globe will not find an alternative to the US dollar and US debt. We will reach a point where it becomes totally apparent to the world that the US cannot service its debt. This is why every time you see gold sell off, there is a bid coming from certain entities which is supporting the gold price.
The bottom line is we have a world which has been dominated by fiat currencies, and we are now experiencing the end, the final throes of that failed global experiment in a purely fiat money based system. And the primary beneficiary of this collapse will be gold.”
To learn more about Michael Pento’s financial management services CLICK 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.
The interviews with Don Coxe, Eric Sprott, Nigel Farage, Peter Schiff and John Embry are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include Egon von Greyerz, Bill Fleckenstein, Jean-Marie Eveillard (oversees $50 billion), Michael Pento by CLICKING HERE.
Eric King
Why We Can All Kiss This Financial System Goodbye
Today Michael Pento gave this dire warning to King World News, “The bottom line is we have a world which has been dominated by fiat currencies, and we are now experiencing the end, the final throes of that failed global experiment in a purely fiat money based system.”
Pento also warned, “Clearly Europe has chosen inflationary default ... but let’s not forget the United States. The US is about two years behind Europe’s pernicious path. We are now over 100% debt to GDP, and if we want to know our future, all we have to do is look across the Atlantic because that’s exactly where we are headed.”
Pento went on to discuss gold, but first, here is what Pento had to say about Europe: “You cannot, as a central bank, have a policy of creating inflation in order to keep yields lower. That is why the deflationist’s fears in Europe are quickly turning towards an inflationary scare, and more specifically a stagflationary quagmire that will quickly expedite Europe into the abyss.”
© 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.
July 22, 2012
