Michael Pento continues:

“U.S. jobs data showed that the nonfarm payroll report for July produced 163k jobs.  That sounds alright at first glance, however, the Household Survey conflicted with the Establishment Survey, in that it concluded 195k net individuals actually lost their jobs last month; and that the unemployment rate ticked higher to 8.3%.

Americans continue to leave the workforce—150k left last month—while our unemployment rate has now been above 8% for the last 41 months.  That stubbornly high and rising unemployment rate will likely cause Mr. Bernanke to announce QE III in September....

Continue reading the Michael Pento piece below...


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“Taking a look over in recession-ravaged Europe, the unemployment rate in Spain rose to 24.6% in the second quarter of 2012, which was an all-time high since records were kept starting in 1976.  That has already caused Mr. Draghi to promise an unprecedented and unlimited bond buying scheme that will necessitate hundreds of billions in freshly printed Euros--just for starters.

Adding to the fears of weak growth and increased joblessness are the depressed stock markets around the globe.  The Shanghai Composite Index is down 13% in the last 3 months.  The Nikkei Dow has shed 15% in the last 4 months.  And Spain’s IBEX has plunged 21% in just 5 months.

So Bernanke and Draghi have threatened to unload a massive debt monetization and inflation strategy to get people back to work.  That all sounds great and wonderful, except the total disregard for a currency’s purchasing power is one of the primary reasons behind these already long unemployment lines.

If one doesn’t know their history, you might be duped into believing money printing has a chance to reduce unemployment.  In fact, all central bankers need to do is open their eyes and see what is going on around them to understand their folly.

Spain’s unemployment rate, which has soared from 9% in 2008, to just below 25% today, hasn’t stopped inflation from rising.  Spanish inflation rose 2.2% YOY in July, and that was up from 1.8% in the month prior.  That’s not runaway inflation by any means, however, it is certainly not deflation either.

According to the philosophy of today’s central bankers, having one quarter of your workforce in perpetual siesta should bring about massive deflation.  And this, of course, must be fought with the full force of the printing press.  But all this accomplishes is to bring rising prices along with the misery of being unemployed.  The saddest part is that the ECB launched their LTROs in December 2011 and March 2012, therefore, the full inflationary impact from these programs is only just beginning to be realized.

The history of the U.S. shows the same results.  Our inflation rate reached its apex in 1980 at 13.5%.  According to those who place too much faith in counterfeiting, that should have brought with it full employment.  But the unemployment rate was a lofty 7.2% at that time and reached 10.2% within the next two years.

The truth is that destroying the purchasing power of your currency serves to increase the unemployment rate.  That’s because it erodes the impetus to save and invest, robs the middle class of its standard of living and leaves the economy in ruins.  Economic growth comes from stable interest rates, low inflation and a sound currency.  Persistent money printing erodes all of the basic principles of a strong economy.

What we will see going forward is a chronically weak currency, intractable inflation, onerous tax rates, a sovereign debt crisis and a depressionary economy.  That always leads to civil unrest.  Therefore, the allocation in your portfolio towards ownership of gold has now become mandatory.”

© 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.

Michael Pento had one of his best audio interviews ever.  He puts KWN listeners ahead of the curve on what to expect from central planners, and how to position themselves ahead of those moves.  The interview is available now and you can listen to it by CLICKING HERE.

The interviews with Egon von Greyerz, James Turk, Dr. Stephen Leeb, John Hathaway and legendary Art Cashin ($612 billion UBS) are available now.  Also, be sure to listen to last week’s line-up of other KWN interviews which include Gerald Celente, Don Coxe ($538 billion BMO) and Eric Sprott by CLICKING HERE.

Eric King

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© 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.

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