Egon von Greyerz continues:

“At that time I mentioned three critical areas:  Unemployment, which has exploded, serious problems in credit markets, also the risk of hyperinflation and the effect that would have on the world economy and investments.

Looking around me now, Eric, it’s all happening....

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“Unemployment is exploding.  Look at the weak economies, especially in Spain and Greece where you have almost 30% unemployment, and youth unemployment close to 60%.  That’s having devastating effects on the economic and social structure of these countries.

Most of the banks in Spain and Italy are bankrupt.  Since this crisis started in Greece, Greek GDP is down 25%.  It’s a similar situation in Italy and Spain.  This will eventually spread to France, the UK and Germany.  German GDP is weakening and retail are coming down dramatically.  The latest number was a 5% plunge in retail sales.

So even the stronger countries are now starting to suffer.  I have friends in the machine tool industry in Germany.  They are telling me that what has been a strong business in the last few years is now turning down rapidly.  Demand is falling at a very fast pace.

Western Europe is suffering in many areas, but look at Eastern Europe.  Some of those countries are in an absolutely desperate situation.  When we look at North Africa we see total social and economic upheaval.  Look at Egypt, Libya, Syria, Mali, and many other countries.

In the United Sates it’s much worse than anyone understands.  Real unemployment is 23%.  Debt, including unfunded liabilities, is around $220 trillion.  We just saw US GDP come out at minus .1% in Q4.

I’ve included two charts of US GDP from Shawdostatistics.  These are very interesting charts.  The first one shows US GDP since 2000 adjusted for inflation.  This chart shows a 24% increase in GDP between 2000 to 2012 (see chart below).

When you look at the second chart, which is adjusted using real inflation rates, instead of an increase of 24% in GDP, you see a decrease of 4%.  When you take out the phony numbers and the propaganda, that’s a staggering 28% differential in GDP (see chart below).

I then adjusted GDP for real inflation using gold as the measure.  If you take the US GDP measured in gold between 2000 to 2012, then GDP has collapsed 70%.  So in real terms US GDP is falling rapidly.  Governments are measuring GDP in falling currencies, which always gives a false picture.

I also want to add that I’ve been discussing currency wars in the last couple of interviews.  The movement in a currency is a reflection of a nation’s health.  The dollar now looks likely to fall very rapidly.  The dollar is technically a worse currency than the euro, thus the euro is strengthening.

These currency wars will have an enormous impact in individual economies.  Look at South Korea vs Japan.  Since 1982 the won is down 77% against the yen.  What’s happening to Japan as a result?  Most companies are doing very badly, both technology and car companies are hurting.  But in Korea we are seeing major industries emerging.  Samsung, Hyundia, Kia are all extremely successful.  The major reason for this is the currency moves.  This is why countries want to devalue.

So coming back to Europe, the strong euro is not good for the European economy.  This is especially bad for the weaker economies in Greece, Spain, and Italy.  I would also add that 38 countries now have zero or negative real rates.  As I’ve stated many times, you can’t have low interest rates and high borrowings.  This will eventually lead to the most massive collapse of government bonds.

What we are saying is that most is that despite the propaganda, most economies are self destructing.  This is currently leading to a social and moral decline, and will continue to do so in the future.  It may lead to a total social and moral collapse.”

Greyerz also added:  “A couple of days ago Swiss banks came out with a major PR campaign offering allocated gold and silver accounts.  Well, Eric, that’s nothing new, they have always done that.  The banks are worried that more and more investors are taking gold outside of the banking system.

So now the banks are telling investors these allocated accounts are safe and would not be included in any bankruptcy.  But the bottom line is this gold and silver will be encumbered, and maybe even owned by central banks who will claim it back one day.

We must remember history.  Look at Lehman, MF Global, Sentinel.  These companies, which all collapsed, had allocated and segregated assets.  These assets were used as security for their credit lines.  Therefore investors did not get their money back.

The two major banks leading this campaign in Switzerland, UBS and Credit Suisse, represent 600% of Swiss GDP.  This exposes the entire Swiss banking industry.  So investors should not participate in that program.”

Greyerz had this to say regarding gold:  “Looking at gold and silver short-term, despite the volatility they look extremely strong.  The charts look very constructive.  This confirms my view that we will see major rises in 2013.

Many of KWN’s interviews have noted that silver looks particularly strong and I agree with that.  The gold/silver ratio is ready for a major decline.  So silver will outperform gold in the coming rise, but both metals are going to see a massive price increases.”

© 2013 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 James Dines, William Kaye, John Embry, Jean-Marie Eveillard, Rick Rule, Pierre Lassonde and Gerald Celente are available now.  Also, be sure to listen to other KWN interviews which include James Turk, Bill Fleckenstein, John Hathaway, Ben Davies, Nigel Farage, Eric Sprott and Art Cashin by CLICKING HERE.

Eric King

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