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Eric King:  “Kevin, I know you’ve been communicating with many of the sovereign wealth funds overseas.  What are you hearing from them?”


Sprott Inc. President Bambrough:  “The burning question that I always have, I’m amazed at their ongoing willingness to continue to accumulate, and hold, such large amounts of US denominated bonds.  It’s been my view that they are basically playing a Ponzi scheme.


I’ve had that confirmed when I’ve had long discussions with different sovereign wealth funds and different government agencies around the world.  They’ve been willing to play this game, but more and more now, as their domestic economies have grown and the US portion of their exports becomes smaller, and with the amount of T-Bills that they have (already) accumulated, I believe they’ve reached the boiling point where they are really going to be unwilling to grow their reserves (of US Treasuries).


Just the process of not growing their reserves is going to be very disruptive.  If they are not willing to accumulate more T-Bills, this is going to force the trade deficit closed.  I think that is really going to rock the financial world at some point in the near future....


Continue reading the Kevin Bambrough interview below...




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Eric King:  “You discussed countries getting to the point where they are going to refuse to accumulate more T-Bills, and that rocking the financial world, can you elaborate on that?”


Sprott Inc. President Bambrough:  “The Federal Reserve is printing $1 trillion or so a year to try to keep the economy going.  The Federal Reserve is sort of like the big provider of the credit card to the government.  If the dollar falls, prices go up, and that will eventually start reducing the buying power (of the dollar). 


It’s an amazing catch-22 because if the foreigners are unwilling to accumulate additional dollars, then it means they will have to go and spend the dollars in the US to (eventually) balance the trade.  But because of the government and the Federal Reserve’s willingness to print money, in actual fact the only way to shut the trade deficit down is if the foreigners either refuse to sell, which is not going to happen, or they actually take the half a trillion (dollars) that comes out of the US and turn around and try to spend it and buy a half a trillion (dollars) of stuff from the US.    


Now imagine what would people buy in the US if they were trying to spend a half a trillion dollars per year?  It’s such a large number.  What I think is going to end up happening is the dollar is actually going to collapse.  There will be inflation and you could even imagine the stock market going much higher because one of the easiest places (for these entities) to spend money is just to buy US companies.  It’s going to be viewed as better than bonds.”


Sprott Inc. President Bambrough also added:  Imagine if the dollar did start to fall in this environment.  The world would view the T-Bills to be completely undesirable.  The more the dollar falls, the more they (foreign entities) are going to try to sell their T-Bills. 


If they sell their T-Bills, at the end of the day there is only one buyer now and it’s the Federal Reserve.  So the Federal Reserve is going to have to buy and print more, and that will cause more panic.  I’ve made the statement when having discussions with different sovereign wealth funds, ‘There is going to be a day of reckoning.  I also believe that in the long-run the fiat currency and the paper is going to become completely worthless.’


I ask them, ‘Do you actually imagine that this next generation, that’s very frustrated with the current situation, is going to go to work in the US and produce more goods than they will consume so that they can pay back the debt and honor the T-Bills that you currently hold?  Does anybody actually believe that’s going to happen?’


It’s quite funny because often these conversations occur with a translator, so it takes a little bit of time to go back and forth, and I always enjoy watching how the expressions change on the (faces) of the people in the meeting.  Half of the time they don’t know whether to laugh or to cry because they realize they are in a very precarious position.


They hold huge quantities of paper that will ultimately become worthless.  They generally are all agreeing and saying, ‘Yes we realize this is a huge problem.’  And that if they start spending that money, what will it do?  A loss of confidence in the currency (the US dollar) will occur, and it will spur other nations to dump (the dollar). 


I asked the Chinese, ‘What would you do if the Japanese were aggressively selling all of their T-Bills, and buying up companies and gold?’  I asked the same question to the Koreans.  These countries view themselves in an economic resource war already.  They realize they have to go out and acquire (hard assets such as gold).”


This is the first of two written interviews with Sprott Inc. President Kevin Bambrough that will be released which reveals what is actually taking place behind the scenes with foreign governments and sovereign wealth funds, and how this will impact the financial world and the gold market.  The written portion above is just a small part of this extraordinary interview with Bambrough.  In addition to the written interviews which will be released, the KWN Kevin Bambrough audio interview is available now and you can listen to it by CLICKING HERE.


The interviews with Kevin Bambrough, Nigel Farage, Eric Sprott, Art Cashin, Stephen Leeb, John Embry and John Mauldin are available now.  Also, be sure to listen to the other recent KWN interviews which included Michael Pento, Egon von Greyerz, Gerald Celente, Andrew Maguire, James Turk and Rick Rule by CLICKING HERE.


© 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.


Eric King

KingWorldNews.com

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