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Fleckenstein:  “What happened in 2008 was the financial system collapsed because it was insanely leveraged on the stupid debts of the real estate bubble.  So the financial system melted down and it gained a velocity.  It was like we were going to have the ‘China Syndrome’ and melt down to the core of the Earth....

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“Well, that (meltdown) has a certain tone to it.  When it becomes clear that the Fed is not in control, and the bond market is, and the Fed’s policies lead to misallocation of capital, inflation, and not economic growth, we will have a very difficult economic period, and we will have a very tough time in the financial markets.

Bond rates will be higher and it will be clear that the Fed can’t wave a magic wand to solve problems anymore.  It will lead to higher bond rates, lower equity valuations, and it will lead to a tough economy.  We will have to deal with the problems we have, of massively out of control government spending and entitlements, and all of this other stuff that we just ignore and kick the can down the road.  All of the states, cities, and counties were able to kick the can down the road on their insane pension benefits until this last recession.

Now they can’t and they are having to deal with it.  Well, the country is going to have the same sort of coming to Jesus moment and deal with our problems.  That will be a difficult period, but it won’t be at all like 2008, because in 2008 we almost lost the financial system.

And I don’t think that is going to happen this time.  It will be painful, brutal, and there will be no quick fix.  But are we going to wake up tomorrow and find out the entire financial system has evaporated?  I don’t think that’s going to happen.”

Eric King:  “Bill, Bitcoin, do you have any thoughts on that?”

Fleckenstein:  “Yeah, it’s a giant chain-letter.  Everyone will lose all of their money that puts money in it.  It’s a complete joke.  Even a crappy currency has government taxing ability behind it, or some sort of a standing army or something like that.

Bitcoin is nothing.  It’s dot-com mania 3.0 just moved one step over, right?  People are so enamored with communication with their phones and online commerce and all of that.  Now they’ve invented what they call a currency to mess around with it, and people are speculating in it the same way they speculated in this other crap.  It’s not a currency at all, it’s a complete joke.”

IMPORTANT - The information above is only a small portion of what Fleckenstein had to say in his extraordinary audio interview.  The KWN audio interview with Bill Fleckenstein discussing the madness of the markets, gold, silver, Bitcoin, the end game and more is available now and you can listen to it 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.

The audio interviews with Bill Fleckenstein, Eric Sprott, Grant Williams, Egon von Greyerz, Dr. Paul Craig Roberts, William Kaye, Michael Pento, Andrew Maguire, David Stockman, Art Cashin, John Hathaway and Jim Grant are available now. Other recent KWN interviews include Marc Faber and Felix Zulauf -- to listen CLICK HERE.

Eric King

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