Egon von Greyerz continues:

“The elderly have been drawing more than anticipated from their retirement accounts to cover their living expenses because they have little or no interest income.  This is why people consistently reject any austerity measures proposed by Western governments.

The Italian election this week was very significant....

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“The Italian election was a rejection of austerity and the government put in by the EU.  It was also a rejection of Brussels.  A totally new party received the most votes.  This is an anti-establishment party, and obviously anti-austerity.  As I said, they are rejecting Brussels, and they are rejecting the euro.  That’s why they received the votes.  So every election in Europe has thrown out the ruling party which has attempted austerity.

Hollande, who came in with lots of promises, is already unpopular in France.  He has already declared that he can’t achieve the few austerity measures he promised Brussels because the people and the unions won’t accept it.  Spain can’t meet its objectives either and the same is true for Greece.

The UK is also totally failing in their efforts, and despite their attempts at austerity they have already been downgraded.  GDP in the UK was down .3% last quarter, and business investment in the UK is the weakest since 2008.  It was minus 10% compared to 2008.  So Europe everywhere is now suffering.

The US can’t even agree on a $1.2 trillion cut in expenses over 10 years.  That’s with a debt and unfunded liabilities of over $220 trillion.  The US won’t even make an attempt at austerity because neither side dares to propose it.  The US will facing its own debt downgrade in the future.

This leaves us with a Western world that is broke.  Western governments and central banks, what they will try to do is is keep the financial system together and the economies going by printing more worthless pieces of paper.  But there is a massive misconception that liquidity or money printing creates wealth.  It doesn’t.  It only creates more debt.

So the Western world, as well as Japan, is just adding debt to debt in a perpetual motion Ponzi scheme that can only lead to ruin.  All money created that is not the result of a service or goods produced is worthless money.  It’s a surprise that Harvard professors and Nobel Prize winners seem to be ignorant of the fact that printing paper doesn’t actually create wealth.  It seems that everyone is part of a system where no one dares to say, ‘The emperor has no clothes!’

Eric, whatever politicians and central bankers say it doesn’t matter because there will be unlimited money printing and there will be hyperinflation.  Propaganda will not save the West from what has already been set in motion.  This is why I am saying the Italian election is so significant because it was a very important reminder of this fact.

Since every printed dollar, euro or yen does not even add a penny to wealth, all currencies will continue to just be systematically destroyed by the money printing.  And as I said, this will lead to hyperinflation.  This is absolutely guaranteed, Eric.  There is no other possible outcome.  A Western financial collapse is coming.

This is why physical gold is the best way of protecting wealth against this destruction of paper money and paper assets.  We still have to see many financial assets continue their collapse in real terms vs gold.  But investors have to remember that paper gold is not real gold.

Any paper gold within the financial system, whether it’s gold ETF’s, gold accounts in a bank, allocated gold in a bank, can just be a paper claim that can never be delivered in terms of physical gold because of the counterparty risks that are involved with the banking system.

Paper gold as well as physical gold within the banking system could be encumbered.  This gold may be owned by a central bank.  It could also be double-counted, meaning more than one entity has a claim on the gold.  It could also just be paper.  This is why, again, I have to stress to investors to take your gold out of the banking system.  Take your gold out of the paper system and into real, physical form, and store it outside of the banking system.”

© 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 Rick Rule, Ben Davies, Andrew Maguire, Marc Faber, James Turk, Bill Fleckenstein, Egon von Greyerz and Felix Zulauf are available now.  Also, be sure to listen to the other recent KWN interviews which included John Hathaway, Eric Sprott, Art Cashin, MEP Nigel Farage, and Michael Belkin by CLICKING HERE.

Eric King

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