KING WORLD NEWS - BLOG
BROADCAST../../../../Broadcast/Broadcast.html../../../../Broadcast/Broadcast.htmlshapeimage_6_link_0
HOME../../../../King_World_News.html../../../../King_World_News.htmlshapeimage_13_link_0
BUSINESS../../../../Business.html../../../../Business.htmlshapeimage_14_link_0
GREEN../../../../Green.html../../../../Green.htmlshapeimage_15_link_0
HEALTH../../../../Health_1.html../../../../Health_1.htmlshapeimage_16_link_0
ENERGY../../../../Energy.html../../../../Energy.htmlshapeimage_17_link_0
SPORTS../../../../Sports.html../../../../Sports.htmlshapeimage_18_link_0
GOLD+../../../../Gold.html../../../../Gold.htmlshapeimage_21_link_0
 

“It is sad to say there are just two reasons why the U.S. is not yet a banana republic.  The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels.  If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse. 


However, the perpetual erosion of fiat currencies will eventually cause investors to eschew the sovereign debt issued by the over-indebted nations of America, Japan and Europe—even if the dollar’s decline does not manifest itself against the euro and the yen.... 


Continue reading the Michael Pento piece below...




Advertisement


To hear which company legendary Keith Barron founded, personally

invested millions into, and is poised to become

a uranium superpower click on the logo:





“The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn. 


The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank. T here is no doubt that the U.S. has suffered from structurally high unemployment, stubbornly high aggregate price levels, and low growth for the past five years, which is the direct result of our debt-saturated economy. 


With all of the hype over Sequestration, investors might believe the U.S. was about to balance its budget overnight.  However, the sad truth is that the budget for fiscal 2013 will still be over $3.8 trillion—which is greater than the year prior.  Therefore, the 2% cut in proposed budget expenditures can only be considered a real cut in Washington, D.C. 


So let’s just assume there exists a country located 15 degrees north of the equator that had amassed $7.5 trillion of new debt in the last 5 years alone.  This nation also has nearly $17 trillion in issued debt outstanding, a debt to GDP ratio above 106%, and has clearly shown it is incapable of preventing that ratio from rising. 


The central bank of this tropical land artificially pegged interest rates at 0% for over 4 years, has pledged to keep them there for at least three more years, owns $1.8 trillion of government debt and has pledged to buy $1 trillion more during 2013.   Let’s not forget that $1 trillion worth of central bank buying just happens to coincide perfectly with the projected annual deficits of $1 trillion for the foreseeable future.  What adjective would you use to describe this country?  Of course, any objective observer would designate it a bona fide banana republic! 


This is the reality of the economic backdrop of the U.S.  But, as mentioned previously, the legacy effects of having the world’s reserve currency postpones the most pernicious effects of such economic fundamentals that exist in our country.  Nevertheless, even though the Japanese and European economies also suffer from debt and stagflation, this isn’t enough to purge the U.S. economy from its insolvency; nor will it save our bond market from that inevitable historic rise in yields.


The problem is now even the mere normalization of bond yields would send interest payments on our unprecedented amount of debt soaring.  This could force the Fed to step up its dollar creation far in excess of what the BOJ or ECB would dare to create in order to stem that rise; and this could be the catalyst to send the dollar and bond market crashing even further. 


While some love to speak about the return of ‘King Dollar,’ the truth is any nation that seeks to remain viable through the life support provided by its central bank purchases of sovereign debt, should be designated a banana republic--regardless of its geographic location.  That is why the U.S., Japan, and the eurozone are headed down the road to serfdom, or fruitdom if you will.  This is also why the unquestionable winner of all these currency wars will be precious metals and energy related investments.”


IMPORTANT: King World News will be releasing two more outstanding written interviews on Sunday.  Also, Stephen Leeb’s tremendous audio interview will be released on Sunday as well.


Michael Pento: President & Founder of Pento Portfolio Strategies and the author of

“The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market”

To pre-order from Amazon CLICK 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 interviews with Dr. Stephen Leeb, Jim Sinclair, 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 and Art Cashin by CLICKING HERE.


Eric King

KingWorldNews.com

To return to BLOG click here.


 
 
http://kingworldnews.com/kingworldnews/KWN_DailyWeb/KWN_DailyWeb.html
KWN BLOGhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/KWN_DailyWeb.htmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/KWN_DailyWeb.htmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/KWN_DailyWeb.htmlshapeimage_24_link_0shapeimage_24_link_1

© 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.

Subscribe to RSS
CLICK HEREhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/rss.xmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/rss.xmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/rss.xmlshapeimage_27_link_0shapeimage_27_link_1
KWN Blog
Archiveshttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/Archive.htmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/Archive.htmlhttp://kingworldnews.com/kingworldnews/KWN_DailyWeb/Archive.htmlshapeimage_28_link_0shapeimage_28_link_1
http://www.kingworldnews.com/kingworldnews/Broadcast/Broadcast.html