Norcini: “If what we are currently witnessing continues, confidence in the currencies will collapse.  St. Louis Fed Member James Bullard said today, ‘Inflation is running low.  I’m getting very concerned about that.  If inflation gains continue to go down I would be willing to increase the pace of the purchases of bonds that the Fed is now engaged in.’

This is exactly what the Bank of Japan has been saying, Eric.  This is why they have declared an all-out war against the deflationary forces which have had a grip on their economy for over 20 years now....

Continue reading the Dan Norcini interview below...


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“They believe the antidote to that is to step up the rate at which they buy bonds, to the point where the Bank of Japan is now the purchaser of 70% of all government debt being issued by Japan.  If you think about it we are almost at outright debt monetization.

I don’t recall any point in history, Eric, where debt monetization has ever ended well for the currency of that particular nation.  In fact, it has always led to the collapse of currencies.  But what we are seeing right now is the price of commodities continues to fall in spite of massive money printing, and it has central planners concerned because their tools are becoming less and less effective.

In a debt based economy, if you don’t have a constant increase in borrowing, and if you don’t have a constant increase in the amount of debt that consumers are willing to take on, then the economy contracts.  That’s what we are dealing with here.

But if the central banks’ answer continues to be buying more and more bonds and printing vast sums of money to accomplish that, at some point a trigger event will occur and confidence will be lost in those currencies and they will literally collapse.  That is the scenario we are now facing because of the reckless behavior of central planners.

Ironically, interest rates will soar as the bond markets plummet and the currencies begin to collapse.  That’s what leads to increased inflation and eventually hyperinflation.  We are headed down a path where there will be fewer and fewer currencies that investors are confident holding.

It doesn’t matter whether you look at Weimar Germany or any of the more recent currency collapses, it always follows a similar path and that is where these industrialized nations and currency blocs are all headed.”

Norcini also sent KWN the astonishing chart below and had this take on the action in the gold and silver markets, as well as the shares:  “The HUI chart below shows mining shares back at undervalued levels that parallel 2001, which is when gold was still in the final stages of its bear market.

This extraordinary undervaluation becomes even more remarkable because it shows mining shares have broken below the wealth destruction levels witnessed during the global liquidity crisis in 2008.”

Norcini also added:  “As far as the long-term outlook for gold and silver, as people around the world lose confidence in the currencies, the primary beneficiaries will be physical gold and silver.  We saw a preview of this last year in Europe, and it will only worsen in the future.  The bottom line is this is a monster that the Fed and other central planners have unleashed on us all.”

© 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.

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Eric King

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