Mauldin:  “I’ve been doing a lot of thinking about the future.  I’m in the process of finishing up a book with the co-author of ‘End Game.’  We have a book coming out this fall called, ‘Code Red.’

We are writing about quantitative easing, currency wars, and the next 5 years.  The upshot of it is that our current policies in both governments, and in central banking, are coming to a point that it’s (actually) increasing the instability of the system....

Continue reading the John Mauldin interview below...


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“As an example, Bernanke gave a hint that they might begin to reduce the amount of money they are injecting into the system and the stock market just threw up.  So within a week there were like 6 or 7 Federal Reserve types that were out saying, ‘No, no, no.  That’s not what we meant.’

They were just panicking over a 7% move in the stock market because they were worried about instability.  This constant concern by the Federal Reserve about market stability is actually building up instability.  What we have today is for all intents and purposes the lowest risk premium in two or three generations.

But the Federal Reserve, by pushing the risk premium down, by dropping interest rates to zero, by forcing people out the yield curve to try to find any income at all, by forcing people to increase their risk in order to get some kind of income to grow their portfolios or just to simply to survive, they’ve driven risk premiums down to a level that they just can’t drive them any lower.

Anything that happens that a central bank would normally respond to, the central bank doesn’t have any weapons.  They can’t drive risk premiums any lower.  They can’t drive interest rates any lower.  They could flood it (the system) with more money, but liquidity is not the problem.  That’s not the issue. 

There is plenty of liquidity in the system.  There are massive amounts of reserves.  The problem is that we now have these large forces of instability built-up, waiting for an event for which there is no reaction.  Rather than saying, ‘OK, we are going to allow a little bit of instability.’  The markets (would then) correct back to more normal levels.

My frustration, Eric, really, is that the Federal Reserve has a mandate for stable prices, and then they added the employment mandate.  And Bernanke has come along and given them a third mandate, and that’s market prices.  It’s kind of like, ‘Who did this?  Why is the Federal Reserve concerned about market prices.’

And yet hearing Bernanke talk about that, you know, ‘The markets have responded.  We’ve helped engineer growth.’  That’s not in their portfolio.  But now the markets have come to think that it is, and that’s made it a very, very unhealthy system.”

The information above was just a small portion of this extraordinary audio interview with John Mauldin.  He covers a tremendous amount of ground in a short period of time discussing instability in the financial system and the end game as he sees it.  Mauldin also discusses gold and much more.  The tremendous KWN interview with John Mauldin 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 John Mauldin, Dr. Paul Craig Roberts, Art Cashin, William Kaye, Marc Faber, Stephen Leeb, Dr. Benn Steil, Eric Sprott, Andrew Maguire, John Hathaway, Nigel Farage and Rob Arnott are available now.  Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.

Eric King

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