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Embry: “I guess I’m always unnerved as a result of what happened in April, the last time the President of the United States had a meeting with all of the bank heads, and two days later the price of gold was smashed for over $200.  Now, the President is meeting with all of the heads of the various agencies, institutions, the Fed, and all of the other key money entities in the United States today.  What’s that all about?


But clearly if the President is having this meeting, there is a crisis unfolding somewhere in the background, and it could very well relate to the dollar, interest rates, and the massive derivatives market associated with interest rates....


Continue reading the John Embry interview below...




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“Rising interest rates are a killer in an over-levered economy, and that’s exactly what we’ve been seeing in the United States.


This surge in interest rates may have already seriously destabilized the entire financial system, and that’s why there is this meeting taking place in the White House today.  The fact is that the vast majority of derivatives in the global financial system are related to interest rates. 


Now, the entire financial system may be on the precipice of some sort of catastrophic event unfolding because of what we have already seen in the bond market, and how the derivatives are so heavily intertwined.  Meaning, we may be on the verge of another disastrous derivatives meltdown.


We have an unbelievable amount of interest rate derivatives in the financial system.  So the winners theoretically take the profits on them, and the losers simply misprice them on their books.  But as you get higher interest rates it becomes even more destabilizing. 


I firmly believe the reason the President has called this meeting today is because if interest rates in the U.S. continue to rise, it could really unleash something disastrous.  We are talking here about the possibility of a meltdown.  It’s interesting that the President would call in that many big hitters, the head of every significant financial agency in the United States, as well as the Fed and the Comptroller of the Currency, etc -- this is a very large meeting today.


I’ve always believed that the global financial crisis of 2008 was just the opener.  We have now bought the better part of 5 years through unlimited money creation.  But as we head into this next massive, and what I believe will be a larger round of destabilization, I want KWN readers around the world to understand that the central planners don’t have the same weapons to fight this global financial crisis.  This is why I believe they are desperately attempting right now, today in this meeting, to stave off this crisis.”


Embry also added:  “When you have a vastly over-levered economy, higher interest rates suck money out of the system, and you have to remember that the system is already struggling.  So we may well be looking at something catastrophic unfolding right now.  As I said, this could be destabilizing the entire financial system.


The mainstream media continues to put out propaganda about a so-called economic recovery that’s going on.  Even the Economist put out a piece essentially saying that the Western world economic recovery is going to be driven by the United States, which is the strongest entity in the Western industrialized world.


If the U.S. is your strongest entity, then you’ve got huge problems.  I believe that if inflation were correctly accounted for in the United States, instead of these bogus numbers they come out with, then the deflator in the nominal GDP would be materially higher.  This means that real growth would be materially lower.


It’s the split between real growth and inflation that determines what the real growth number is.  And if inflation is understated, and I believe they have just manipulated the hell out of the inflation rate, then I don’t really think there is much recovery, if any, going on in the United States.  All of this is in the face of $85 billion each month being pumped in by the Fed, and interest rates near rock-bottom levels.


But now we are beginning to see U.S. interest rates climbing inexorably, at the same time that the oil price is remaining elevated, those are two major factors in determining the future of the economy.  If rates go up and the oil price is very high, that just knocks the struts out from under the consumer.


When you look at the oil price, just when you think it can’t get worse, the situation in the Middle-East deteriorates even further.  It’s becoming a battlefield with Russia and China basically lined up against Western interests.  So I’m extremely worried about the overall picture.


When I look at what is unfolding right now in Europe, markets are clearly unsettled over there.  I also see the German Finance Minister has come out and said that Greece is going to need a third bailout.  So the idea that anything is getting better in Europe is preposterous.


So, when watching currencies, the only thing I am interested in is the price of gold and silver, which is real money.  Gold and silver are putting in a better performance, although they are still being restrained.  The fact is that they are building a super-base, and that’s what the central planners should really be afraid of, the U.S. dollar collapsing against gold and silver.


I said it last week and I will say it again, we will now see historic and catastrophic wealth destruction.  It’s going to be something to behold, and investors who want to survive this financial holocaust had better be properly positioned.”


© 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 James Dines, William Kaye, Grant Williams, Dr. Paul Craig Roberts, Gerald Celente, Hugo Salinas Price, Chris Powell, Eric Sprott, David Stockman, Art Cashin and Marc Faber are available now. Also, other outstanding recent KWN interviews include Jim Grant and Felix Zulauf to listen CLICKING HERE.


Eric King

KingWorldNews.com

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