Greyerz:  “Eric, it is important to consider what the truly important factors are that will determine what will happen to the world, its people, and to the global economy.  If we look around, what do we find?  We find a world that is financially, politically, and morally bankrupt.

This is a world that is feeding on ever-increasing debt and money printing.  Just look at the G-7 debt....

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“The G-7 are the top industrialized countries in the world:  The U.S., the U.K., France, Italy, Canada, Germany and Japan.  Since neither China and Russia are included, you can question the validity of this group, especially since most of the G-7 countries are bankrupt.

Nevertheless, the G-7 represents around 50% of world GDP, which totals $30 trillion.  But these countries have a total debt of $140 trillion, which is a remarkable 440% of their GDP.  If you look back to 1998, the total debt of the G-7 was $70 trillion and their GDP was $30 trillion.  So, Eric, debt has doubled between 1998 and 2012, from $70 trillion to $140 trillion, and GDP has only gone up by $10 trillion.  What this means is that it takes $70 trillion of additional debt to produce $10 trillion of additional GDP. 

So the world’s so-called richest nations need $7 of debt to produce $1 of GDP.  The world is bankrupt, and all of the economic figures that are being published are just a mirage of a castle built on a foundation of worthless paper money.  The world can, of course, never pay back the debt with real money, and the world can’t even pay the interest with real money.

Every 1% increase in the interest rate means an additional cost for the G-7 of a staggering $1.4 trillion.  That is absolutely massive.  $1.4 trillion is only slightly less than the entire GDP of Canada.  If interest rates increase by 10%, then we are looking at an increase in interest expense for the G-7 nations which equals the entire GDP of the United States.

Eric, anyone with a sane mind would realize that this whole situation is untenable, and, sadly, this will end very, very badly for the world.  We don’t just have an economic bankruptcy, but we also have a moral and ethical bankruptcy taking place on top of the threat of war, and the fact that most governments are taking away freedoms and personal initiatives by making them dependent on state handouts.

We also have the very dangerous situation where the rich are getting richer and the poor are getting poorer.  Since 2009, the wealthiest 7% have seen their wealth increase by 28%, while the other 93% have seen their wealth decline by 4%.  If you take the wealthiest 300 in the world, they have more wealth than the poorest 3 billion.  Eric, this is very dangerous for a world which will have more and more people going hungry.”

Greyerz also added:  “If we turn to the situation in gold, there is a major shortage of physical gold, and Western governments and central planners are doing what they can to sell or lease their gold into the market.  This has the Fed greatly concerned ahead of their decision.  At the same time, the manipulation in the paper market continues.

I am convinced that the relatively small correction we have just seen was simply manipulation prior to the Fed announcement tomorrow.  As you know, Eric, I have said for some time that there will not be tapering.  So, they had to get gold down because it’s likely to go up substantially after the Fed has surprised the market tomorrow.

Remarkably, only one half of 1% of world assets are invested in gold.  Considering what will happen to the world in the next few years, that percentage will go up dramatically, but that will only happen at much higher prices since there is virtually no physical gold available at these prices.”

© 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 Eric Sprott, Andrew Maguire, Grant Williams, Stephen Leeb, Bill Fleckenstein, Pierre Lassonde, Dr. Paul Craig Roberts, Art Cashin, Egon von Greyerz and Marc Faber 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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