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Eric King:  “Eric, what is the big threat going forward?  What has you worried here?

Sprott:  “The big threat to the financial world is the realization that all of these actions by central banks have created nothing....

Continue reading the Eric Sprott interview below...  


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“Even when I look back to the US and how we came out of 2008 -- we’ve got an extra 20 million people on food stamps.  There are no real signs of real growth here.  I just think that people will figure out that we have all been boondoggled on this thing, to believe that something positive is happening, when in fact very, very negative things have been happening.

The Fed’s balance sheet has blown out.  We never did restructure the banking system.  We see that the European banks would have to raise $1 trillion in certain circumstances.  And I can just imagine if they actually came to market (for $1 trillion) what the prices of the bank stocks would do -- they would just collapse because I don’t think there is $1 trillion that wants to go into European bank stocks.

So all of the problems that we had in 2008 are still around, except magnified now.  So that’s the big concern -- that we all find out it was just a big Ponzi scheme and the market breaks.  It’s the same decision I had to make back in 2000, before the Nasdaq crash, when I thought, ‘Boy, it looks like the Nasdaq is going to crash.  What am I going to do?’  The obvious conclusion was you’ve got to own hard assets -- things like gold and silver.”

Eric King:  “Eric, how close do you think we are to where they (the central planners) are going to hit the wall with the money printing?  You finally get to a point where you can’t have an impact on an economy at all (with the money printing).  Are we getting close to that?”

Sprott:  “You hit the wall, Eric, when problems in the banking system are allowed to manifest themselves -- where some bank finally realizes, ‘Hey, we don’t have any capital here and we just can’t keep going on pretending that we are solvent when we are insolvent.’  And as we see this constant deterioration in the economic data, I think it will become apparent to everyone that things aren’t working. 

If stocks start going down, of course it imperils all paper assets, and the banking system owns nothing but paper assets.  My biggest concern in the financial arena has always been that the banks end up with problem loans.  In Spain something like up to 25% of all loans are problem loans.  You just know there is no way for the banks to survive without the support of the central banks, and these central banks are getting extended here.  There is only so much they can do.

So you will see something (shocking) in the financial system -- maybe it’s in the stock market, maybe it’s some bank going down.  The valuations are bearing no relationship to what the underlying fundamentals are today, so something is going to break somewhere along the line.”

IMPORTANT - KWN will be releasing interviews all day today with William Kaye, Eric Sprott and others.  Also, the extraordinary audio interview with Eric Sprott is available now and you can listen to it by CLICKING HERE.

© 2014 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, Bill Fleckenstein, Egon von Greyerz, Dr. Paul Craig Roberts, Nigel Farage, James Dines, Gerald Celente, Andrew Maguire, Rob Arnott, David Stockman, Art Cashin and Dr. Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf -- to listen CLICK HERE.

Eric King

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