Celente:  “What the Fed did today is what most people expected, more tapering.  We saw the reaction from the markets and the fear start spreading through Wall Street.  This has been an interest rate and stimulus recovery....

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“The record low interest rates have enabled Wall Street to profit very well, and it also gave the housing market a nice boost because money is cheap.  Yellen implied that a rate hike would be coming earlier than they had previously signaled.  And when rates go up, the markets go down.

When stimulus stops, the economy slows -- it’s a very simple formula.  Listening to Yellen, there was quite a distortion between the prospects for job growth, and of course inflation.  There are two worlds out there:  The phony world the Fed lives in, and then there is the real world of inflation that people feel every time they stick the nozzle in the gas pump and go shopping for food.

Food inflation continues to rise and it is only getting worse.  Everything is going up from utility bills, to rent, insurance, property taxes, etc., but none of that, according to the Fed, is inflationary.  As an example, electric bills here in the Hudson Valley just went up a staggering 38% in February, and are expected to jump another 18% this month!  Residential gas costs went up 25%!  So people have a lot less to spend and the data shows they are also earning a lot less in terms of real incomes.  So these are twin body blows for the average citizen.  Meanwhile, Yellen pretends that the economy is rebounding.

As I look at this, it’s very clear the Fed does not know where it’s going, and the journey up to now has all been guesswork.  And guess what?  It’s not going to work.  There is no way that they are going to be able to raise interest rates, cut back tapering, and expect the economy to grow at any kind of sizable rate.  In fact, you can start looking for economic decline as the Fed tapering increases and the interest rates rise.”

Eric King:  “Gerald, you nailed the fact that the Fed would taper in December.  You have been right all along when it comes to QE, but you did say that at some point the Fed is going to hit a wall.  With all that’s taken place, where are we at this point?”

Celente:  “At some point the Fed is going to have to put more stimulus in.  They are going to have to juice the economy.  The economy cannot sustain itself.  The economy could not even sustain itself with $85 billion each month of stimulus, and it could not sustain itself with interest rates at record lows.

You are going to start to see the equity markets respond very violently, particularly in those emerging markets.  So I fully expect the Fed to have some kind of new stimulus program.  Maybe they will call it ‘Yellenomics,’ just like in Japan they call it ‘Abenomics.’  But just as it’s a failure in Japan, Yellenomics will be a failure as well.

There is no way out for the Fed because they are going to have to juice the economy, and increase bond purchases just to keep this fragile economy from imploding.”

Eric King:  “When the Fed increases QE, and essentially admits defeat, how is the world going to view that?”

Celente:  “The world is going to view it as they have to bail out of the United States as a reserve currency.  I’m shocked, just as Dr. Paul Craig Roberts is, that the BRIC countries have yet not come up with an alternative reserve currency.

And as we know, China is now the largest purchaser of physical gold.  Also, more and more international transactions are now being made in yuan.  We also just saw Daimler, the German automotive company, float a bond offering in China and they did the entire bond offering in yuan.

So we can see China is pushing the yuan toward becoming a reserve currency, and unlike the United States dollar, which is backed by nothing, the Chinese could well end up having a currency that will be backed by gold.  This is going to be incredibly attractive to global investors. 

So when the Yellenomics is injected into the system, and interest rates are forced to stay low as more stimulus is introduced, that is when the globe is really going to respond negatively to the U.S. dollar.  Then you are going to see sharp increases in gold and silver prices.  But I can assure you these reckless and insane policies are going to end very badly for the U.S., it’s just a matter of time.”

UPDATE:  Gerald Celente’s remarkable audio interview where he discussed the ‘Coming Internet War,’ gold, Ukraine, and much more is available now and you can listen to it by CLICKING HERE.

IMPORTANT - KWN has many more interviews being released today.

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The audio interviews with Gerald Celente, Egon von Greyerz, Eric Sprott, David Stockman, Michael Pento, Bill Fleckenstein, Dr. Paul Craig Roberts, Grant Williams, Andrew Huszar, Art Cashin, John Mauldin 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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