Greyerz:  “I’ve just come back from the United States. What surprised me was how bullish some people are about the U.S. economy and the equity markets.  The mainstream media continues to fuel this totally misplaced optimism....

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“I was watching one mainstream media news channel when the revised GDP figures came out at minus 2.9 percent for Q1.  The reporter stated that in a survey of 25 economists, every one said the drop was due to climate and therefore was an aberration.

When a guest argued that this was a real drop and an important one, the reporter said, ‘Let’s stick to the facts.’  She was referring to the forecast of the 25 economists.  So now on mainstream media the forecasts have become the ‘facts.’  No economist has ever correctly forecast a turn in the economy and they will all be wrong this time as too.

I also met with a number of high-net-worth individuals in the United States.  Not one was concerned about the economy or the dollar, nor do they have any interest in gold.  I think a lot of people will be very surprised in coming months and years.

But if you speak to ordinary people like taxi drivers, they have real problems making ends meet.  This is the same problem in the entire Western world.  The gap between the rich and the poor is bigger than ever and this will create major social unrest when the economy turns.

In my view the negative Q1 GDP number was not an aberration.  The real U.S. economy is weak and debt-laden.  Money printing and zero interest rates are not having any effect.  GDP adjusted for inflation is now a staggering 8 percent below the 2005 level.  And real wages for workers have been falling for decades.

I see some major turns in markets and the economy happening soon.  The optimism based on the stock market exuberance will soon turn.  The market does not reflect the real economy but only that all printed money has flowed into the financial markets.  Based on any rational criteria the stock market is a massive bubble.

I have for some time forecast July as a top but it could last a bit longer.  But when a turn happens this will be the start of a secular bear market that will last for a long time.  And once the psychology turns, the fragility of the world economy will be exposed.  We have discussed all the problem areas many times, and each one of these can trigger a major breakdown of the world economy.

You know that I believe Japan is a basket case, and every economic figure that comes out from Japan just confirms my view.  Household spending in May was minus 8 percent and their CPI was plus 3.7 percent. This was the highest CPI in 24 years.  People are earning less and spending less and still prices are rising.  So we have the perfect example of stagflation in Japan, which will lead to a hyperinflationary depression and default as the yen collapses.

Another market in trouble is the sovereign bond market. Rates in Japan are near zero and government bond rates in Europe in countries such as Greece, Italy, and Spain are down to very low levels now.  U.S. rates don’t reflect the risks either.  It’s astonishing how investors can buy worthless government paper that can never be repaid with real money.

Eventually, worldwide bonds will be good only for lighting fires.  In the meantime, governments will tax the people to death.  Spain, for example, is now proposing a tax on bank deposits.  What a great incentive for people to save.  They actually have to pay a tax for saving.

In addition to the economic fires worldwide, the geopolitical problems are now flaring up everywhere.  The problems in Ukraine and the Middle East are extremely serious and a major threat to world peace.

Looking at the metals, you probably remember that some time ago I forecast a turn in June.  Well, that seems to have happened.  We might get some volatility in July but come August and September the bull market in gold and the bear market in the dollar and other currencies will continue in earnest.  Investors should be holding physical gold and silver during this time frame because they will go up dramatically.  The metals will also protect people against unprecedented risks and dangers in the world as things really unravel.”

© 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.

IMPORTANT - KWN has many more interviews being released today.

The audio interviews with Gerald Celente, Dr. Paul Craig Roberts, John Hathaway, Grant Williams, Andrew Maguire, James Turk, Jean-Marie Eveillard, Egon von Greyerz, David Stockman, MEP Nigel Farage 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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© 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.

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