Greyerz:  “Eric, since 2007 the world has created tens of trillions of dollars of paper money, either by QE or by increased lending.  So why haven’t we had any significant inflation?  Well, it’s simply due the manipulated way in which most countries produce inflation figures.

For example, most people in the world, whether it’s in the U.S., Europe, or in Japan, are experiencing significant inflation in food and energy....

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“Food inflation in many countries such as the U.S. and Japan is around 20 percent.  But these accurate figures are not published.  Instead, the truth is kept hidden from the people. 

But, importantly, the tens of trillions of printed dollars have not gone into the real economy.  This money has stayed on the balance sheet of the banks.  This was necessary to prop up the banks.  Also, the banks and the bankers have used this money for their own profitable benefit.

Another thing people need to understand is that asset markets such as stocks and bonds are not measured in inflation figures.  But these markets have seen trillions of dollars of fund flows.  So when we were told the printed money was to bolster the economy, that was a complete lie.  That money was always intended to save the banks and to benefit the bankers.

But in spite of this massive injection into the banking system, European banks are more vulnerable today than in 2008.  And U.S. banks are in a terrible position as well if we include their derivatives positions, which have little real value.  Most of the assets of the wealthy are growing quickly because of stocks, property, art, etc.  If we include these assets into the inflation numbers, there has been significant inflation that has benefitted a small minority.  But what it has also done is create bubbles in stocks and bonds that are totally unsustainable.  So, again, the world has printed tens of trillions of dollars of money that has not benefitted the world economy.

The world is in disastrous shape as I outlined in last week’s KWN interview.  With interest rates near zero and massive money creation, the world’s central banks have no other tools to stimulate the world economy.  The ECB just lowered their rate to negative 0.1 percent.  So now banks have to pay to leave their money with them.  Right now virtually no banks are safe to put any money with, whether it’s a central bank or commercial bank.  And to receive negative interest on money for this danger is laughable. 

So what are the central banks going to do?  The answer was given yesterday by Draghi.  After announcing a 400 billion euro loan package to eurozone banks, Draghi said, ‘We are not finished.’  So there will be more QE in Europe and there has to be in Japan, and eventually there will be more QE in the United States to stimulate the economy.

But more printed money will not save the world economy.  All it will do is to make more currencies collapse, leading to hyperinflation in many countries.  After the ECB announcement yesterday, the euro went to a new intermediate low against the dollar, and then shot up to a higher level than when it started the day.

Why this action in the euro?  Well, because the dollar is a very vulnerable and weak currency that will lead the currency race to the bottom.  This is why it’s critical for investors to get out of dollar assets, especially since there will be exchange controls.

We had the U.S. unemployment figures today which showed that 217,000 jobs had been created.  But since 2007, when the real money printing started, the number of people not working is up 13 million to a staggering 92 million people in the United States.  At the same time, workers wages are going down.

So all this stimulus has had no effect on the real economy.  Today in the U.S. there are only 117 million people working full-time, and 129 million not working, or working only part-time.  In spite of these massive problems in the U.S., the optimism continues, partly based on the overvalued stock market.  The 1 percent fall in Q1 GDP was described as just a weather-related phenomenon.  But the increasing trade deficit, which was $54 billion in April, points to a low Q2 GDP number as well.

Turning to the precious metals, they continue to be weak short term.  Last week I mentioned there was a risk of lower levels before we turned.  But from a wealth preservation point of view, this is the last opportunity for investors who don’t have enough physical gold and silver.

In the next few years gold will go up many thousands of dollars an ounce and will be a critical part of investors’ portfolios in order to protect their assets from total destruction.  As gold and silver markets go up, the massive paper selling of gold and silver, which has been done by governments and bullion banks in order to depress the prices, will come back as a boomerang.

This will happen because the West mainly has paper gold, while Russia, China, and other Asian countries have real physical gold.  When the paper shorts are called upon to deliver, it will cause a massive short squeeze.  This will push gold and silver many multiples higher in price.  In my view, precious metals such as silver, palladium, platinum, and gold, present the most unique opportunity of a lifetime for investors.”

© 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 Ben Davies, Gerald Celente, David Stockman, Bill Fleckenstein, MEP Nigel Farage, Michael Pento, Dr. Paul Craig Roberts, John Mauldin, Eric Sprott, Andrew Maguire, 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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© 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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