Greyerz:  “Eric, we have a world where the wealth of the 85 richest people is the same as the 3.5 billion poorest.  1.5 billion people must live on $1.25 a day.  So the gap between the rich and the poor is at unacceptable levels.  Also, the world’s population has exploded in the last 100 years, almost 5-times, from 1.5 billion people to 7 billion people....

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“In the coming economic downturn, which is an economic certainty, we will not only see many of the poor with empty stomachs, but also revolting because of the severe inequalities, with severe social unrest following.

What is happening in Ferguson in the United States will be commonplace around the world, and probably a lot worse.  Throughout history the world population has always been controlled by war, plague, or famine.  Currently all three of these risk factors are in place.  The risk of a major war is the greatest since any time after World War II.  Both Ukraine and the Middle East could easily develop into a major war on a global level.

Of course virtually nobody believes this, but nobody believed that World War I or World War II would start either.  And the second risk factor is a plague.  It’s happening already.  Ebola is still relatively small, but the fact that it seems to have become an airborne disease makes the risk extremely serious.

And with an impending economic downturn, famine is virtually guaranteed for a world that has grown too fast and can only survive on credit and printed money.  So the exponential rise in world population is unlikely to continue.  Instead, we could see a reduction in the next few decades of one, two, or three billion people.  It’s hard to believe today, but nobody would have believed 100 years ago that the world population would explode by 5.5 billion.

If my forecast becomes reality our children and grandchildren will live in a very different world.  But as you know, Eric, we don’t just live in an overpopulated world, but also in an over-borrowed world.  Worldwide borrowings have exploded in the last 6 years.  In 2008, at the height of the crisis, world debt was $190 trillion.  Today world debt is an estimated $260 trillion.  That is a staggering $70 trillion increase.

But in spite of that credit explosion, and in spite of zero interest rates, the real economic situation is not improved.  In fact, the situation has deteriorated.  Yes the wealthy are wealthier and the bubble in stocks and real estate has grown, but for ordinary people things are getting worse.  Wages in many countries, including the U.S., are declining, and so is real GDP.

Debt has also exploded in the U.S. since 2008.  Federal debt is up from $10 trillion to almost $18 trillion. The Fed’s balance sheet has increased over $3 trillion due to money printing, and business debt has gone up by $2 trillion.  So all these areas have seen an increase since 2008 - 2014 of $13 trillion.  And that doesn’t include student loans, car loans, etc..

So both in the U.S. and worldwide an astounding amount of debt has been created.  This has not improved the world economy one bit.  Also, this debt can never be repaid.  Keith Barron touched on the massive problems in Europe in his KWN interview yesterday.  Yes, Greece, Italy, Spain, Portugal and France are all disaster areas.  And these countries will not make it through this crisis.  On top of this, the European banking system is under tremendous pressure and fighting for survival.  A major ECB QE package is imminent, and that will be followed by a Fed QE package, but the U.S. will call it something different.

So how do investors navigate through these very difficult conditions?  Physical gold outside the banking system is a must.  Having assets outside your country of residence is important.  A weak dollar and exchange controls are imminent, so taking these measures to protect oneself is absolutely critical.

With regards to geopolitical and social risks, we can only hope and pray that they won’t be too serious for the world, since for most people it will be impossible to protect themselves.  As to the short term picture in gold, it looks constructive.  In spite of regular interventions, gold is holding above $1,300 and looks poised for the next leg higher.  We are now getting to the 3 year anniversary of the $1,900 high in gold, and during the coming autumn we are likely to see gold moving towards that level.  The geopolitical and world economic situation will most certainly see to that.”

© 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, James Dines, Michael Belkin, Dr. Paul Craig Roberts, Andrew Maguire, Art Cashin, Michael Pento, MEP Nigel Farage, David Stockman, William Kaye, John Hathaway and 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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