Today the man who has become legendary for his predictions on QE, historic moves in currencies, and major global events warned King World News that the world is now on the edge of total collapse.
By Egon von Greyerz, Founder of Matterhorn Asset Management & GoldSwitzerland
November 9 – (King World News) – Anyone who takes off his rose-colored glasses and studies the facts will realize that the world is very different from the picture that Western governments and media are painting…
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An illusion of prosperity
Between “American Idol” and Fox News, no one will ever understand what is really happening. But sadly that is all most people in the West are exposed to. Neither ordinary people nor the better-off understand that the world is living on borrowed time. For a hundred years the world economy has lived on a lie and a corrupt financial system based on few real values but instead on printed money and a fractional-reserve banking system. The synthesis of these two elements has created a perceived prosperity unprecedented in history. Little do people understand that the false wealth and high standard of living have not been produced with honest work or investment but with printed money and credit that have created the illusion of prosperity.
When the Federal Reserve was created in 1913 by and for the benefit of private bankers, world debt was negligible. It grew slowly until Richard Nixon realized in 1971 that the U.S. economy could survive only if money was created out of thin air. From then on the United States started in earnest to take advantage of its status as issuer of the reserve currency of the world by printing worthless pieces of paper that they called money or dollars. But it was not until the real master of Fed-speak and financial gobbledegook came on stage that the world abandoned any notion of sound money and entered the era of financial fantasy. Alan Greenspan had his own language, a language that nobody understood but everybody loved because with brief exceptions he managed to create a false prosperity that everyone believed was real. He was a master of financial repression, setting interest rates at levels that had nothing to do with economic realities but that created a bonanza in credit expansion and stock market euphoria.
The most productive man in history
Before Greenspan became chairman of the Fed, he had been a proponent of sound money, which meant he had a clear understanding of the importance of gold. But as soon as any sane person assumes a political role, any values or principles he had disappear. The role is now to assist the government to buy votes and to pass the baton without serous mishaps. And so Greenspan did. His successor, Ben Bernanke, was the most productive man in history. During his reign U.S. federal debt went from $8 trillion to $17 trillion. It took the United States more than 200 years to go from zero debt to $8 trillion, but Bernanke managed to more than double the U.S. debt in eight years.
The world followed the U.S. lead and between 1990 and 2015 world debt went from $35 trillion to $225 trillion, a six-fold increase. At the same time world GDP increased by less than three times. This is the law of diminishing returns or, in layman’s terms, pushing on a string. The world needed to create more and more money just to stand still. But now we are at a point when even exponential credit creation leads to a negative return.
Where is the good news?
Everywhere we now look, the real news is just getting worse. Yes, there is of course one exception. Stock market investors are still in their delusional state. Whether economic news is good or bad, the stock market continues to rise to dizzying heights. Just as in 1929, 1973, 1987, or 2000, stock market investors are blissfully unaware of what is going to hit them.
But in the real world we are seeing bad news all around. Let us consider some recent examples.
World trade is collapsing
Virtually all indicators for commerce between countries are now showing a substantial contraction. The Baltic Dry Goods Index is at its lowest level in history. The China Container Freight Index is down 50 percent since its 2011 peak. Chinese exports fell for the fourth month in a row in October, down 7 percent. And Long Beach empty containers are at the highest level since 2006. Freight on U.S. railroads has seen the biggest fall since 2009. And U.S. truck loads are down 60 percent since 2014.
All these statistics are indicators of real economic activity. This is very different from manipulated official statistics like U.S. unemployment, which shows a false improvement, overlooking the 94 million people who have no job, and that for the up-to-55-year-olds, 119,000 jobs were lost and the only jobs gained were for the over-55 or fabricated jobs (145,000) based on a theoretical model assuming eternal job expansion.
The world has reached a stage when all the king’s horses and all the king’s men cannot put things back together again. We have reached the end of the road where all the trickery of governments and central banks will be revealed as just a temporary postponement of the final collapse.
As von Mises said:
“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe
of the currency system involved.”
Before this happens governments will crank up the printing presses until they go glowing hot and melt. Many quadrillion dollars are likely to be created before the total catastrophe of the currency system. Physical gold and some silver will be the best way to preserve wealth and purchasing power.
***KWN has now released the powerful audio with one of the top economists in the world, Michael Pento, where he discusses what to expect in gold, silver, of the year, what surprises to expect as well as how investors can protect themselves, and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: Legendary Pierre Lassonde Says Super-Wealthy Now Buying Massive Positions In The Gold Sector CLICK HERE.
***KWN has also now released the extraordinary audio with former U.S. Treasury official, Dr. Paul Craig Roberts, where he discusses the desperation of Western central planners, the global Ponzi scheme, how it will unravel and collapse, the rigging of the major markets, the corrupt media’s role and much more, and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.
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