The man who has become legendary for his predictions on QE and historic moves in currencies and metals told King World News that people need to prepare themselves because this global crisis is going to get much worse than what we’re seeing today.
Each week Egon von Greyerz articles are published first on KWN.
October 17 (King World News) – Egon von Greyerz: At the end of major economic cycles, shortages develop in all areas of the economy. And this is what the world is experiencing today on a global basis. There is a general lack of labour, whether it is restaurant staff, truck drivers or medical personnel.
There are also shortages of raw materials, lithium (electric car batteries), semi-conductors, food, a great deal of consumer products, cardboard boxes, energy and etc, etc. The list is endless.
SHORTAGES EVERYWHERE
Everything is of course blamed on Covid but most of these shortages are due to structural problems. We have today a global system which cannot cope with the tiniest imbalances in the supply chain.
Just one small component missing could change history as the nursery rhyme below explains:
For want of a nail, the shoe was lost.
For want of a shoe, the horse was lost.
For want of a horse, the rider was lost.
For want of a rider, the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a horseshoe nail.
The world is not just vulnerable to shortages of goods and services.
Bombshells could appear from anywhere. Let’s just list a few:
- Dollar collapse (and other currencies)
- Stock market crash
- Debt defaults, bond collapse (e.g. Evergrande)
- Liquidity crisis (if money printing stops or has no effect)
- Inflation leading to hyperinflation
There is a high likelihood that not just one of the above will happen in the next few years but all of them.
Because this is how empires and economic bubbles end…
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by CLICKING HERE OR ON THE IMAGE BELOW.
The Roman Empire needed 500,000 troops to control its vast empire.
Emperor Septimius Severus (200 AD) advised his sons to “Enrich the troops but no one else”.
As costs and taxes soared, Rome resorted to the same trick that every single government resorts to when they overextend and money runs out – Currency Debasement.
So between 180 and 280 AD the Roman coin, the Denarius, went form 100% silver content to ZERO.
And in those days, the soldiers were shrewd and demanded payment in gold coins and not debased silver coins.
Although the US is not officially in military conflict with any country, there are still 173,000 US troops in 159 countries with 750 bases in 80 countries. The US spends 11% of the budget or $730 billion on military costs.
Since the start of the US involvement in Afghanistan, Pentagon has spent a total of $14 trillion, 35-50% of which going to defence contractors.
Throughout history, wars have mostly started out as profitable ventures, “stealing” natural resources (like gold or grains) and other goods. But the Afghan war can hardly be regarded as economically successful and the US would have needed a more profitable venture than the Afghan war to balance its budget.
US HOPELESSLY BANKRUPT – NEEDS TO BORROW 46% OF BUDGET
The US annual Federal Spending is $7 trillion and the revenues are $3.8 trillion.
So the US spends $3.2 trillion more every year than it earns in tax revenues. Thus, in order to “balance” the budget, the US must borrow or print 46% of its total spending.
Not even the Roman Empire, with its military might, would have gotten away with borrowing or printing half of its expenditure.
TOTAL MISERY AS MR MICAWBER SAID:
As Mr Micawber in Charles Dickens’ David Copperfield said:
‘Annual income 20 pounds, annual expenditure 19 [pounds] 19 [shillings] and six [pence], result happiness. Annual income 20 pounds, annual expenditure 20 pounds ought and six, result misery.’
And when, like in the case of the US, you spend almost twice as much as you earn that is TOTAL MISERY.
Neither an individual, nor a country can spend 100% more than their earnings without serious consequences. I have written many articles about these consequences and how to survive the Everything Bubble
INFLATION IS HERE
The most obvious course of events is continuous shortages combined with prices of goods and services going up rapidly. I remember it well in the 1970s how for example oil prices trebled between 1974 and 1975 from $3 to $10 and by 1980 had gone up 10x to $40.
The same is happening now all over the world.
That puts Central banks between a Rock and a Hard place as inflation is coming from all parts of the economy and is NOT TRANSITORY!
Real inflation today is 13.5% as the chart below shows, based on how inflation was calculated in the 1980s
FORGET THE LIES & PROPAGANDA
Real Inflation Is A Staggering 13.5%!
The central bankers can either squash the chronic inflation by tapering and at the same time create a liquidity squeeze that will totally kill an economy in constant need of stimulus. Or they can continue to print unlimited amounts of worthless fiat money whether it is paper or digital dollars.
Their choice is obvious since they would never dare to starve an economy craving for poisonous potions of stimulus.
History tells us that central banks will do the only thing they know in these circumstances which is to push the inflation accelerator pedal to the bottom.
Based on the Austrian economics definition, we have had chronic inflation for years as increases in money supply is what creates inflation. Still, it has not been the normal consumer inflation but asset inflation which has benefitted a small elite greatly and starved the masses of an increased standard of living.
As the elite amassed incredible wealth, the masses just had more debts.
So what we are now seeing is the beginning of a chronic consumer inflation that most of the world hasn’t experienced for decades.
THE INEVITABLE CONSEQUENCES OF CURRENCY DESTRUCTION
This is the inevitable consequence of the destruction of money through unlimited printing until it reaches its intrinsic value of Zero. Since the dollar has already lost 98% of its purchasing power since 1971, there is a mere 2% fall before it reaches zero. But we must remember that the fall will be 100% from the current level.
So back to the nursery rhyme.
As the value of money is likely to be destroyed in the next 5-10 years, wealth preservation is critical. For individuals who want to protect themselves from total loss as fiat money dies, one or several gold coins are needed.
For want of a nail [gold coin], the shoe was lost.
For want of a shoe, the horse was lost.
For want of a horse, the rider was lost.
For want of a rider, the battle was lost.
For want of a battle, the kingdom was lost.
And all for the want of a horseshoe nail [gold coin].
Gold is not the only solution to the coming problems in the world economy. Still, it will protect you from the coming economic crisis like it has done every time in history
And remember that if you don’t hold gold you don’t understand:
- What happens when bubbles burst
- You are living in a fake world with fake money and fake valuations
- Your fake money will be revalued to its intrinsic value of ZERO
- Assets that were bought with this fake money will lose over 90% of its value
- Stocks will go down by over 90% in real terms
- Bonds will go down by 90% to 100% as borrowers default
- You lack regard for your stakeholders whether they are family or investors
- You don’t understand history
- You don’t understand risk
The 1980 gold price high of $850 would today be $21,900, adjusted for real inflation.
Gold’s 1980 High Adjusted For Inflation = $21,900
So gold at $1,800 today is grossly undervalued and unloved and likely to soon reflect the true value of the dollar…This will link you directly to more fantastic articles from Egon von Greyerz CLICK HERE.
***To listen to this powerful audio interview with Alasdair Macleod CLICK HERE OR ON THE IMAGE BELOW.
***ALSO JUST RELEASED: CAUTION: “It’s Complete Chaos, This Is The Earliest Sign Of A Crack-Up Boom” CLICK HERE.
***ALSO JUST RELEASED: WHAT A WEEK: Big Breakout For Metals CLICK HERE.
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