With the Dow and Nasdaq hitting new highs, today John Embry told King World News that we now live in a world that is heading toward a crisis of epic proportions on the road to hyperinflation.
A World On The Road To Hyperinflation
John Embry: “Eric, I was traveling in Europe for a couple of weeks, and when I returned, nothing had changed. Stock markets continue to be propped up globally, with the Japanese markets posting a record streak of up days…
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John Embry continues: “Bond markets, where the greatest risk resides, continue to hang in, despite ongoing rhetoric from central banks about reducing their balance sheets and raising interest rates. Of all the annoying things happening right now, this is the most absurd. But it shows the central banks’ increasing desperation to keep confidence in the current monetary system intact. If central banks actually admitted the truth and stated that quantitative easing has to continue in order to prevent a global financial and economic collapse, confidence in the pure fiat system would immediately collapse. This would put the world on rout to hyperinflation.
Let me be frank, the current situation, which has been building since the early 1980s when this remarkable era of financial asset inflation got underway, is now in a terminal state. There is infinitely too much leverage in the global system. In fact, it has reached an extreme which has never been remotely approached in history. With all the financial innovation in the last couple of decades, the system has held together better than many believed possible. But in reality all this has done is to ensure a historic collapse that will exceed anything seen in the past.
A Crisis Of Epic Proportions
Traditional assets like bonds, stocks and real estate, which account for the vast majority of the world’s pension assets, are historically very overvalued. But despite this, many pension funds are currently seriously underwater. As the population of the industrialized world is rapidly aging, there will be more and more people collecting and fewer and fewer people contributing. This is another reason why I believe the developed world’s central banks have no choice but to continue printing money and attempting to prop up markets because without that there will be a pension crisis of epic proportions.
Now while all this has been occurring, the gold, silver and platinum markets have been relentlessly suppressed. Gold and silver, which have represented real money for thousands of years, have never been more inexpensive in relation to the amount of money and credit in the world. However, the timing remains imprecise as the central bankers are working overtime with their various allies to suppress gold and silver prices in the paper markets. They know better than anyone, being the architects of this impending financial disaster, that if gold and silver prices traded freely at prices that truly reflected reality, interest rates would rocket higher and trigger the inevitable debt deflation.
In my opinion, one still cannot own enough gold and silver and the respective equities at current prices. But be careful what you wish for because the social dislocation that will accompany materially higher precious metals prices is going to be something to behold.”
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