Today a 42-year market veteran spoke with King World News about the remarkable event that is going to trigger collapse and send shockwaves in global markets. Below is what Egon von Greyerz, who is founder of Matterhorn Asset Management out of Switzerland, had to say in this extraordinary interview.
Greyerz: “Eric, I’m watching Japan because I think it’s the best example of the coming hyperinflation we will see in many countries. Japan has been in recession since the 1990s, with falling real incomes, a declining population, rising deficits and rising debts. Their debt is now a massive 1.1 quadrillion yen, which is about $10 trillion. This represents a staggering 200 percent of Japanese GDP….
Continue reading the Egon von Greyerz interview below…
“Attempts to stimulate the economy have failed, so the Japanese have just come out with additional QE at the rate of an astonishing 8 trillion yen per year, which is roughly $800 billion. Remember that the Japanese economy is only about $5 trillion per year. So this would be equivalent to the U.S. launching a new QE program totaling about $2.5 trillion per year.
So, Eric, nothing adds up in Japan. Tax revenue is 43 trillion yen, which is $400 billion, and debt service plus social security payments are now 120 percent of tax revenues. What is happening in Japan is they are having to borrow 50 percent of the budget just to make ends meet.
Tax revenues have been static for over a decade and expenditures are escalating fast. Even if interest rates only rose to 3.5 percent in Japan, which is very likely for a country on its way to hyperinflation, then all tax revenues would go to pay just the interest. But interest rates will eventually go above 10 percent, 20 percent, or even more. This will mean the end of the Japanese economy. The Japanese will be bankrupt and have to default.
But on the way to their default the Japanese will print tens of quadrillions of yen and eventually hundreds of quadrillions of yen. Remember that hyperinflation comes from a collapse of the currency and that is already starting in Japan. The yen is already down about 35 percent since 2012. And just in the last week the yen has fallen 10 yen against the U.S. dollar.
So Abe’s road to ruin for Japan is starting to work. Eric, as you know I have said for a long time that the Japanese economy will not survive, and debts, deficits, and a collapsing currency will lead to hyperinflationary depression. Of course for the aging population in Japan it will be a human disaster.
But everyone should be watching Japan as an example of what is likely to happen in Europe and in the United States. We are not that far away from additional money printing schemes in the West. Europe is already starting to print and it might take a little bit longer in the U.S., but eventually it will happen in the United States as well.
But it is also important to remember that once Japan starts to default, it will have major repercussions for the rest of the world. Meaning, the Japanese default will spill over quite dramatically into Europe and the United States and create enormous chaos for them as well.
In Switzerland we have just over 3 weeks until the Swiss Gold Initiative vote. The Swiss National Bank is getting more desperate by the day. They are putting out non-stop propaganda about how important it is for them to be able to manipulate the markets and to print more money.
Turning to the metals, Eric, we see continued strong demand from the East for physical gold. There are large premiums for gold and shortages in Japan, and shortages of silver coins around the world. In spite of this, gold has dumped $90 in just five trading days. Silver has also fallen $2. The GOFO rate is now gone negative to the extent of 0.185 percent. This is the most negative rate since 2001. This is a significant sign of real shortages of physical gold.
In the last few days we have seen the gold market hit five times. Last week we saw a $14 dollar drop in one tick at 8 o’clock in the morning European time. We know, and Andrew Maguire has also said this, that no commercial seller would ever sell gold in that manner. So it was clear intervention.
It is obvious that the BIS and central banks want the price lower. This may be directly linked to the Swiss Gold Initiative. We know that it’s in the interest of the Swiss National Bank and the other central banks for the initiative to fail. The Chairman of the SNB makes it clear every day that he doesn’t want to the gold initiative to succeed. Since PayPal without warning blocked donations to the Swiss Gold Initiative, an alternative method of payment has been set up. The PayPal donations that were blocked have been refunded. Donors can now pay by bank transfer to a Swiss Post Finance account. Alternatively, Bitcoin donations are also accepted. Please click on the link below for details.”
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IMPORTANT – KWN will be releasing interviews all day today.
The audio interviews with Andrew Maguire, Eric Sprott, Rick Santelli, Bill Fleckenstein, Rick Rule, Michael Pento, Dr. Paul Craig Roberts, Andrew Huszar, MEP Nigel Farage, John Mauldin, Egon von Greyerz, Michael Belkin, and Marc Faber are available now. Other recent KWN interviews include Jim Grant and Felix Zulauf — to listen CLICK HERE.