April 21st, 2014
With China’s debt now bursting at the seams and the economic outlook in the United States signaling a major recessionthe governments and central banks of the world are very rapidly running out of options.
So much so that well respected Swiss asset manager Egon von Greyerz of Matterhorn Asset Management warns that they will have no choice but to ramp up monetary printing at an accelerated pace in 2014. Failure to do so will likely seize up the global flow of credit and lead to a massive financial collapse as liquidity gets sucked out of the system.
The problem, of course, is that policy makers have backed themselves into a corner and their only remaining option will likely lead to an even more disastrous outcome; one that will have a direct impact on your long-term financial well being and quality of life.
In the following interview with King World News von Greyerz highlights the irreversible problems faced by the economic system, risks to global stability, the likely course of action to be taken by governments, and the end result when they fail.
The world is exposed to danger to an extent that it hasn’t been for a long time. So the possibility that something unpleasant or unwelcome will happen is substantial.
Paul Craig Roberts gives very interesting interviews on KWN. According to Roberts, the risk of a world war is high. He likens the current situation to the start of World War I. Of course we hope that there will not be another world war, but the risks are there.
Another major risk is, of course, the economic situation. Never have as many major countries been bankrupt. The list of these countries is getting longer all the time.
Coming back to all the risks we are facing, personal savings will either be bailed in or destroyed by hyperinflation. The same thing will happen to pensions and other investments.
To have a job will be a privilege in a world of mass unemployment.
We are already seeing this in many countries in Europe. And of course the real unemployment rate in the U.S. is 23 percent.
All this is likely to lead to famine and civil unrest in many countries.
So the risks are massive and the real solutions are non-existent.
Of course I hope I am wrong in these forecasts, but people must be aware of these risks.
In short, one way or the other we are toast.
If they fail to print the scam is exposed for the Ponzi scheme that it is almost instantaneously as stock markets and commerce around the world crashes due to lack of stimulus.
If they print, the can gets kicked a bit further down the road for a while longer, but eventually buckles under the weight of government debt, rising interest rates and leverage.
The only remaining choice at that point will be asset forfeiture on a mass scale. Think Cyprus deposit confiscations on a scale of hundreds of millions of people. Either that or the currency printing hyperinflates away the debt.
In both cases the people will take to the streets. And, they’ll be holding Molotov cocktails and assault rifles, not protest signs.
It’s something the government has been preparing for in recent years and you should be too.
According to Egon von Greyerz the monetary problems will cause such a disconnect in the system that asset prices are likely to sky rocket relative to their currencies:
Gold must not be seen as a trading investment but as a long-term wealth-preservation asset. People should just buy physical gold and hold it outside the banking system. The gold price will be at multiples of the current price in a few years’ time. That price could be 10 times today’s $1,300 level ($13,000), 20 times today’s level ($26,000), or even thousands of times higher in a likely hyperinflationary scenario.”
As an asset manager von Greyerz focuses on precious metals. But the fact is that any asset of necessity will see its value skyrocket.
The time to prepare for a general destabilization of our economic and financial systems is now. That means acquiring assets that will, at the very least, maintain their value when all else fails.
- Dry commodities like rice, beans, grains and other foods that can last a lifetime are assets that you will use and can hold in your physical possession without “counter party risk” should paper investments collapse.
- Productive land where you can raise your own livestock and grow your own food may drop in price during a real estate crash, but its value to you personally could be extremely important.
- The ability to produce energy by disconnecting from the grid as costs for propane and electricity necessarily rise is another excellent “investment” to consider.
- Learning and perfecting new trade skills (or developing “products”) that can be used as barter when traditional methods of commerce collapse will also be essential. Look no further than the underground economy of Greece following their collapse for an idea of how important this “asset” will become.
- Firearms and ammunition. If civil unrest takes hold and law enforcement is overwhelmed, it will be used by criminal elements as an opportunity. As time progresses, crime will undoubtedly rise. Be prepared to protect what’s yours. Moreover, when was the last time you saw a downward price trend in self defense related products?
- And, of course, precious metals with which to trade when dollars are no longer trusted should be part of any diversified prepper portfolio. We recommend first starting out with various physical silver units and working your way up to gold if financially feasible.
Yes, the global financial, economic and political systems are under extreme stress and there is a distinct possibility that a collapse is inevitable at this point.
But that doesn’t mean we have to be victims.