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The Smell of Collapse is in the Air – Part 3



-- Posted Wednesday, 2 October 2013 | | Disqus

By GE Christenson

 

We live in a world of exploding debt, unsustainable deficit spending, Quantitative Easing, corrupt politicians, and “forever” wars that benefit the political and financial elite.  We will need help to survive the collapse of failing economic and political systems.

 

(This is a continuation from parts one and two.)

 

Collapse – From Our Debt Addiction

 

Bill Bonner: (link)

 

“The feds decided to fight fire with fire.  To solve the debt problem, they added debt!  The genius of this plan was, we admit, not immediately obvious.”

 

“The feds have always had one overriding goal:  to transfer money and power to themselves.  They create no wealth.  The can only get it by taking from others.  The crisis – which was nothing more than a natural market correction in an unnaturally extreme debt cycle, caused largely by the feds – gave them cover for larceny on an ever grander scale.”

 

Egon Von Guerytz: (link)

 

“We have had a century of false prosperity based on printed money and credit… These four extremely shaky legs, Central bank printing, Bank leverage, Government borrowing and Derivatives manufacturing have created a world of delusional wealth and illusory prosperity.  Also, there is a total absence of moral and ethical values.  We are in the final stages of an era of extreme decadence, an era that sadly cannot and will not have a happy ending.”

 

Dan Norcini:  (link)

 

“In a debt based system, more and more, larger and larger, amounts of debt have to be taken on for the economy to grow.  It is difficult to do that if consumers are afraid to spend with the same reckless abandon as they did during the boom years.”

 

Karl Denninger:  (link)

 

“What Bernanke did yesterday [the no-taper caper] was guarantee a crash.”

 

Egon Von Guerytz:  (link)

 

“Why will the dollar go down?  For the simple reason that the US has created a mountain of debt of enormous proportions.  This is a debt mountain which can never be repaid with real money.  This is why the US will have to print unlimited amounts of dollars over the next few years.  But this will only add to the problems the US faces.

 

The collapsing currency will drive prices of goods and services exponentially higher.  But the falling dollar will also start a vicious downward spiral with other countries selling the dollar assets, including their Treasury bonds, and that will lead to even more money printing.  This will cause the dollar to fall even faster and interest rates will surge more quickly during this period as well.”

 

 

Collapse – Before or After the Next Big War?

 

Ernest Hemmingway:

 

The first panacea for a mismanaged nation is inflation of the currency; the second is war. Both bring a temporary prosperity; both bring a permanent ruin. But both are the refuge of political and economic opportunists.”

 

Bill Holter:  (link)

 

A war is necessary.  It is necessary so that fingers can be pointed to it as the reason for all things bad… Not many pay attention anyway but a war, more than anything else will distract attention to the real deal.  The real deal being that the global Ponzi scheme is collapsing.”

 

Strauss & Howe – “The Fourth Turning:” (link) 

 

“History offers even more sobering warnings:  Armed confrontation usually occurs around the climax of Crisis.  If there is confrontation, it is likely to lead to war.  This could be any kind of war – class war, sectional war, war against global anarchists or terrorists, or superpower war.  If there is war, it is likely to culminate in total war, fought until the losing side has been rendered nil – its will broken, territory taken and leaders captured.”

 

 

Collapse – Seek Protection & Safety With Gold

 

Dr. Paul Craig Roberts:  (link)

 

“So what the Fed is doing is simply keeping the system going as long as it can.  I don’t see how they can avoid a crash.  It they stop QE it’s going to crash.  If they don’t stop it, it’s going to crash later.  So the Fed is manipulating everything to keep the system intact.  And to repeat myself, they can do that until there is a run on the dollar, and when there is a run on the dollar they lose control.  At that point (the price of) gold and silver will explode.”

 

Peter Cooper:  (link)

 

In order to reset the monetary system this time Mr. Rickards argues that the gold reserves of the global central banks will be absolutely essential with 20-40 per cent gold backing sufficient.

That will mean a revaluing of bullion to around $7,000 an ounce or otherwise there will not be enough of it to do the job. Central banks will be in a position where they have to do this rather than constantly suppress the gold price to create an illusion of low inflation, he contends.”

 

Robin Griffiths – Historic Fed Decision’s Impact on Gold and Major Markets (link)

 

“The (gold) charts indicate that a capitulation sell-off has taken place, completing the bear part of a cycle still in secular uptrend.  Central banks have been trying to disrupt the bull move but they have simply ended up with nothing in their vaults.  They have lent or sold so much of the precious metal that it would take seven years of production to rebuild their reserves to the levels they were at two years ago.”

 

Western Central Banks have supported collapsing western currencies and economies by selling off the one real asset – gold - that has no counter-party risk.  This seems less like a sensible decision and more like an act of desperation.   The result has been a massive transfer of gold from western commercial and central bank vaults to the east, where China, Russia and others have imported huge quantities of gold from London, Switzerland, and New York. 

 

DISCUSSION:

 

1.    The U.S. economy is run largely for the benefit of the political and financial elite.  (An excellent explanation is given here.)  Ever-increasing debt is necessary for the transfer of wealth to the political and financial elite.

2.    It seems that BORROWING MORE money to extend current wars and to fight additional wars in the Middle East is a major component of the U.S. economy.  What price will we pay in terms of lives, jobs, commodity price inflation, and the standard of living for the middle and lower classes?  It is clear that expensive and pointless wars will accelerate the timing for a financial collapse.

3.    The United States, Europe, and Japan have chosen to print money and create more debt to “solve” their excessive debt problems.  Few expect this will end well and history suggests some form of collapse is highly likely.

4.    The United States, Europe, and Japan have created a crushing mountain of debt that is ever-increasing and can only be rolled over (extend and pretend), but not repaid.  Which currency and economy will collapse first?  How long will the United States dollar maintain its “reserve currency status” and how dire will the consequences be when that “exorbitant privilege” (French Minister of Finance) is lost?

5.    When the dollar weakens or collapses against other better managed currencies, how drastically will gold and silver appreciate?  There is no bubble in gold yet, but remember that “there is no fever like gold fever,” so another bubble in gold seems inevitable.  Gold fever will visit those countries that have abused their monetary systems, mismanaged their currencies, and who confuse actual wealth with unbacked paper money, which is merely a depreciating currency based on debt IOUs.

6.    What about the $1,000,000,000,000,000 (a $ Quadrillion or so) in global derivatives?  Could a spike in interest rates cause those “weapons of mass financial destruction” (Warren Buffett) to collapse the international banking system and a few Western economies?   For perspective, remember the economic crash of 2008, the 2006-07 housing crash, the tech stocks crash of 2000, and many other financial crashes that enriched a few at the expense of the many.  It can happen again!

7.    Are you prepared?  I’ll say it again – protect yourself with gold and silver stored outside the banking system!

 

Stay safe!  It is wise to admit that strange and previously unthinkable events are now more likely to occur in the U.S. and Europe – such as stolen MFGlobal customer accounts, Cyprus “bail-in,” and partially nationalized Polish retirement funds. 

 

Additional concerns that may contribute to a financial collapse include QE to infinity, unsustainable deficit spending, middle-east wars, a government shut-down, Obamacare, an unknown risk from about $1,000 Trillion in derivatives, and loss of faith and trust in governments and central banks.

 

A financial collapse may not occur in the next few months, but the risks and instabilities seem to increase every quarter.  Gold and silver, stored outside the banking system, seem more necessary after each new political crisis, government scandal, QE creation, and financial bail-out.

 

GE Christenson

The Deviant Investor


-- Posted Wednesday, 2 October 2013 | Digg This Article | Source: GoldSeek.com

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