Friday, September 30, 2022

"Global Financial Storm Of Epic Proportions" (Excerpt)

"Global Financial Storm Of Epic Proportions"
by Egon von Greyerz

Excerpt: "As the dark years are approaching, the world is now approaching survival mode. Admittedly, if you go to a high class restaurant in New York, London or Zurich, there are no signs of misery but instead of incredible affluence. What is happening to middle America or England has not yet reached Wall Street or the City of London where exquisite food is plenty and excellent wines are flowing. This is of course no different to the end of eras with major excesses and decadence. It was the same at the peak of the Roman Empire 2000 years ago or in 1929 just before the Dow crashed 90%.

Main Street is already in survival mode with cost of living increases of a magnitude that ordinary people can’t afford. Energy, fuel, food, mortgage rates, rents and most things have gone up by 10-20% or more in the last year. Everything has happened so quickly that people are in shock. But it is a fact that real MISERY has now hit ordinary people. As Charles Dickens wrote in David Copperfield:
"Annual income twenty pounds,
annual expenditure nineteen six,
result happiness. Annual income
twenty pounds, annual
expenditure twenty pound
ought and six, result misery."

For Main Street it is no longer a question of making ends meet but of economic survival.

The Fed and other so called “independent” central banks are doing all they can to exacerbate the crisis. The Fed’s official two tasks are stable inflation and full employment. Stable inflation the Fed has in latter years defined as 2%. How did they arrive at that? They probably don’t know themselves since there is nothing good about 2%. Because an annual inflation rate of 2% means that prices double every 36 years which is highly undesirable. Anyway, even with pumping up M1 Money supply by $19 trillion between 2006 and December 2021 and keeping interest rates at 0% they still don’t have a clue why inflation is going up. Many of us were laughing at Powell and Lagarde when they called the increase in inflation transitory! Whilst clueless central bank heads are transitory, current inflation certainly isn’t.
Hyperinflationary Rocket: It is absolutely incredible that the heads of the Fed and ECB, the world’s biggest central banks, didn’t have the basic knowledge to fathom that unlimited free money for over 10 years is like a matchstick to light the biggest inflationary rocket in history. Yes, it seemed to take a long time before the inflation rocket was set alight. The explanation is self-evident. There were different compartments in the rocket. Before the consumer prices were set alight, the inflation flame reached all the financial assets such as stocks, bonds and property.

Between 2009 and January 2021, the Nasdaq for example went up 16X, the S&P 7X and house prices went up 2X. But conveniently for the Fed, this Hyperinflation in asset prices doesn’t count as inflation. So the Fed could continue to fulfil its main purpose which is to make the rich richer. As the Fed was conceived by private bankers in Jekyll Island in 1910 for the main purpose of enriching the bankers and their friends, it is clear that this Elite group must be looked after first."
Global Debt $2.5 Quadrillion: With global debt, contingent liabilities and derivatives of around $2.5 quadrillion, there are a lot of assets/liabilities which need to implode before the world can show healthy and debt free growth again."
It Ain't Over Until The Fat Lady Sings: This is the perfect storm. But remember it has only just started and as I have stated in numerous articles and interviews, this won’t be over until the fat lady sings. When will she sing? Well, if this is the end of a very major cycle as I believe it could be, it might be a decade or longer before she sings. We must of course remember that nothing goes straight down and there will be violent corrections that initially will make investors euphoric. But most reactions will be short lived so buying the dips could be very dangerous.
We should first see hyperinflation taking hold properly and stock and property markets go down by at least 75% and possibly 95%. Bonds won’t stop going down until rates are 20%+. Many bonds will go to ZERO as borrowers default, including many sovereign states."
Full, most highly recommended, article is here:

No comments:

Post a Comment