Today Egon von Greyerz stunned King World News when he stated that the
Fed may increase QE a shocking ten times in coming years. Greyerz,
founder of Matterhorn Asset Management, also provided a tremendous
chart. Here is what Greyerz had to say in this remarkable and exclusive
interview: “Eric, as we discussed last week I
was expecting gold to make a low this week. So far we had a closing low
on Wednesday at around $1,564. We will see if that holds. As always,
in these cases where we have some kind of cycle low there is always
price action that cements that low. ”
It’s not possible to stop QE with a federal debt of $220 trillion, including unfunded liabilities....
We also just had the second
biggest bankruptcy ever announced in Spain. So with unemployment at
27% overall, and roughly 60% for the youth, Spain is in an absolute mess
and is not going to improve. The government’s borrowing rate should be
50% or more, and yet they are still able to borrow at 5%. In fact,
they couldn’t borrow any money without the ECB’s help.
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Egon von Greyerz continues:
“First of all, every day
around the open or just before the open we have seen on the NYMEX the
price of gold has been pushed down, which is clear paper manipulation of
the price. Then, of course the Fed minutes came out with some of the
members saying that the Fed should stop QE. Well, in my view that is
absolute nonsense.
“The cash deficit every year is currently
running at $1.5 trillion, but if you include unfunded liabilities, the
accounting deficit totals $6 trillion each year. How can they ever stop
QE? You look at the banking system, they can only survive by valuing
their toxic assets at phony values.
Even student loans now
total above $1 trillion, and the default rate currently amounts to 23%.
Some colleges have a default rate as high as 60%. As youth
unemployment increases, default rates will average 50% in my view. If
you look at Social Security, there are over 125 million on benefits,
including food stamps.
I wouldn’t be surprised to
see at least 150 million people in need of government assistance or
standing in front of soup kitchens in the next few years. All the while
the Fed will be signaling the end of QE. So there is nothing in the US
that’s pointing to any improvement or anything that would allow for QE
programs to cease.
One thing that’s worried me
and it continues to worry me is the divide between the rich and the
poor. It’s increasing continuously in the US and in the rest of the
world. The poor in the US and Europe are having trouble making ends
meet, and this is a very, very dangerous trend for the world.
Interestingly enough I was
at a family office conference recently and this confirmed that the rich
are still very rich, and they are buying all of the conventional assets,
stocks, property, private equity, wines, art, etc. But very few of
them had any significant exposure to gold. There will be a massive
wealth destruction because many of the assets which have been financed
by credit bubbles around the world, they will plummet massively in real
terms.
If we move to the eurozone
things are just getting worse. The European Commission admitted that
what they expected to be growth in 2013 is not going to be happening.
But optimists as they always are, they now say it will happen in 2014.
Well, Eric, there is absolutely no chance there will be growth in Europe
in 2014.
The problems in Europe are
still massive. When you look at Spain as an example, the financial
system is crumbling. Bankia, which is the bank that was created by all
of the mergers in 2010, and subsequently saved by the government, is
about to announce its biggest loss ever. They are not even valuing
their assets at real market value. There are 3 million empty houses in
Spain as an example.
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