Today Michael Pento writes for King World News to explain exactly why “... the unquestionable winner of all these currency wars will be precious metals and energy related investments.” Below is Pento’s tremendous piece:
“It is sad to say there are just two reasons why the U.S. is not yet a banana republic. The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels. If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse.
However, the perpetual erosion of fiat currencies will eventually cause investors to eschew the sovereign debt issued by the over-indebted nations of America, Japan and Europe—even if the dollar’s decline does not manifest itself against the euro and the yen....
“The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn.
The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank. T here is no doubt that the U.S. has suffered from structurally high unemployment, stubbornly high aggregate price levels, and low growth for the past five years, which is the direct result of our debt-saturated economy.
With all of the hype over Sequestration, investors might believe the U.S. was about to balance its budget overnight. However, the sad truth is that the budget for fiscal 2013 will still be over $3.8 trillion—which is greater than the year prior. Therefore, the 2% cut in proposed budget expenditures can only be considered a real cut in Washington, D.C.
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“It is sad to say there are just two reasons why the U.S. is not yet a banana republic. The first reason is that the US dollar has not yet lost its world’s reserve currency status, which is helping to keep interest rates at record low levels. If the dollar, yen and euro were not involved in a currency war, the dollar’s intrinsic decline would become much more evident, causing domestic inflation to soar, and our bond market to immediately collapse.
However, the perpetual erosion of fiat currencies will eventually cause investors to eschew the sovereign debt issued by the over-indebted nations of America, Japan and Europe—even if the dollar’s decline does not manifest itself against the euro and the yen....
“The other reason why we have not been declared a banana republic is because America is not located between the Tropics of Cancer and Capricorn.
The Definition of a banana republic is a nation that suffers from chronic inflation, high unemployment and low growth; primarily due to massive government debt and deficits that are purchased by its central bank. T here is no doubt that the U.S. has suffered from structurally high unemployment, stubbornly high aggregate price levels, and low growth for the past five years, which is the direct result of our debt-saturated economy.
With all of the hype over Sequestration, investors might believe the U.S. was about to balance its budget overnight. However, the sad truth is that the budget for fiscal 2013 will still be over $3.8 trillion—which is greater than the year prior. Therefore, the 2% cut in proposed budget expenditures can only be considered a real cut in Washington, D.C.
Read More