Greyerz – We Are On The Edge Of A Catastrophic Global Financial Collapse And Panic. Here Is What You Need To Do To Prepare Right Now

Today the man who has become legendary for his predictions on QE and historic moves in currencies and metals warned we are now on the edge of a global financial collapse and panic. He also discussed what you need to do to prepare right now.

Ground Control To Major Tom
(King World News) – Egon von Greyerz:  “Ground Control to Major Tom … Your circuit is dead, there’s something wrong. Can you hear me Tom. Can you hear me Tom….Tom:  “I am floating around in my tin can and there is nothing I can do.” — (David Bowie)

Yes, Ground Control in the form of the major central banks have totally lost control and the world economy is now floating around helplessly without direction. Since the end of 2006, the major CBs (Fed, ECB, BOJ & PBOC) have increased their balance sheets from $5 trillion to $25.5t today. The great majority of the extra $20t created since 2006 has gone to prop up the financial system. 

And even with these $20 trillion the world economy is more rudderless than it has ever been. Clueless CBs are doing what we had expected them to do which is doing the only thing they know – namely printing endless amounts of money that has zero value since it is created out of thin air. But the CBs money creation is just a small part of the problem. On the back of CB’s $25t balance sheets, global debt has exploded from $125t in 2006 to $280 trillion today…

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None of this colossal extra debt has benefitted ordinary people. It has propped up the banks and made the gap between the haves and the have-nots dangerously high. In the US, for example, 10% of the population holds 70% of the wealth. No wonder we are seeing an increasing number of protests and riots. And as the economy deteriorates, the violence is, sadly, going to increase substantially. 

SPACE ODDITY
So what is the destiny of this Space Oddity (name of Bowie’s song above) with not only central banks having lost control of but also governments? We can just take the US as an example since it is the biggest economy in the world and also the most vulnerable. But many countries are in the same situation. 

Here are some of the areas which neither Trump nor Biden will be able to come to grips with: 

• Covid-19 – Man made virus paralysing the world, no effective vaccine for long time, if ever
• Economy – The precipitous fall is more likely to accelerate than recover
• Industry – Will contract rapidly as well as trade
• Asset bubbles – Stocks, bonds, property, will crash, massive wealth destruction
• Dollar – Will implode leading to hyperinflation 
• Deficits – Will accelerate for years to support economy, people & the financial system
• Debts – Will surge to 200% of GDP quickly, much higher when banks collapse 
• Unemployment – 20-30% will be the floor, higher likely
• Social unrest – Only beginning now, much more to come with empty stomachs 
• Civil war – Government can’t cope with protests now, risk of escalation major
• Pensions – Will disappear as asset markets collapse, most people don’t have pension 
• Social security – Will be insufficient with bankrupt government and hyperinflation 
• Political turmoil – No party or leader will be trusted – not even coming Marxists

The problems are endless and all of the mess above has been created by humans, even Covid-19, so we are looking at a world falling apart due to human failure and mismanagement – not that this is new in history. 

SOUND MONEY
Anyone who understands sound money cannot seriously believe that the explosion of debt since 1971 (when Nixon closed the gold window) will end well. One of the most important attributes of sound money is that it must be scarce. The explosion of money supply and debt since 1971 proves what happens when money is infinite. The Keynesians and MMT (Modern Money Theory) followers believe that money can be pulled out of a hat like a rabbit.  And for 50 years they have got what they asked for without understanding the consequences. Because for every willful action, there are always serious consequences.

For 50 years, unlimited paper or fiat money has been created without any service or goods produced in exchange. Since 1971, total US debt has gone from $1.7t to $78t. In the same period, prices for houses, goods and services have exploded but most consumers are not aware of this since it is a slow process. As the chart below shows, debt has surged 46x in 1971-2020 whilst GDP is up only 18x. So the US economy is running on empty and more debt is required to raise GDP. 

As the money created to expand the economy is fake, the increase in GDP is not real but just an inflated figure due to chronic currency debasement.….more here

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