by Egon von Greyerz
Most people are blissfully ignorant of the fact that 2007-8 was just a
mild rehearsal of what we soon are going to experience. The additional $60
trillion in credit and printed money since then and the lowering of interest
rates to zero have given the world the impression that all is now well again.
Let me be very clear, nothing is well. As a matter of
fact in the 8 years since the start of the Great Financial
Crisis the bubble economy has now properly spread to the world’s second
largest economy – China. China has had exponential growth in debt from
$2 trillion to $28T this century. A major part of this debt has financed
white elephant projects and ghost cities. It would be surprising if the total
Chinese bad debts were below $ 10 trillion before all of this is finished.
The bubble contagion has also totally infected most emerging markets. With
massive growth in debts, a stronger dollar and collapsing commodity prices,
almost every emerging economy is now starring into the abyss. As Michael
Snyder of the Economic Collapse Blog recently pointed out, 23 stock
markets around the world are now crashing. Of the 23, there are 22 emerging
economies and the 23rd is Greece which definitively is not emerging but
sinking into the Mediterranean. But don’t believe that this epidemic will
just affect EMs. No, the contagion is already spreading to the West and this
autumn we will see stock market falls that will shock the world, spreading
massive fear throughout the world economy. I expect this autumn to be the
beginning of the end of the 100 year old failed experiment of manipulation
and repression of the financial system by bankers and central banks.
So the Great Financial Crisis of 2007-9 will now transcend into the Great
Financial Catastrophe. This could very well involve a total reset or more
likely a collapse of the world economy, financial system and world political
system. And it won’t be orderly. It is likely to take a very long time and
will involve bankruptcies of major parts of the financial system as
well as many major nations. It will also lead to social unrest, escalation of
wars, major poverty and famine with the world population going down
significantly.
I realise that this forecast sounds very alarmist and like an impossible
doomsday scenario. I sincerely hope I will be totally wrong. But sadly the
risk that I will be right or at least partly right is major after 100 years of
excesses in the world built on no solid foundation but an ocean of debt and
printed money. Nobel Prize winners in economics, central bankers and ordinary
people will learn the hard way that worthless pieces of paper that they call
money cannot create real lasting wealth.
For the privileged few that have wealth to protect, gold and silver
outside the banking system is a must. At the end of this reset, we will
hopefully see a world based on rewarding real work and investment, with real
ethical and moral values and a sound monetary system. But the road there will
be very long and arduous.
Please see also my latest King world News interview
http://kingworldnews.com/all-hell-is-about-to...levels-of-fear/
Egon von Greyerz
