“We must be prepared for the most massive money printing bonanza in history in a final but failed attempt to save the World. The combination of Hyperinflation and Defaults are likely to lead to lower bond prices and higher rates for many years. The risk of a total implosion of the system is at that point extremely high and quite likely,” writes Egon von Greyerz, international financial expert, founder of “Matterhorn Asset Management”, Zurich, Switzerland.
He writes in a ‘long read’ on the prospects for the development of the current financial crisis: “I personally experienced high inflation and high rates in the UK for 10 years in the 1970s. There was a Middle East Oil Crisis with oil surging, there was a coal miners strike and there was a 3 day working week as companies could only operate with electricity for 3 days. Inflation peaked at 24% in 1975 and was above 10% for 8 years. My first mortgage reached 21%!
The circumstances now are considerably more dire than in the 1970s. And the consequences will be exponentially worse. The world is definitely facing the crisis of a century and possibly of a millennium.
Everything is more serious today – debts, deficits, size of asset bubbles in stocks, bonds and property. And very importantly, this crisis is global.
So rates will be high for years and so will inflation.
We know that governments’ and central banks’ coffers are empty. They have been for a few decades already.
We also know that the even before the crisis has started, the real economies in the US and Europe are already on the ropes.
EU’s problems are of a magnitude that are beyond salvation. Italy and Greece are already basket cases and Germany is on the verge of becoming one.
And in the US, the real economy is crashing. For example, House closings are the 2nd lowest ever and worst since 2007 (subprime crisis) and house sales are down 50% with evictions up 30%. More homeless, more misery.
Auto, home and student loan data are all horrible. That means auto and housing lenders are in trouble and so are banks.
And as energy prices are surging, nobody can afford to pay their bills.
In Europe energy prices are up 10x in many areas – a tragedy in the making. Add to that food and car fuel inflation of 20% and more. Nobody can afford it.
All this will of course lead to a major economic upheaval for the world.
So back to money printing: But we must be prepared for the most massive money printing bonanza in history in a final but failed attempt to save the world.
All sectors of the economy, individuals, companies, banks, local governments etc will be in need of financial support of a magnitude never before seen in history.
But remember that what governments and central banks are doing will add ZERO intrinsic value to the economy. Instead they are creating more debt to get rid of a debt problem.
Yes, we are looking at a human disaster of proportions never seen before in history and that on a global scale, emphasized Egon von Greyerz.
…One should take to attention his forecast since his previous estimates often came true.