The European Central Bank (ECB) recently announced a trillion- dollar package to fight inflation. Whatever these central banks do will not have any effect on the world, short-term.
The ECB program involves printing 60-billion euros per month, which is nearly three-quarters of a trillion euros per annum, and they will start in March 2015 and end in September 2016. Their goal is an inflation target of two percent. The program involves the buying of euro-denominated assets. A bankrupt Europe does not need another 1.1 trillion of debt. By doing this, the ECB will have even more worthless assets on their balance sheets, debt that will never be repaid.
So why does every central bank in the world want to fight inflation?
Because inflation is not good for the consumer – consumers need low prices. Although deflation is good for consumers, it’s not good for governments and it’s not good for central banks because with deflation, none of the hundreds of trillion in debts will ever be repaid and the financial system will collapse.
The central banks believe that printing money will solve the problem; you don’t create wealth by printing worthless pieces of paper.
The worldwide printing of money will lead to hyperinflation of an exponential nature. It will not solve the problem because the debt will also go up exponentially. It will produce hyperinflation spiral followed by a deflationary collapse.
Banks must now be paid to hold money.
Switzerland’s rates just went to minus 0.1 percent. Therefore, you have to pay the Swiss national bank to look after your money. The Swiss Central Bank is the most leveraged central bank in the world with a balance sheet that is 80 percent of GDP, and, like every other central bank, they are sitting on worthless assets.
To buy physical gold is the only safe course with gold rising as paper currencies collapse. Gold is up 150 percent in rubles in the past 12 months and in 2015 gold is up 10 percent in dollars and 150 percent in euros. The dollar strength is not justified, and it is coming to an end soon. The ECB decision is likely to mark the final days of the dollar’s strength, and as the dollar starts falling, we will see price acceleration in gold and silver.
The Dow against gold went down 88 percent between 2009 and 2011. The slight correction in the market is over. Expect another major downturn in stock markets, relative to gold. I can see the Dow falling 50 percent against gold in the next few years. Massive money printing could start by the second quarter of 2015.
Gold has been held back by the central banks, by manipulation, by futures markets, and by the paper market, so I think when gold accelerates, it could go up far more than 50% by late 2015. It is inevitable that we will have a collapse of the financial system, which could happen very quickly. I think that 2015 will be a dramatic year.
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