The solution of $25 trillion to save banks and financial markets was not a solution.
It was just a temporary deferral of the problem. The money, as we know, went into the banking system, and it didn’t go into the real economy. The banks in Europe still have the same problems. They are leveraged as much as before. Deutsche Bank is leveraged 50 times.
U.S. banks are slightly less leveraged, but they have the derivatives that are not included on their balance sheets; of course, but if you include that, they have more leverage than the European banks. . . . We are now in a situation where every major economy in the world is in a total mess.”
Greyerz goes on to explain, “Japan’s economy is going to disappear into the Pacific. China is having its problems. Europe has problems. The EU will never work and was not supposed to work. The euro is an artificial currency and, in the long run, will not survive. The U.S. stock market is at an all-time high, but that has nothing to do with the real economy which is an absolute mess.
So, the world has never been in a situation where all nations simultaneously are having problems that are insoluble. Every major nation is running a deficit today. So, right now, I think we are going to revisit 2008; but this time, there is no solution.”
On the value of the U.S. dollar, Greyerz predicts, “The problem is it’s not just the dollar. The dollar is the first one that’s going to fall, but all the currencies are in a race to the bottom. Since 1913 when the Fed was created, we’ve seen a fall of 97% to 99% of ALL currencies against gold.”
So, what might this next financial calamity look like? Greyerz, who controls the largest gold vault in Europe, says, “We are specialists in wealth preservation.
Our task is to analyze the risk and take all the measures possible to protect clients from the risk that we see, and the risks are bigger than ever in the world.
We are going to see a major financial disaster and possibly collapse. The world has been living above its means for a hundred years. It has gradually gotten worse as central banks have printed more and more money.
Just in the United States, in the last eight years, the debt has increased from $8 trillion to $17 trillion. That is an increase of $9 trillion in just eight years. That is more money than was created in the creation of the United States from over 200 years ago to when Bernanke took over.
That is happening everywhere in the world. The dollar is going to collapse, and all the other currencies will follow. It will then be revealed that all these debts can never be repaid. Will they be repaid with inflationary money? That’s not repayment. In the end, there is going to have to be a reset; and I fear that, in the end, there will not be an orderly reset.
I fear we will have a hyperinflationary depression first and then a deflationary depression.”
On World War, Greyerz says, “That’s been the rule whenever an empire is collapsing. The actions they take are they start wars everywhere because then you can frighten people and you can borrow more money. Of course, to some extent, the United States has done that.
There could easily be a war, and just look at Ukraine. Here we have a situation that just arose in the last six months that nobody talked about last year. That, in itself, is a very dangerous situation.
Ukraine is just one situation. When you take a look at what’s happening with Iraq, Saudi Arabia and the Middle East, it’s a very unstable situation also. War is certainly a major part of the risks we have.”
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Founder of Matterhorn Asset Management, Egon von Greyerz, who can be found on GoldSwitzerland.com.
(There is much more in the video interview.)