


So why doesn’t anyone stand up to tell the world where we are heading. Well, for the simple reason that no politician can tell the truth. Because if they did, they wouldn’t be elected. The principal purpose of any politician is to buy votes and to get votes you can never speak the truth.



The Roman philosopher and statesman Seneca said: “Veritas Nunquam Perit” (The Truth Never Perishes). That might very well be true but it can be suppressed for a very long time as we are seeing now all around the world.



And that is where we are heading now. A catastrophic course of events was triggered when Nixon closed the gold window on August 15th, 1971. Since then global debt has exploded and all currencies have imploded. Debt, derivatives and unfunded liabilities have gone from manageable amounts in 1971 to over $2 quadrillion today. And every single currency has lost 97-99% in real terms.

As I mentioned last week, the world, the politicians and the UN are all focusing on the wrong problem. The destruction of the world economy will have consequences of a magnitude that is exponentially greater than climate cycles. We are now at the point when we will not be able to change the course of either of the two. Climate is determined by very long cycles that humans have virtually zero influence on. With regards the financial system, there was a time when it could have been saved. But that time is long gone. Now we just have to let it take its course which will be totally catastrophic for the world.





We also know that the money has zero value because no bank or central bank is prepared to pay interest on deposits. Instead because money is worthless these bankers want to be paid to hold the money. It is really quite logical. Why should you pay interest on money which has zero value.




It is this vicious cycle of money printing that has inflated asset bubbles to an extreme today. We all know what happens when a bubble gets too big. IT POPS! And when it pops, all the air that was inside the bubble just disappears.

For the ones who don’t understand what this means practically, let me explain. Let us start with the asset bubbles. When the global stock, property and other bubble asset markets pop, all these assets will lose at least 95% of their value in real terms. The best way to measure real terms is obviously gold since that is the only money which has survived and maintained its purchasing power for thousands of years.

And if we look at the debt bubble, global debt is at least $270 trillion. But when the debt bubble pops so will other liabilities like the $1.5 quadrillion of derivatives. So when the debt bubble pops, virtually all that fiat money becomes totally worthless. No one can repay it and no one is willing to buy it.


These events will obviously not happen in one go. It will most probably start with stock markets first crashing which will put pressure on credit markets. More QE will follow but that will only have a short term effect. More crashes, more money printing, inflation, hyperinflation, credit defaults and bank defaults. It will all unravel relatively quickly until their will be a deflationary implosion of most assets. I outlined it briefly in my article last week called “Global Warning”.



Then in September the Fed started overnight Repos of $75 billion increasing to $100 billion. They also undertook 14 day Repos of $ 30 billion increasing to $60 billion. Following on from that the Fed has now announced that they will start QE of $60 billion per month. But we mustn’t call it QE according to the Fed. So let us just call it money printing because that is what it is.


He is of course right, it is a plumbing issue. But the problem is that the financial system is leaking like a sieve with no chance of plugging all the holes.

Between the end of 2017 and 2019 the Fed reduced its balance sheet by $700 billion from $4.5 trillion to $3.8 trillion. As always, the Fed hasn’t got a clue. They didn’t understand that there was no chance to take away the punch bowl from a system that couldn’t survive without a constant feed of more printed money. The problem is that the system won’t survive with more money printing either. Because you can never solve a debt problem with more debt. So either way they are doomed.

So the Fed is now joining the ECB which will now start to print € 20 billion a month indefinitely. The BOJ has of course never stopped printing. They own 50% of all Japanese bonds and are supporting the stock market aggressively. The BOJ balance sheet has gone up 8X since 1999 and is now Yen 560 trillion ($5 trillion).

Yes, the system is rotten and is now starting to smell. The actions by the Fed in particular in the last few weeks smell of panic. Is there a problem with JP Morgan, or Bank of America, or maybe the Fed is supporting the bankrupt Deutsche Bank? We will probably soon find out where the biggest pressures are.


The central banks are already fire fighting and so far very few people are aware of the fires. But it is only a matter of time before these pressures in the financial system will spread like wildfires.


Investment markets will soon reflect the risks in the financial system. Stock markets are likely to fall heavily this autumn and the precarious month of October isn’t over yet. But potentially the fall might not happen until early next year. But the risk is there today.

The dollar is extremely weak. In spite of paying the highest interest of any major currency, the dollar is now weakening and is probably starting the final leg to ZERO.

Finally, the precious metals have merely just started to reflect the risks in the financial system. The small correction that we have just seen is finishing. But no use worrying about these small movements in the metals. Physical gold and silver will soon start their journey to multiples of today’s prices. But more importantly, they will be life savers as the financial system crumbles.