Central Banks And The Beginning Collapse

Central Banks Have Triggered A Global Collapse

 Egon von Greyerz:  We are now in the very final stages of the most remarkable era of alchemy in the history of finance. This cycle started in 1913 with the creation of the Fed and had its death knell in 1971 when Nixon took away the gold backing of the dollar. It has been a long and slow 50 year death of the world economy and the patient has only been kept alive due to the creation of fake money, fake assets, fake (paper) gold, fake wealth, fake valuations, fake balance sheets, fake bankers, fake politicians, all built on a colossal mountain of fake debt…

“What will be the trigger for the coming biggest financial crisis in history? There are so many time bombs around the globe that it really doesn’t matter where and how it starts. Because when it starts, there will be a chain reaction that will lead to the most spectacular economic fireworks in history. 

Central banks around the world have already set the coming fall in motion. What has kept the world going for so long, in spite of being bankrupt, is the massive liquidity that all central banks have added to the system. The world economy can only grow, albeit artificially, by a constant injection of liquidity. Without that the patient would die quickly. This has created an illusion of growth but all that has grown is debt. In real terms the world economy is hardly growing and how could it just based on fake money. 

But central banks are now creating the perfect situation for the coming collapse. They are taking away the punch bowl that has fed all the asset and debt bubbles in recent years. It is not just the US where liquidity growth has reversed abruptly by the quantitative tapering. Also in the Eurozone, Japan, and China, liquidity growth is slowing down significantly. This is all that is needed to create the perfect setup for the coming collapse. The bubbles will implode if they are not constantly expanding.

Yes, there will be a point when stock and bond markets collapse and central banks will start wild money printing again. But since they are always behind the curve, it will all be too late and what the world economy will experience is a hyperinflationary depression that eventually leads to a deflationary implosion of the system. 

So what will be the initial specific events that start the coming fall of the world economy? Will it be Japan’s economy sinking into the pacific, or the Chinese debt dragon catching fire or maybe some little boy who will proclaim that Uncle Sam has no clothes? The Brussels elite is certainly doing a superb job in destroying Europe both economically and socially. They will clearly cause the fall of the Rome Empire. Not that Italy is much of an empire these days. But just like all empires collapse under its own debt, so will Italy.

In a bunch of sick economies, it is always difficult to determine who should get the prize for the sickest. Italy certainly has a good chance to win that obscure prize. That they can never repay the debt is a certainty and this will soon lead to Rome burning and the rest of the EU also catching fire.

The Brexit saga is a symptom of how desperate Brussels is to hold the EU together.

The EU elite has pushed Theresa May to accept an exit deal which is totally unacceptable to the British people as well as to the British parliament. Brussels is extremely frightened that the UK leaving the EU on good terms will not only open the flood gates for other countries to do the same.

It will also lead to the failure of the Brussels’s attempt to create a European Superstate, led by an unelected and unaccountable whole elite. So Eurexit or the breakup of the EU is coming, that is certain. It is not going to happen overnight, but the bursting of market bubbles combined with weakening economies across the board will most likely precipitate the collapse. 

History tells us that when you reach the end of a global economic cycle, the whole world is super bullish. Virtually no one can, or wants to see, the coming collapse. We know that from peaks like 1929 or 1973 when all market observers were certain that the golden era they were in will go on forever – “Because it is different today.”