(King World News) - Egon Von Greyertz: “Welcome to 2018 - a year that will be the terrible culmination of at least 105 years of mismanagement in the Western financial system, governments, central banks and the elite …
2018 will be a year of severe volatility in many markets. Stocks are now in a thaw phase and before major bear markets start in virtually every country in the world, we will see the final moves to exhaustion, which could be substantial. The year will also be marked by a rise in inflation much faster than expected. This will include higher interest rates, much higher commodity prices like food, oil and the falling dollar. And many base metals will strengthen. The precious metals completed a 2-3 year correction (depending on the base currency) in 2015 and are now resuming their transition to new highs and ultimately much higher. More on this later.
For a century, the reckless elite controlled the system for their own personal gain and thus amassed enormous wealth. Ordinary people have been completely deceived into believing that they have won by having all the material things that most of them cannot afford - be it a house, car, computer or iPhone. Of course, everything is on credit. While the elite owns most of the assets, ordinary people own the debt. Not only their own debt, but the burden of public debt that has created irresponsible governments, including unsecured liabilities such as retirement and health care. And when the financial system fails, ordinary people suffer the most.
We have seen a century of debt accumulation from zero to 240 trillion. Global debt has doubled since the start of the Great Financial Crisis in 2006. This led to asset bubbles and revaluations never seen before in history. And if all unfunded liabilities and financial derivatives are included, the global debt is $ 2 quadrillion.
This is a huge task for Sisyphus, which the world will have to contend with in the coming years. While central banks and elites pretend not to understand, they are clearly aware of the enormity of the problem.
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We know that these obligations will never be settled. What happened in 2006-9 was just a rehearsal. At the last minute, central banks launched a massive bailout program that included cutting interest rates, printing money, guarantees, plus liquidity injections. These measures temporarily delayed the inevitable collapse. They won't work the next time, but since central banks have no other options, they will try to do the same again. And they will fail.
In my mid-December interview with KWN, I discussed the new world currency Phoenix, based on cryptocurrency technology, and the likelihood that governments will implement such a system. It would be a fraudulent trick with the fact that paper money is already worthless and useless. The new "money" based on crypto technologies will have counterfeit value that will make it difficult to communicate with the "old" currency. The same thing happened when the Euro was created. Also, like existing kryptons, meaning will be massively inflated through manipulation as well as at the request of the gullible public. Governments would use this new cryptocurrency to divert attention from the intractable problem of global debt.
Bank of England Governor Mark Carney has just said that the Bank of England is seriously considering introducing an official cryptocurrency in 2018, and that the Bank of England is discussing the matter with other central banks. The Bank of England has been working on this project since 2015. The technology was tested satisfactorily in the summer of 2017, according to Carney. He stated: “This is the most interesting application that benefits financial stability and efficiency. He said, "We're in business." Obviously, this has nothing to do with financial stability, since another currency, this time electronic, can only very temporarily hide the fact that the world is bankrupt.
Thus, it is clear that central banks have been considering this issue for a long time and see official cryptos as a solution to the global debt problem as well as an ideal way to control money. Through manipulation, they can easily create unlimited krypton and cheat value. They can also electronically fully control individuals' funds and their transactions. This is the ideal Big Brother system and thus another daunting attempt to severely restrict money and personal freedom.
It is likely that Western governments will try to introduce such a cryptocurrency system soon. There could be USCrypto, EUCrypto and UKCrypto, etc. It is also possible that there will be SDCrypto (Special Drawing Rights). But there will be many hurdles as it is highly unlikely that countries like Russia and China will accept US, EU or UK cryptocurrencies. These countries understand that all new fake cryptocurrencies will be just as worthless as the currencies they would replace. China and Russia have a very different plan. They will inject gold and oil behind their (crypto) currencies, which will far exceed any new money the West produces. With this currency, China and Russia will become the dominant economic powers as the West collapses into obscurity.
These major changes in economic trends, of course, will not happen quickly. However, 2018 will be the most important year, which will mark the beginning of the end of the last corrupt financial system, which lasted 105 years.
The stock market is melting!
By virtually any criterion, stocks around the world are currently significantly overvalued and represent a very dangerous investment market. But that won't stop this market from reaching even wilder heights before it crashes. The global stock market in 2008 was $ 25 trillion. Today they amount to $ 80 trillion. Will they get to $ 100 trillion before they crash?
What has been driving this since the founding of 2009 is clearly a massive expansion of debt. Investor credit and debt margins are now at historical levels and much worse than in 2000 or 2007, as shown in the chart below.
The Great Bubble continues to swell!
The US debt to GDP has gone from 30% in 1980 to over 100% today.
Values based on the selling price of the shares and the share price to book value are currently at their highest as shown in the charts below.
Stock prices are at historic lows and a major turnaround is on the way:
China occupies a leading role and a large part: 50-70% of the world's coal production and almost 50% of aluminum, nickel, zinc, copper, iron ore and lead.
U. S. dollar
The dollar has been in a downtrend for 300 years. If we rule out the American Civil War, the decline began after the creation of the Federal Reserve and accelerated in the 1930s. After 1971, when Nixon abolished the Gold Standard, the dollar practically collapsed. Over the past 105 years, the dollar has lost 99% against the only value that has survived in history, namely gold.
It was clear to me already in early 2017 that the dollar rally (since 2008) peaked in November 2016, immediately after Trump was elected. So far, the dollar has fallen by just over 10% from that level. The fall will accelerate in 2018. In the medium term, the 70 level will be reached, but the ultimate target is likely to be at least 40 level of the dollar index, which is another 57% - drop from today. We must remember that we are measuring the dollar against a basket of junk currencies that are all declining in real terms with the dollar. It's just that the dollar will fall faster than other fiat currencies in a race to the bottom.
DOLLAR INDEX 2016 - 2018:
INTEREST RATES
US Treasury activities in 2012 with a double bottom in 2016. The lower bottom of 2016 showed a divergence in dynamics, which was the reason for the trend change. It is now clear that the uptrend in rates is in motion. Over the next 3-5 years, rates will be as high as in the 1970s, which means a level of high pressure.
Gold
Gold denominated in US dollars bottomed out in 1999 and rallied for 12 consecutive years, between 2001 and 2011. After a three-year drop, gold bottomed out again in 2015. The upward trend has been slow since 2015 but is likely to accelerate in 2018.
Gold in the euro had a 14-year uptrend between 1999 and 2012, but then dropped one year and bottomed out in 2013. Like gold in dollars, the uptrend for gold in euros has been slow, but we are likely to see a strong acceleration in 2018.
The demand for gold along the Silk Road continues steadily. Between 1995 and 2017, China, India, Russia and Turkey purchased a staggering 35,000 tons of gold! The trend has accelerated since 2009, when China realized that a coercive Western financial system was unlikely to survive. While the West is only selling, since 2009, China has accumulated 16,000 tons of gold.
Since 2009, the demand for Silk Road has been significantly higher than the annual gold production in the world market. Thanks to demand from the rest of the world, strong gold purchases that we have seen over the past 9 years have depleted the world's gold reserves, including gold from the Western Central Bank, which is likely to be well below official figures. Only the manipulation of paper gold kept the price of gold at current levels. Gold traded on the Comex, ETFs and other fake markets has nothing to do with the yellow metal. This is just a false mirror image that will soon disappear as these markets crash.
So 2018 will be a pivotal year for financial markets. Increasingly high budget and trade deficits, debt out of thin air, artificially low interest rates, money printing and counterfeit money are all part of the Alchemy economy that the world has experienced over the past 100 years. Alchemy is a form of witchcraft. For a century, the elites seemed to have magical skills, as they seem to have defied the laws of nature. But now it will end because they will not be able to continue to fool all people. In the end, it will be a huge mass of debt that will stifle the global economy. As I said, 2018 will mark the beginning of the end of this extraordinary period in world history.
