Final Catastrophe of the Currency System

Friday, August 26, 2016
By Paul Martin

By Egon von Greyerz
August 25th, 2016

The fate of the global economy was decided decades ago as deficits, debts and derivatives started their exponential growth and reached the time bomb phase that we are now in. This final chapter of this 100-year era will end in “a final and total catastrophe of the currency system” as von Mises succinctly articulated.

It started on Jekyll Island

It all started in 1910 when a few senators and bankers, led by JP Morgan, secretly met on Jekyll Island with the purpose to set up the Federal Reserve and so control the banking system. Thus, the Fed was a creation by private bankers and for the benefit of these bankers. Few of them could have imagined the enormous success of their venture as the control of the financial system led to vast fortunes for a very small elite. The back side of these fortunes is global debt of $230 trillion plus unfunded liabilities and derivatives. The total which is in the quadrillions is what the poor masses in the world are liable for. Not that they will ever be able to repay it but the implosion of these debts will lead to misery for the majority of people for generations to come.

Critical to protect yourself against these events

Sadly, things have now gone too far to stop the inevitable currency collapse and implosion of the financial system but that doesn’t mean that it is too late for individuals to protect themselves. As we enter this final phase, there will be panic in financial markets with governments and central banks taking draconian measures. Below are some of the potential risks that all investors must protect themselves against today:

Currency collapse – leading to destruction of capital

Capital controls – making it impossible to take money out of bank or country

Bail-ins – the bank will steal your money in order to try to save itself

Forced investments – compulsory purchase of treasuries with your bank or pension assets

Custodial risk – stocks and bonds will be hypothecated by the bank, leaving you nothing

Bank failures – all your investments will disappear as the bank becomes insolvent

The above list in not exhaustive but it contains the most likely events that will take place in the next few years. Most private investors don’t see these risks and have zero protection against them. And professional money managers haven’t got a clue about real risk, nor do they see any need for protection or insurance. When you manage OPM (Other People’s Money), you take maximum risk in order to benefit from the upside. The downside is not your risk and thus it can be ignored. This strategy works extremely well until the music stops. But as long as money printing and credit creation inflates markets, these professionals will never spend a second worrying about the total destruction of clients’ money.

So how likely are the above risks and how do you protect against them? Anyone who has followed some of my work will know that I consider all the above risks as guaranteed to materialise.

The Rest…HERE

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