Eveillard – This Is All A Delusion, I Am Keeping My Gold
June 27, 2012
With global stock markets trading higher, today King World News interviewed legendary value investor Jean Marie Eveillard, who oversees $50 billion at First Eagle Funds. Eveillard told KWN that despite “the fact that the stimulus has been completely unprecedented in scope … the economic recovery seems to be sputtering.” He also discussed the gold market, but first, here is what Eveillard had to say about the ongoing crisis: “There is no doubt that there are major deflationary forces at play. There is also no doubt that the private sector is continuing to deleverage. But in order to prevent the deleveraging of the private sector from sending the economy into a replay of the Great Depression, governments are leveraging themselves.”
Jean-Marie Eveillard continues:
“So the public sector is leveraging up in a major way in practically every country. And in a pure paper money system, which we’ve had for more than 40 years, in a pure paper money system you can always inflate. There are deflationary forces at work, but governments are making sure they are offset, if not more than offset, by leveraging up of the public sector. So I wouldn’t worry too much about deflation.
In any case, one could argue that deflation and inflation are two faces of the same coin. You know it’s one thing to stabilize matters in the short-term, but in the process you don’t want to compromise the medium and the long-term, which is what they did. Because now they are running into those Neo-Keynesian steps not helping much, in spite of the fact that the stimulus has been completely unprecedented in scope.
This has been true particularly in the US in terms of increasing the size of the Federal Reserve balance sheet….