Rick Rule – We Are Near An Epic Collapse in Confidence
July 11, 2012
With global stocks struggling, the US dollar very close to a breakout, and gold ignoring US dollar strength by trading higher, today King World News interviewed one of the wealthiest and most street-smart pros in the business, Rick Rule. Rule warned, “…for those who are looking for signs of a collapse in confidence, if past is prologue, you should examine our experience in 2008 and begin to look for immediate signs of structural stress.”
Rule, who is now part of Sprott Asset Management, also issued the following warning: “The world has been trying to solve a solvency problem with liquidity. Obviously the problem becomes, at some point in time, the issuers, be it the US government or the ECB or whoever the issuer is, runs into a problem where they can’t sell more paper. There is nobody to fund it.”
Rick Rule continues:
“One of the things that comes to my mind is that what has passed for quantitative easing and refinancing in this market, is, in effect, counterfeiting. We have a situation where one of the biggest buyers of government bonds is the government.
In the United States, as an example, we took in between 40% and 45% of the federal budget last year by way of tax receipts. We took care of the other 55%+ of the budget by borrowing half of the deficit, and in the second instance by printing money which we used to retire government bonds. In other words we bought our own paper.
I guess that’s fine as long as it works….