Originally published February 24 2015
Every central bank in the world now bankrupt; financial guru warns of coming chaos
by J. D. Heyes
(NaturalNews) A noted global finance expert who accurately predicted more than a decade ago that the price of gold would rise and, more recently, forecast the economic unrest in Europe and downsizing of the euro says that central banks are essentially going bankrupt, which will lead to additional economic chaos in the near future.
In an interview with King World News, Egon von Greyerz, the gounder and managing partner of Matterhorn Asset Management AG (MAM) and GoldSwitzerland based in Zurich, said in response to a recent decision by the European Central Bank to begin a program of quantitative easing, like that implemented by the U.S. Federal Reserve in recent years, won't have much lasting economic impact.
"These decisions by the central banks have virtually no impact whatsoever on the underlying economy over the longer-term," he told host Eric King. "They did what they had to do because the European banking system as well as the economy is in dire straits."
Further, von Greyerz said, "Central banks still believe that by printing money they can kick-start their economies and save the financial system. That's not the case. There is no chance whatsoever to change the outcome of an indebted and bankrupt European economy."
European QE program won't solve EU's economic problems
A few months ago, von Greyerz also predicted that the euro would fall after being de-pegged by the Swiss central bank from that country's currency, the franc.
He also "forecasted the current present problems in the world economy well over 10 years ago. In 2002 when gold was $300 per ounce, MAM recommended to its investors to put 50% of their investment assets into physical gold stored outside the banking system," according to his Matterhorn bio.
Von Greyerz said the European Central Bank's QE -- in which the institution will print and inject about 1.1 trillion euros into the EU economy over the next few years, is a short-term solution to a longer-term problem of economic malaise.
"Even though this will have a short-term effect on markets, people need to understand that this just creates even more debt that will never be repaid," he told King. "But the ECB is now pushing on a string because, sadly, printing money is the only thing they know how to do."
Further, von Greyerz noted:
As it becomes clear that this new money printing program is also a failure, the ECB will then accelerate the money printing. This will have the effect of rapidly debasing the purchasing power of the euro and it will also lead to even more chaos in Europe. It is of paramount importance that investors protect themselves against this coming wealth destruction.
In a recent piece, CNBC noted that the trillion-euro plan is likely to raise at least as many questions as it answers.
The most important of which, according to the financial news site, is whether the bond sales at the heart of the QE program will make, or lose, the ECB money.
The question of returns on bonds appears to have been answered, at least for now. As reported by the Telegraph:
The yields on 10-year [British] Government bonds have hit record lows, as the returns on sovereign debt have fallen across the globe. ...
The squeeze on yields has accelerated in the run-up to the launch of a eurozone stimulus package by the European Central Bank (ECB).
"A total global collapse is now in front of us"
The lower bond yields are a boon to indebted nations for the time being, because that means lower debt payments. But the debt remains, and there is only so long it can remain (and grow) before the bottom falls out.
"This is what all central banks have done -- they've trapped themselves in a corner," von Greyerz told King. "They have zero or negative interest rates, they are printing more money, and they are buying more assets that they can't sell and that are worth a lot less than they are paying for them.
"So every single central bank in the world is bankrupt because they will never, ever get the price for their assets that they paid for them," he continued. "This is why the financial system will not survive, Eric, and a total global collapse is now in front of us."
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