Tuesday, July 26, 2016

Derivatives Are 15X The World's GDP! BUT
There Is An Even More Frightening Problem
Than A Derivatives Meltdown
"In many areas of society, the border between the 'REAL' world and virtual reality is very fuzzy. In the investment world, virtual reality has to a great extent replaced investing in 'real' things. We have a world full of virtual money, virtual gold and virtual wealth. Money used to be backed by gold but that is a totally outdated concept. Today governments and central bankers can fabricate any amount of money which is not backed by anything. Instead, they print a piece of paper that they call money and simultaneously they issue a piece of paper that they call a government bonds or treasuries .. Not only will governments never repay their debts, they have now reached a stage when they can’t even afford to pay the interest on these bonds, and therefore the yield on most governments securities is either zero or negative. It is totally incomprehensible that an investor can buy a bond with a zero yield or negative interest and which will never be repaid. To paraphrase Mark Twain: 'I am NOT as concerned about the lack of return ON my money as the return OF my money.' .. Due to the state of the world with record deficits, record debts and no chance of ever repaying these debts, even at zero or negative rates, central banks only have one solution, namely more printed money and more debt. This is where the helicopter comes in. All that is needed is to drop unlimited amounts of printed and worthless amounts of paper on the world is the belief that this will solve the problem that was created by debt in the first place. The problem is that the weight of all this paper will eventually lead to the helicopters crashing and the world financial system imploding."
- Egon von Greyerz
link here to the reference

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