How can the Fed taper when the real US economy is in a terrible state. Add to that the massive problems in the Eurozone. And Japan, the world’s third largest economy, is a guaranteed basket case.
In the US, the job participation rate is the lowest since the 1970s, real unemployment (calculated on a consistent basis) is 23%, workers’ real wages have not gone up for decades, 50 million people on food stamps, government deficit runs at $ 1 trillion p.a. and government debt including unfunded liabilities is $220 trillion and growing exponentially. Does this sound like an improving economy? Well not to me. Also, the banking system has the same toxic debt and derivatives as in 2008. The banks are just fortunate that they don’t have to value their assets at market. If they did, very few banks would be standing today.
In the G7 countries total debt is exploding and it now takes $7 of debt to produce $1 of additional GDP. Talk about the law of (diminishing) negative returns.
Original source: Goldswitzerland
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Egon Von Greyerz Goldbroker.com Board Member - Founder of MAM
Founder and Managing Partner of Matterhorn Asset Management AG (MAM) and GoldSwitzerland, Egon Von Greyerz joined the board of Goldbroker.com in 2012. Egon von Greyerz started his working life in Geneva as a banker and thereafter spent 17 years as Finance Director and Executive Vice-Chairman of Dixons Group Plc. Since the 1990s EvG has been actively involved with financial investment activities including Mergers and Acquisitions and Asset allocation consultancy for private family funds. This led to the creation of MAM in 1998, an asset management company based on wealth preservation principles. EvG makes regular media appearances (CNBC, BBC...) and speaks at investment conferences around the world. EvG 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.