Money manager Michael Pento thinks the Greek debt crisis is small when you consider the enormously leveraged global economy. Pento contends, “That’s why I consider Greece as more of a distraction. It’s a small piece to the puzzle. You look at debt that extends all across the planet,every asset on the planet is in a bubble. China is in a bubble. Japan is in a bubble. Europe is in a bubble. The United States is in bubble. That’s not just stocks. It’s bonds. It’s real estate. It’s diamonds. It’s art. Look, China fell 7 ½ % overnight because every housewife and widow in China opened up a margin account, and now, they are wiped out. The market in China is down 18% in the last week alone, and it’s got a lot more to fall. Who is there to support that? This is where the rubber meets the road. Don’t worry because central banks have our backs. When has that been the case? A central bank can monetize unlimited amounts of debt and destroy the currency. It creates money out of thin air at infinitum without any consequences. When has that ever been the case? I am telling you right now, if the Federal Reserve doesn’t get off its ass and start raising interest rates, the free market is going to do it for them. That’s what is happening today. You see the 10-year Treasury is at 2.47% and rising. . . . You cannot continue to print unlimited amounts of money and have everything be quiescent. It is going to come back and bite investors in the butt shortly.”
Pento thinks the biggest danger in the world is overconfidence in central banks. Pento explains, “The biggest bubble out there is an increase in faith that central bankers can save the world. This is why Chinese shares can drop 7 ½% overnight and the Dow can be up 90 points. What do I hear on radio and TV is who cares if Greece leaves the Eurozone because didn’t Mario Draghi say he would do ‘whatever it takes’? Who cares if Chinese shares collapse because the Peoples Bank of China will just print money. Who cares if inflation in the United States becomes intractable? Didn’t they say Fed Head Janet Yellen and company would just buy all the sovereign debt there is to keep interest rates low? Who cares? The free market always wins, and it will always trump government. That’s why I am so petrified about investing right now. I think we are in the most dangerous time frame we have ever been since the history of economics. I think what is going to replace this misguided spurious faith in central bankers is going to be a renewed interest in hard money-precious metals. We are going to throw out the central bankers, and we are going to universally think it is absolute madness to think we can put our faith in a small unelected, unaccountable group of people. We are going to put our faith back into gold and silver as money. That’s what I am looking forward to. It will be great news to America and the economy in the long run.”
Pento also gives a dire warning and points out, “If you look at it globally, there has been a $60 trillion increase in debt since 2007. This is unprecedented, it’s never happened before. There is going to be a lot of insolvencies when interest rates normalize, and investors have to be very cautious. . . . You are either going to be in for a deflationary depression as the yield curve flattens out due to an aggressive Federal Reserve, or, and this is more likely, you have to watch the long end of the yield curve because once that breaks 3 ½%, watch out. This market will absolutely tank along with every other phony and engendered asset class that has been sponsored into the stratosphere by the Federal Reserve.”
After the Interview:
Michael Pento’s website is called PentoPort.com. Mr. Pento has prior interviews and some free analysis there. If you would like to sign up for his podcast click here. To get a copy of his book titled “The Bond Market Collapse” click here.
Greg is the producer and creator of USAWatchdog.com. The site’s slogan is “analyzing the news to give you a clear picture of what’s really going on.” The site will keep an eye on the government, your financial interests and cut through the media spin. USAWatchdog.com is neither Democrat nor Republican, Liberal or Conservative. Before creating and producing the site, Greg spent nearly 9 years as a network and investigative correspondent. He worked for ABC News and Good Morning America for nearly 6 years. Most recently, Greg worked for CNN for shows such as Paula Zahn Now, American Morning and various CNN business shows.