Real Fiscal Cliff-Currency and Bond Collapse-Michael Pento

By Greg Hunter’s         

Economist Michael Pento says forget the “Fiscal Cliff” you have been told about.  Pento charges, “The real ‘Fiscal Cliff’ is the coming currency and bond market collapse.”  Pento says if we stay on our current path, “We are in for an interest rate shock that will make the Great Depression look like the days of wine and roses.”  The open-ended Fed money printing is creating “. . . a fictitious world of artificially low interest rates,” according to Pento.  He says, “We need to move quickly towards a balanced budget . . . yes, it will be painful for a lot of people.”  If we don’t change course, Pento says, “A financial collapse is inevitable . . . the free market will force this Fiscal Cliff upon us.  There is no way around it.”  If you ever wanted to hear Mr. Pento uninterrupted and unfiltered by mainstream financial media, here’s your chance.  Join Greg Hunter as he goes One-on-One with Michael Pento of Pento Portfolio Strategies.  

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  1. justin king

    It’s always good to see someone who says the future is a matter of deflation OR inflation.// Trouble is- how can you play it?? Gold for inflation or cash for deflation. Everyone is going to have to be very quick on their feet or go down hard.// Buying and selling gold-cash back and forth is the only method I can see = A MONKEY ON A RAZOR BLADE.

    • Greg

      Thank you Justin, Jay and Bob!!

    • Frank

      Beans, land, and bullets, plenty of bullets and the ability to make more bullets or at least shotgun shells.

  2. jay

    Great interview Greg. simple enough for the average mind. The big question is what will become the new currency?,and what will be its base of security? I think this is why the fed is acting like theres nothing to be concerned about.Like a 400 lb man fighting aginst a 100 lb weekling. As we all know the heavy man is more likely to have a heart attack then lose to a featherweight.

    • Saq

      All the fat man has to do is sit on the featherweight………..

  3. Bob

    Greg excellent interview,very eye opening for sure.

  4. slingshot

    We have been kicking the can down the road for sometime. How much time do we have left? Not to worry as they push the dates further out with each commentary. They way they use to tell it, we should have been in a Depression already. The question is, Can we turn this economy around? Will the price of “Austerity” be able to win the Battle for the World Reserve Currency? Then we are really stupid as we take the full brunt of the battle as those in power, hide safely in financial bunkers.
    There is no real talk of reigning in the banking system. First step to recovery. The reintroduction of the Glass-Steagall act and a gold standard would be a good start. Wall Street runs amuck with its derivatives and electronic banking. The Braying Jackass of BEN Bernacke and the FED has to go. His too big to fail banks, did not mind taking you home for missed payments on an overblown mortgage. Austerity you paid for!
    We should be paying attention at what is happening in Europe. Once things start happening here, like in Europe, It’s Done. Take notice what failing governments do, to save themselves. The common thread between all governments is, BANKING.

    “You Ain’t Seen Nothing Yet”
    Bachman Turner Overdrive

    • Greg

      All I can think of now is “Ba, ba baby you ain’t seen nothing yet!” Love the nostalgia!!

  5. AndyB

    Greg: Michael speaks reality, something that most refuse to face. The only problem that I see is that TPTB can not and will not let rates rise until they have, in place, a viable alternative to the USD as the global reserve currency. USTs would be dumped by everyone other than the FED (and possibly the ECB) should ZIRP change to even 4%. Further, the can has to be further kicked for at least another two years until the US police state apparatus is fully implemented to stem the social unrest when there is an overnight 50% (or more) dollar devaluation and there are draconian regulations to prevent bank withdrawals. The bottom line is that your money is not safe in any bank; the presumed FDIC backstop would probably cover less than 10% of total deposits.

    • Greg

      Thank you for the analysis.

  6. Davis

    Off topic I know but this mess has me really cheesed off.

    Really Mr. Secretary?

    Well that sure didn’t take long. Seems I recall predicting to someone just Friday that we would get a “new” Benghazigate story by today. Right on cue, and early in fact, we get one Secretary of Defense Leon Panetta projectilely vomiting the latest batch of lies and misdirection in a crude attempt to cover up for the previous batch of lies and misdirection.

    Misdirection #1. “There is a lot of Monday morning quarterbacking going on by people who don’t know what’s going on.” Really Mr. Secretary? Are you implying that the DoD does know what’s going on or are you saying that if the DoD doesn’t know what’s going on nobody else possible could either?

    Lie #2. When asked why fighter aircraft had not been sent to the scene to at least do “low and loud” passes over the consulate or to lay down suppressing fire the Secretary said that they “were concerned about creating civilian casualties that might further inflame the situation.” Really Mr. Secretary? The Consulate was already in flames, how much more inflamed could it get? Anybody who has ever been in combat will tell you that once a firefight breaks out that civilians flee the area as quickly as possible or crawl into the deepest hole they can find to keep from getting their heads blown off. What did the Secretary think these “civilians” he’s so concerned about were doing? Sitting out in their lawn chairs watching the show and roasting shish-ka-bobs of the flames of burning vehicles?

    Lie #3. “We weren’t going to deploy assets into a situation we hadn’t fully assessed.” Really Mr. Secretary? Just how much more information did you need? You had both Flash Traffic and emails coming from inside the Consulate as the attack was taking place. You had CIA assets at the annex requesting permission to led assistance to the Consulate that could have both provided support and on a further on the ground situation report. You had Predator drones circling overhead providing you live video feeds in both visible and infrared light. What else were you waiting for Mr. Secretary? Did you think al Qaida was going to post their Order of Battle to help you make a decision?

    This was followed by the most monstrous, shameful and shameless lie of all.

    Lie #4. With a shrug of his shoulders Mr. Panetta concluded, “This was all over before we could do anything about it.” Really Mr. Secretary? It doesn’t take a genius to figure out that the designator for US Army Delta Force units is QRT (Quick Response Team). Do you need “quick” defined for you? Why did they remain on the ground in Sicily two hours away? Why were they not embarked on their KC-130 aircraft to at the very least circle off shore where they could then either go into action or return to base as the situation developed? Do not such QRTs also have AC-130 gunships attached? Aren’t these aircraft designed for and known for being able to lay down pinpoint accurate suppressing fire? Is there not a US Navy CVN and LHA stationed full time in the Eastern Mediterranean Sea? Just what are those QRT teams, aircraft and that full Battalion of Marines there for if not for just such situations?

    I’m sorry Mr. Secretary no one but the gullible, naïve or stupid is buying any of this retched street pizza your laying out. The real shame is not that hack politicians lie to us; we’ve come to expect it. No the real shame is that no one in the so-called mainstream media is asking anything close to these kinds of follow up questions when presented with such blatant and obvious lies.

    • Greg

      Thank you for posting this. It is all part of the same problem, the public is constantly being lied to. No one know what is really going on. That is very dangerous for the common man.

      • Davis

        Your welcome. I know I’ve been a bit silent of late. Sometimes I just get frustrated that no matter how much good people point out the abominations of the “Ministry of Truth” nothing seems to change.

        Then things like this happen and it demands response. It’s posted at my site if you would care to to it

        • Greg

          You are always welcome to post your articles and thoughts here. I am providing a link to your site for our readers:

          • jay2

            Thanks Greg. MR. Davis your link is in my favorites. Good Information.

            • Greg

              Thank you Jay2 for all the comments and for your support.

    • BOB D

      Obama Bay of Pig moment. Those neocon’s trying to drag us back in. One General and Admiral been fired for not standing down.
      Obama’s plumbers down on Wall Street tonight, changing out the codes and closing the back doors,Bank Holiday. As goes the Bankers, so goes the worthless wars.

  7. Jon

    Why do these ‘experts’ keep blethering on about deflation when it is crystal clear the Fed is inflating big-time? Also, why does Pento talk about ‘balancing the budgets’? Is he serious? How can this be done now? This is silly talk .. we are about to go ‘splat’!!

    • Greg

      Thank you Jon.

  8. Jon

    Thanks Greg for a great job on this site. Take care, Jon

  9. Paul

    Greg –

    I think that the metaphor of “fiscal cliff” is a somewhat over the top. If anything a more appropriate metaphor would be a fiscal sinkhole. Albeit a very deep one. Wantonly driving over a cliff will surely result in death and a total write-off of the vehicle, while inadvertently driving into a sinkhole will result in injury and vehicle damage which may well be repairable.

    Either way somebody should have posted warning signage.
    Where were they?

    • Greg

      Somehow if there were signs posted I don’t think many would take the time to read them. I like the “sinkhole” analogy. Thank you for the comment.

      • jay2

        still Greg. there are some who do.

        • jay2

          Paul .

          Thats the best comment ever. So much truth.

          • jay2

            Greg, You are so wrong. The whole reason I found your site is because no one warned me before losing my ass in 2008.Paul you are so right ,So Right!Had I been warned by the (millionaires) giving me advise, I wouldn’t care about whats happening now.

      • George Too

        The only sign post you will see is posted after you go off the cliff

  10. Rick Szymanski

    Greg, As usual, your interviews with the guests you have on are always informative and right on the money regarding state of affairs in the U.S. and globally. In addressing the timing of the fiscal cliff that all are commenting on, no one is taking into account the possibility of a Black Swan event pushing us over this cliff. Think of the Fukashima disaster caused by a horrific 9 point Richter scale earthquake in Japan. The U.S. too has a nuclear power plant in California on the coast line centered on the San Andreas fault line. In 1906 the Great Earthquake of San Fransisco occurred along the San Andreas fault line triggering a stock market crash and followed with the 1907 Bank Panic due to the nervousness and volatility after massive losses on the stock market caused by the 1906 San Francisco earthquake. Geologist that have studied the San Andreas fault line have concluded that another massive earthquake of the same or greater magnitude is long over due. They have found from their studies that on an average a big one hits every 70 years and the longer it’s over due, the more destructive and powerful it will be. It’s now over 106 years since 1906. I don’t wish it to be but nature has it’s own time table. Approximately 20% of the U.S. industrial base lies on the fault line as well as the Diablo Nuclear Power Plant. I can envision by Presidential Order of a Financial and Bank holiday as Gerald Celente often reefers.

    • Greg

      I can too Rick!! Thanks for the comment.

  11. Jerry


    You did it again, great interview. This and the Mr. Williams interview got me thinking about what could be missing with regards to raising tax revenue in the future and this is what I came up with. We all know that we have lost Trillions of dollars with the deflation of the last 5 years (since the financial crisis). We have to realize that those losses remain on the balance sheets of large corporations and financial institutions around the world until they are written off through tax filings. These losses are categorized as “loss carry forwards” on the balance sheets of “C” corporations and are carried on the pass through of “S” corporations on the CEO’s and Ownerships K-1 long tax forms. These “loss Carry Forwards” that have accumulated on these balance sheets are transferable through purchase and acquisition transactions (Not the “S” K-1 credits). With these massive loss “credit” balances remaining to be offset by future profits, it will guarantee that large corporations and financial institutions never pay taxes again within our lifetime; no matter how much they try and increase taxes. A profitable company can purchase another company with 100’s of millions of accumulated loss carry forward credits and move those credits onto their profitable balance sheets and not pay taxes on those profits. When you speak with Mr. Williams again can you ask him about this? as I know he is a CPA. I know that the “Loss Carry Forwards” are worth a minimum of .33 cents on the dollar to offset future earnings tax liability. Debt does not just disappear through repudiation but has to be written out of existence through tax levy accounting. Who pays for that? The middle class!

    • Greg

      Thank you Jerry for the kind words and support.

  12. Davis

    Hurricane Sandy is rapidly becoming the Black Swan so many have been antisipating. From my “Derivatives for Dummies” piece posted back in June.

    “Derivatives are quite simply a form of insurance policy. Nothing wrong with insurance right? Well no, unless of course the value of those policies outweigh the assets of the underwriters on a scale of several hundreds to one.

    Imagine if you will the U.S. were to experience a disastrous hurricane season. A dozens cities along the Gulf coast and the eastern seaboard are destroyed. Think Katrina on steroids. Most of those homes and businesses are insured of course and the owners will file the requisite claims for financial restitution. Except that if the sum total of all the claims exceeds the cash reserves and liquid assets of the underwriters, they go bankrupt. Not only do the claims not get paid and the policyholders are destroyed, but all of the stockholders and bondholders in the insurance companies are also wiped out. This includes not just individuals, but because of interconnectedness, many banks, credit unions and mutual funds. Even more insanely insurance companies underwrite policies against each other’s insolvency. This is a derivative know as a default swap. The failure of one threatens the solvency of all.”

  13. Mickey

    Great work Greg! I hope you are not no where close to Sandy’s path! Take care & keep the reports coming!

    • Greg

      I am safe and dry! Thank you for your support!

  14. nm


    What does a currency and bond market crash mean for the average american with an average job, debt and virtually no savings?

    • Greg

      For one thing, you will see a normalization of interest rates, and that might mean some double digits. The housing market will absolutely tank and so will the stock market in this environment. That’s just off the top of my head. It will be worse than the great depression when we fully reach bottom. That is certain. Good to see you commenting again!

  15. Norm Ezzie

    I must chime in here: Imaginary Money is one thing…but when those foreign-heads-of-state request a viable audit of their own Gold,which is held throughout those wonderful institutions (i.e.Central Banks)- and they say its too “labor intense”- (after all,we’re talking about tons of that glittering stuff,right?) its brings a whole new definition of “Stiff Arming”- Think,if we use imaginary money…can they create imaginary gold?Mmmmmmm,that’ll make ya stay awake at night….if your one of those “nation-states” hoarding gold! Speaking for myself here…I’d rather invite a real miner to my home and make him a offer he can’t refuse!

  16. Fazsha

    Peter Schiff said once “We will get deflation, WHEN PRICED IN GOLD.” That is, it doesn’t matter whether we get nominal inflation or actual deflation, gold is the answer in either scenario, because the problem is debt, and deleveraging depresses prices, and inflation devalues the burden of debt, so they are two different ways to attack the same problem – more debt than the productivity of the world can service.

    • JoeJustJoe

      Peter Schiff also cost anyone who listened to him back in 2006/2007 at least 50% of their bankroll in 2008-2009. Now he’s back harping the same message this blog is. The markets are about to give you a “clear vision” of what lies ahead for gold and gold assets in the future. The 2 day shut down of the markets was “obviously” staged so that the computer quants could cover the damage that was done overnight in the futures markets on Th, Oct 25. They miraculously held things up on Fri. Today (Wed, Oct 31) we got an inkling of where the short term problems lie with the complete decimation of National Bank of Greece (NBG). Gold and gold assets rose since “the ave Joe” can easily be convinced of another money pump at the first sign of trouble. You will soon see a “slight” pullback in gold and gold stocks leading to a “slight” rally in the market indicies. They will all get dumped on in unison tho. I certainly “hope” you all pay attention cuz “as the general market goes…so goes the gold sector” is the theme for the foreseeable future. Get used to loving the dollar too. It won’t be too many months from now that it will be your only friend.

      • Greg

        JoeJust Joe
        This is just nonsense. Gold is North of $1,700 an ounce. Gold was averaged about $700 and ounce in “2006/2007” and in “2008-2009” it averaged around $900 an ounce. As I write this, gold is $1,720 per troy ounce. Long term investors are winning here–BIG. Yes, there will be pull backs, but long term gold is going up in price. Do you not realize the Fed has a stated policy of “open-ended” QE or money printing to the tune of $85 billion per month. Interest rates are being held at near zero until mid 2015. I’ll be “loving the dollar” when they stop printing it at a rate of more than $1 trillion per year. Thank you for your comment even though you are dead wrong.n By the way, Bill Gross, Eric Sprott, Ray Dalio, Jim Sinclair and many other experts all say similar things about gold (and silver).

        • JoeJustJoe

          Like I said, you goldbugs will be singing the same tune until you are all taken down for massive losses a second time. I outlined a scenario for the markets yesterday and you saw an exact manifestation of it today as gold and the general market (as measured by the SPX) moved in opposite directions. Tomorrow you will see more of the same at least briefly. My “suggestion” would be for you goldbugs to buy at least a small hedge position in the ticker DUST as it trades to 23.70. I’ll be there to pick you up from amongst the smoldering ruins at NUGT 7.90 or less once the festivities get started tho. That’s almost a 50% drop from current levels. And when we are back up retesting these highs again sometime in 2013 again I guess, I will make sure I stop by and warn you goldbugs again because there really isn’t anything quite as clueless as a goldbug. I bet you didn’t realize that oil as measured by say the ticker USO is the “real” inflation guage. Nevermind, that’s right…gold is the “magic elixir” that will heal all wounds. Can’t wait for one of you to come up with a way for me to carry my stack of gold bars around comfortably so that when I go to pay for my $10 BigMac it isn’t to much of a struggle for me. In the meantime…enjoy the sound butt whooping coming your way. If you wanna be safe in the short term then buy bonds. Bill Gross is completely clueless BTW. That’s why he keeps flip-flopping on his bond trades…every trade a loser. The computers have him confused too. This stuff ain’t as easy as I make it seem. Most playas just go with “the obvious” …which brings us to AAPL. Can it “really” trade to say $520 in 5 trading days? Stay tuned, sports fans.

          • Greg

            Joe you are a trader and that is just fine with me. On the other hand, can not back up your premise with fact. Your argument seems almost childish. Gold is up 500% since 2001, and yet you ignore this FACT. I suspect most people on this site are physical gold holders and not traders. You can liquify gold at anytime for currency. That’s how you buy your $10 Big Mac. You say Bill Gross “is completely clueless?” What are you using to back up this statement? Gross sits a top of a $1.3 trillion fund. How much money do you manage? Thank you for your participation and for keeping the comments clean.


    Hi!, Patrons Of Et Al:

    This was a great presentation Greg and Mike but please allow me to put in my own two cents on OUR World economic plight: 1st of all, in his book, Human Action, Ludwig Van Mises declares that gold is money; something that thanks to Congressman Ron Paul we recognize that OUR Fed. Chief, Ben Bernanke, doesn’t recognize as money at all and, if he did, that fact alone would put him totally out of business producing digital and/or paper based purchasing media instead of minted, physical, specie gold & silver coins as mandeated in Article 1; Section 10 of OUR US Constitution.
    I get adds in my mailbox, to shop at the “True Value” hardware near my home. It’s up to me isn’t it to believe that their adds are full of a bunch of concocted psychology or their goods truly do represent True Value?
    In the world of money then according to Ludwig Von Mises gold represents true value; while all forms of paper or digital money present mere psychology or pumped up value that fades in and out depending upon the psycology of the markest over and from time to time. Gold, on the other hand holds its’ true value under all exonomic climates.
    Therefore, if we measure the psychologically valued money today against the True Value of gold we see increasingly incrementally higher and higher gold prices don’t we? World monetary authorities have been unable across the board to deflate the price of gold or its’ true value & no matter what tactics are tried. The problem here is that, outside of artificially pumped up psychological determinants, no digital or paper based purchasing media have one iota of True Value whatsoever and so the problems presently with the bond markets and the real estate markets etc. can not be measured only by price measured in non descript paper or digital I Owe You Nothings which means that all forms of payment not utilizing the True Value of real money which is gold is totally worthless, without the psychological underpinings presently administered & artificially guaged. The psychological value of paper can change over time based upon intereste rate spreads between currencies etc.; while the True Value of Gold NEVER changes, because gold is money constantly regardless of human psychologies. When this realizatin finally hits the markets worldwide, there will be an unbelievable flight from paper and digitized purchasing media that leaves gold as the one True Value standing as money in the marketplaces of the World. That will begin the process of an unavoidable painful recovery without any human efforts to exercise its’ will over the entire world marketplace causing the required adjustments it will take to fortify a True Value Recovery that straightens out the paper/digital mess in which we presently find outselves floundering about like chickens with OUR proverbaial heads cut off. Rather than a voluntary recovery then we will be forece into experiencing an involuntary recovery brought upon US all by the real True Value forces installed within the confines of Mother Nature which of coarse will be gold itself as money again. There will be NO other way!!

    RUSS SMITH, CALIFORNIA (One Of OUR Broke States)
    [email protected]

  18. Martin

    The problem’s of the fiscal cliff can be blamed on the pandering politicians for sure but the blame game does not stop there .Americans unfortunately have come to believe that the Government will always be there to bail them out,to provide money,provide shelter, ad infinitum. The reality is that we are broke -dead broke – and our lenders know it.
    Our debt is accumulating at 4 Billion Dollars a day– THINK ABOUT THAT – these numbers are so huge that the mind numbing number of a Trillion Dollars doesn’t scare anybody anymore.
    The devastation of Hurricane Sandy ( I lived on L.I. and have friends there and the full story there hasn’t been told yet) is estimated in monetary terms at roughly 20 Billion Dollars for clean up — THAT IS $_-F-I-V-E -_$ DAYS of our National Debt!!

    Think about the massive clean-up and repairs needed — 5 days of our debt !!
    Is the cliff coming ?? IT is ALREADY here — WHY haven’t we plunged?? Because of Berbanke and our reserve currency. Will/can that last?? NOooooooooooooooooo. The bond market will collapse – Mr. Pento is right — The bond market is the greatest bubble ever blown in history and you do not want to be in it when it P-O-P-S !!

    • Greg

      You are spot on sir. Hurricane Sandy will have some very ugly financial effects. Thank you for your analysis and link!!

    • JoeJustJoe

      The bubble in Apple computer stock far outweighs the bubble in bonds. Bonds certainly aren’t going to get cut in half 5 times like the price of AAPL stock is going to do over the next 2 or 3 years. Of course I imagine you would look at AAPL and say “no way”…and that’s what I would expect you to say cuz just like your take on bonds…it’s “obvious” how great Apple Computer is…isn’t it?

  19. Agent P

    Greg –

    This is getting old… It’s Kingworldnews-esque hype & drama 24/7. Michael Pento (and many others like him), have been droning on about this every other week on some site – mainly the aforementioned one. It isn’t that they’re wrong – in fact, guys like Pento are likely 100% right! The problem really boils down to the old saw: ‘The market can remain irrational longer than you can remain $solvent’…

    Actually, I would slightly revise that old nostrum to reflect modern-day reality, as we haven’t had a true ‘free market’ in some time. We have quasi-fascism in the form of the federal reserve/treasury/Wall St. complex…

    ‘The government can distort the market longer than you can remain solvent’, would be a much more apt description of our current situation.

    I will say this however, in support of all the chicken-littles in the blogsphere: When our fiscal/monetary/economic comeuppance does finally arrive, it will likely come at a speed that almost no one will anticipate – even those ‘prepared’ will be amazed at how swift the hatchet falls when the whiff of fear about our solvency begins to spread.

  20. nm


    Someone asked me the following: If you own a house with a mortgage and have a fixed interest rate, how will the bond market crash affect you?

    Also, in terms of jobs — are there going to be massive layoff’s(both in government and in the private sector)

    What about credit card debt and student loans? Will people just stop paying if interest rates rise?

    • Greg

      If you have a fixed rate loan it will not affect you directly, but your neighbors will likely have adjustable rate mortgages and their payments will rise until they hit the cap. This could turn your neighborhood into a ghetto in a few short years. Of course the rest of the economy will be tanking with higher interest rates so the entire economy will self destruct. A bond market collapse will cause a financial calamity that will make the great depression look like a picnic.

  21. Bob

    Pento is approaching this from the standpoint of the status quo. That just won’t work. I didn’t hear him say a word about the gigantic fraud driving this fiscal crisis — the federal reserve (neither federal nor a reserve). It needs to be abolished! Where does the debt come from? Who holds this debt? How much is held by the fed? Every dollar that is “born” comes into this world carrying 6% interest, so the debt can NEVER be paid! Go back and read all the great American critics of private central banks — Jefferson, Jackson, Rep Lindburg, Rep McFadden — they all predicted this would happen. What annoyed me about Pento is he mentioned social security. If the government hadn’t stolen that money for bombs and war it wouldn’t have a problem. And he mentioned Ryan — Ryan is a genuine fraud, as are all of these neocons. As are Boles and Simpson. Just remember one thing — if we ever get the republic back, it will be in spite of the jerks that have been passing for our leaders for the past 100 years (the fed was “voted” in 100 years ago this coming day before CHRISTMAS EVE).

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