Financial writer John Rubino says the currency crisis happening in Turkey is a stark reason for owning something a government can’t print more of at will. Rubino points out, “The function of gold and silver is to protect you against government mismanagement of your currency. The emerging market countries (including Turkey) have screwed up their money. They borrowed a lot of U.S. dollars at low interest rates when the dollar was falling. They expected the dollar to keep falling and pay back their loans in ever cheaper dollars, but the dollar went the other way. So, now their loans are unpayable. Their currencies are blowing up, and you are seeing gold and silver rise in local currency terms. In other words, precious metals are protecting the citizens of those countries against financial mismanagement.”
Rubino warns, “The crisis eventually works its way all the way to the middle, which is what happened after the housing bubble burst in 2007. It was just sub-prime mortgagees to begin with, which was not really a big deal, but eventually it became a near death experience for the entire global banking system. Since that time, instead of getting our financial houses in order around the world, we basically kept on borrowing money. Now, we have almost twice as much debt globally as we had in that debt driven global financial crisis. So, you can expect the next one . . . to be bigger, scarier and more dangerous. There are a lot of reasons to believe we are getting close, and one of those reasons is the emerging markets are starting to blow up.”
Rubino also points out, “The “Crack-Up Boom” is the point at which everybody figures out it is the explicit policy of their government to make their currency worth less year after year after year, and they don’t want to hold the currency anymore. So, as soon as they get paid, they turn that money into real stuff. You see the price of real things spike because everybody is buying real stuff at whatever price they have to pay. That manifests as accelerating inflation, but it is really a loss of faith in the currency. I think that is the end game of this system. The central banks are bailing out so many different players with so much new currency that people figure out that is a bad deal for the holders of that currency. They start front-running the process, and the system breaks down. This could be the time that it happens because the amount of debt that would have to be bailed out by the central banks is immense. It was much bigger than the bailouts . . . in 2008, and that was multi-trillions of dollars. . . . The numbers could be so immense this time people might see it for what it is. People will figure it out, and that is the systematic destruction of these fiat currencies, and then all hell breaks loose.”
According to Rubino, the long predicted so-called “debt reset” is getting much closer. How’s that going to work? Rubino explains, “It’s not clear that a currency reset (devaluation) will work unless it is coordinated. It’s not just the U.S. It could also be the European Central Bank, Bank of Japan and The Peoples Bank of China all making the announcement about their currency at the same time. If that happened, it would be really disruptive for a short time, but we would come out of it in reasonably good shape. That’s what we should be hoping for because there is no pain free option when you borrow too much money.”
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.