Thursday, September 29, 2016

They are going to print money until the system collapses

When I think of central banks, I think of alchemists. They were trying to mix all kinds of powders and chemicals to produce essentially gold. And they all failed. The central banks are just mixing water, in other words, paper money and the results cannot be a favorable outcome in the long run.

It's possible that suddenly inflationary pressures will be there, that central banks should then act but they cannot because the system is so over-leveraged.

Now with this low interest rates and negative interest rates, Pension funds, even in these beautiful years of returns, 2009 to today, they have become less funded, they have become more underfunded. With interest rates at zero and this low, their portion that's in bonds is never going to meet the expected returns of 7.5 percent. It's physically not possible.

They are going to continue to print money and the Fed's balance sheet and the other central banks' balance sheets will continue to grow until the whole system collapses and then you and I in gold assets will be better off than in paper assets.