The Serious Economic Warning No One Is Talking About

economic collapseBy Justin Spittler

On Tuesday, July 12, a huge event happened in the investing world.

But if you’re like most Americans, you probably haven’t even heard about it.

The mainstream media didn’t discuss this event much. It was too busy pointing out that the S&P 500 and Dow Jones Industrial Average have hit new all-time highs.

Meanwhile, something much bigger was happening on the other side of the world.

Today, we’ll tell you what this event was…and why it means big trouble is likely on the way for investors.

Earlier in the week, the Japanese yen plummeted…

It fell 1% over Monday and Tuesday.

This might not sound like a big deal. But it was the yen’s biggest two-day slide since November 2014.

Japanese Prime Minister Shinzo Abe triggered the plunge when he surprised the world with an announcement on Tuesday. Bloomberg Business reported:

The currency fell by more than 1 percent against all of its 31 major peers after Abe said he planned to add fiscal stimulus after his victory in last weekend’s upper house election. The premier indicated Tuesday he will order ministers to prepare plans for further measures aimed at supporting domestic demand.

According to The Wall Street Journal, “The prime minister is widely expected to compile a new spending package worth more than ¥10 trillion ($96 billion) in the autumn.”

“Further measures” could also include more monetary stimulus. Bloomberg explained:

BOJ [Bank of Japan] Governor Haruhiko Kuroda has repeatedly said the central bank won’t hesitate to expand stimulus. More than half of economists surveyed before the June meeting were predicting a move on July 29.

Governments often use reckless monetary policies to try to stimulate their sluggish economies…

Since the 2008 financial crisis, desperate governments have printed trillions of dollars and cut interest rates to unnaturally low levels.

But if you’ve been reading the Dispatch, you know Japan is the worst offender of all. As we’ve explained, it has gone “all in” trying to stimulate its economy, even before Abe’s big announcement.

The BOJ is currently pumping 80 trillion yen ($671 billion) into Japan’s financial system each year through quantitative easing (QE). That’s when a central bank creates money from nothing and injects it into the financial system. QE is the modern-day version of money printing.

The BOJ also introduced negative interest rates in January. Regular readers know negative rates basically flip your bank account on its head. Instead of collecting interest on the money you keep in the bank, you pay the bank to look after your money.

In short, these “stimulus” measures haven’t worked. Japan’s economy hasn’t grown since the 1990s. Its stock market is doing poorly too. The Nikkei 225, Japan’s version of the S&P 500, is down 12% this year.

And now, it looks like the BOJ is about to do something even more drastic…

Former Federal Reserve Chair Ben Bernanke met with Abe …

As you probably know, Bernanke ran the Fed from 2006 to 2014. Under his watch, the Fed cut interest rates to effectively zero. And he pumped $3.5 trillion into the U.S. financial system using QE.

According to Bernanke, there’s still a lot more the BOJ can do to jumpstart Japan’s economy. The Wall Street Journal reported:

Bernanke rejected the notion that the Bank of Japan is short of ammunition when he met with Prime Minister Shinzo Abe Tuesday.

Mr. Bernanke noted during the face-to-face meeting that Japan’s central bank still has a range of monetary easing measures at its disposal, according to Chief Cabinet Secretary Yoshihide Suga.

You may also know Bernanke by his nickname, “Helicopter Ben.” He earned this nickname in 2002 when he said Japan should use “helicopter money” to jumpstart its stagnant economy.

“Helicopter money” is a highly experimental government policy that involves handing people free cash. Until recently, most economists didn’t take it seriously. But just a few months ago, Bernanke wrote that “Helicopter money could prove a valuable tool.”

This has led many folks to believe that “helicopter money” is coming to Japan. The Wall Street Journal continued:

Mr. Bernanke visited Tokyo at a time of intense speculation that Mr. Abe may resort to so-called “helicopter money,” a radical form of monetary easing advocated by the former Fed chief…

Koichi Hamada, a close adviser to Mr. Abe, said Mr. Bernanke may have discussed helicopter money with Japanese officials he met with during his visit.

Helicopter money won’t fix Japan’s economy…

It will only destroy the value of the yen.

That’s what happens when a central bank prints money. You end up with more paper currency chasing the same amount of goods and services. Everything from a gallon of milk to a new house costs more.

Consider what’s recently happened in Venezuela and Argentina. As we explained last month, these countries tried to jumpstart their economies using helicopter money. Both times, it sparked a full-blown currency crisis.

Inflation in Argentina is currently running about 40% per year. It’s even worse in Venezuela.

Last year, inflation in Venezuela hit a record high of 181%. And it’s only heading higher. According to the International Monetary Fund (IMF), inflation in Venezuela could skyrocket to 1,642% next year.

The same thing will happen to the yen if the BOJ continues to recklessly print money.

If you have money in Japanese bonds or yen, we encourage you to get it out as soon as possible.

But Japan isn’t the only government you need to worry about…

Every major central bank in the world has gone overboard with easy money.

According to MarketWatch, central banks have cut rates more than 650 times since the 2008 financial crisis. They’ve “printed” more than $12 trillion.

Eventually, central bankers will destroy the paper currencies they’re supposed to defend.

That’s why it’s critical to own gold today, before it’s too late.

As we often remind you, gold is real money. It’s preserved wealth for centuries because it has a rare set of attributes: It’s durable, easy to transport, and easily divisible. Its value doesn’t depend on a government or central bank. That’s why the price of gold often soars when governments do reckless things like print money.

This year, gold is up 26%. It’s trading at the highest level in two years. But it will likely head much higher. Casey Research Founder Doug Casey says gold prices could easily triple in the coming years.

To learn why, watch this short presentation. It explains why the world is in the early stages of a global currency crisis. By the end, you’ll understand why we’ve been pounding the table about gold so much recently. Click here to watch this free video.

Chart of the Day

Japanese banks are trading like a major crisis is coming.

Regular readers know we watch bank stocks closely. That’s because banks are pillars of the global financial system. They keep money flowing through the economy. If they’re in trouble, it often means something is wrong with the financial system.

If you’ve been reading the Dispatch, you know that’s exactly what bank stocks have been saying lately. As we’ve shown readers, many of the world’s biggest bank stocks have crashed recently. Some are now in free fall. For example, Deutsche Bank (DB), Germany’s biggest lender, has plunged 52% over the past year. Swiss banking giant UBS (UBS) is down 56%.

This selloff has hit European banks the hardest. But, as you can see below, Japanese banks have crashed too.

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Today’s chart shows the performance of the TOPIX Banks Index over the past year. This index tracks Japan’s biggest banks. You can see that it’s plunged 40% since last July. This tells us Japan’s banking system has serious problems…and it’s another reason to be concerned about a global banking crisis.


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27 Comments on "The Serious Economic Warning No One Is Talking About"

  1. “….As we often remind you, gold is real money….” = BANKSTER money ! It always was !

    Any commodity – gold, silver or whatever – has inherent problems serving as money since it is, and always will be, first and foremost, a commodity. This inherent fact is what the Gold-Is-Money advocates believe to be the premier virtue of commodity-backed money. “They just cannot turn on the printing press and create ‘real wealth’ such as gold.” We have all read this a thousand times and it is a half-truth at best. It is true you cannot print gold the way you can print paper dollar bills. It is not true that having a gold-backed currency is the solution to this problem created by expanding the monetary system arbitrarily. But if you believe that only a gold-backed currency is the solution, then you will fall into the coming trap that is presently being woven all around you.

    What the Gold-Is-Money advocates do not understand is that what must be done to get a gold-backed system to work correctly is exactly the same as what must be done for a paper-backed system to work correctly.

    At the moment of failure, one or perhaps two new monetary systems will be trotted out by the Global Power Elite. One could be a new world currency based on paper/electronics with all the central banks enthusiastically participating and declaring in unison that the new currency will solve all the currency problems here to date. Those who believe that only gold can be money will not be persuaded and will reject the new currency out-of-hand. If these only-gold-can-be-money types are in a small minority, they will be left behind while the world plunges into another paper-based rip-off.

    The other possibility is that a gold-backed currency will be announced by the Global Power Elites and their central banks with some tepid apology that they have learned from the profligate ways of their client states and now they wish to step in and take command and to “run things on a sound basis : meaning a gold-backed currency.” This will be the trap.

    • You are right that the Banksters have used gold in the past to manipulate the economy for their own benefit. And as long as they can control the “legal” currency, it doesn’t matter what that currency is. That’s why we need a free-market money; that is let people contract for whatever type payment they want, whether it is gold, or some other commodity, or simply another good or service. Why must people be forced to accept a Federal Reserve Note as payment? Because the banksters have made it that way, so they can get anything they want with their fake money, and by law, you have to take their money for any good or service you want to sell. This “monopoly money” by force of government is the source of all the evil we see in government and business.

    • Hi Crodo Dile, about 8 or 9 years ago I learned from Patrick Wood that the Trilateralists and other global elite organizations had already proposed gold backing the global currency they’ve intended to create for decades. One of the papers he cited went so far as to develop a working name for the new currency that incorporated the French word for gold. About a year ago, the blogger “Rusticus” posted an article on Activist Post in which he found some further documentation for this plan to back the a global currency with gold. Maybe you saw it, it was a nice bit of sleuthing. My take is exactly like yours, it’s always a bait and switch, a selling point, not a way to reign the controllers. It’s also a possible tactic to begin conditioning the public to accept an energy based economic system by getting them to think in terms of a finite supply and the need to accept government imposed rationing.

    • My question would be: Where IS all the gold? Why is it that countries around the globe cannot repatriate their gold – why was it even handed over to the US or the UK in the first place?

    • In 1010 all member IMF countries, (except the US) voted to replace the dollar with the SDR. Come 10/1/2016 when the yuan is officially added to the other 4 reserve currencies backing the SDR countries can exchange their debt, dollars and treasuries for SDRs. This is the method that hopefully will stimulate world trade by reducing a countries debt. The SDR will not be backed by gold. Recently the head of China’s PBOC publicly stated, (in May when they called an emergency meeting in Paris and after the G-20 meeting in China) that they wanted the IMF to speed up the process and not wait until October. Most countries including China and Russia hold SDRs in their reserves and all IMF loans are actually made now in SDRs which can be converted into any of the 4 reserve currencies soon to be five. A gold backed monetary system that PM dealers rant about is not going to happen as it does not provide enough liquidity for an economy to grow and create jobs especially when the price of gold floats. If the price falls you must either remove liquidity from the economy to meet the amount of paper to gold ratio or go out and buy more gold which for most countries is not feasible or sustainable. The IMF was considering adding gold to the basket backing the SDR but it was turned down because they thought it would increase the value of the SDR and hinder trade not stimulate it!

    • you are right, currency represents labor, gold or whatever is finite so it will eventualy lead to some other commodity, however the advantages of physical currency is that it will be more difficult to manipulate and control, moving to electronic currency alone will be a mistake.

      The main problem now is labor so as you mentioned any solution will eventualy lead to the same result.
      At the moment of failure, most likely paper money will be worthless, wich might lead to a metals requisition, wich will serve no real pourpose, moving everyhting to coupons and electronic money.

  2. Why is there a global meme to introduce a minimum income (aka basic income)? Why ZIRP and NIRP, also global? The Pope calling for a debt jubilee? “Bail ins” formally agreed to at last G20 Financial Stability Board meeting? = race towards debasement, then currency crises and the some kind of big “solution” to stabilize the global economy……a boost to IMF SDR

  3. Career politicians are the problem. Banksters get away with their destruction because our lawmakers let them. Ending career politicians would be a great leap forward, then we can work on all the other massive problems we have.

  4. Help Croco and Blue, help me fit in two factors: One, I never understood what happened in the Toyota scandal that destroyed Japan’s international finance. Toyota was the second largest lending institution in the world. The Toyota car scandal that proved false toppled Japan’s economy compounded by Fukeshima. The Second is I do not believe the powers that be would create a gold backed currency because China and India have been buying gold and possibly have more than the Euro/American community. Allow me to also ask What the effect would be “if” China backs the yuan with gold?

  5. The ICELAND remedy for the banksters, is the only plan that works….imho

  6. When all he** breaks loose, what good is gold? A starving person can’t eat that. I don’t understand why everyone wants to get into gold. I use my money to buy things (food, medicine, etc) to help me and my family in a survival situation. Besides, how many thousands of times, through the many years, has the sky been falling?

  7. Mango must be eating fruit from tree of knowledge.
    Gold is real, it is not a fiction created by deceivers.
    Fractional reserve currency is comprised of varying amounts of smoke with mirrors capably applied.
    Such fraudulent unaccountable monetary means is the fundamental basis to the impending World War ,

  8. Your response Croc that you do not know the Toyota case is alarming. The case evidences the power of the American Capitalist in the international market backed by the US Military. Now its no longer competition b/w American Capitalists on American soil with Laws controlling their behaviors, it’s global Someone destroyed the Japanese economy which forced them to join forces with other Asian Countries. Not in America’s best interest I assure you. We are the UGLY American.

    • We don’t know what is really happening behind the scenes.
      We can only guess.
      I was not looking at Japan though, so I can’t say anything about their economy and who is playing what role. The only thing I know from some reading Japan is more corrupt than Europe.

  9. i think our democratic republic is best. minority populations would get zero voice without it.

  10. so where is my earlier comment ?

  11. I went and read and commented there … a comment that should be required reading.

  12. bit-coin is about as real as one wants to believe, then when it is no longer valuable the reality will be that it is worthless … when it is based upon technilogical promises and not on substance held (actually experiencable), it is no better than any other “digital” currency. Should the “system” fail, (the reason people buy gold for protection), the digits will disappear … and meanwhile shysters in power will manipulate their worth for one reason or another.


  13. “If His eye is on the sparrow, I know He watches me”. Words to live by. Got Jesus? He will never let us down. He looks out after His own. This world is not my home, I’m just passing through. All my treasure is laid up somewhere beyond the blue. We as a nation have been kicking the can down the road ever since Glenn Beck was on FOX News. How many country’s have already defaulted on their currencies? It’s just a matter of time before our economic chickens come home to roost. That’s just the way it is.

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