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BookmarkIn the aftermath of the disaster in Cyprus and escalating fears from investors around the world that their savings will be confiscated, today King World News spoke with Michael Pento to ask him what people should expect going forward. Pento spoke candidly about the frightening situation the West faces in the future.
Eric King: “Obviously (after Cyprus) people are worried that governments are going to go in and start to steal money right out of their bank accounts.”
Pento: “This is the truth. Governments follow something called, ‘The Rule of Law.’ But it is also true, Eric, that the rule of law is mutable. By that I mean the rule of law changes with the whims of politicians. In normal times what the government will do is they will steal the purchasing power of your currency surreptitiously. In other words they will just print money and steal the purchasing power of your money without your permission.
What’s happened now in Cyprus is they have actually taken a more honest step, a more overt means of taking away your money. They are taxing your deposits in the bank. Now, when you have an insolvent bank, and you have an insolvent nation, the only thing you can do is to go into the private sector and take their money.
Normally that is done via money printing, but now the governments are getting aggressively in the business of stealing your money directly….
“When a government is pushed to the wall, rules change. Rules change to benefit government, not people.
I will tell you that what’s happening in Cyprus will also happen in the bigger nations in the European Union, and it may even happen here in the US if we come to the point where our banks are insolvent, and our country is indeed insolvent.
You may ask, ‘When will that happen?’ That will happen and become obvious to all once interest rates normalize.”
Eric King: “In the aftermath of all of this, what do you see around the world that is catching your eye, Michael?”
Pento: “Investors can’t ignore what the Fed, the Treasury, and our politicians here in the United States of America are up to. The sad truth is that our central bank is monetizing (more than) $1 trillion of government-backed debt this year alone.
That action is supporting the housing market. It is in the process of creating another bubble in the equity market. It is levitating our consumption bubble. It is reducing debt service payments for the corporations and for the consumers. It is keeping our government solvent through artificial borrowing costs.
It should never be overlooked that what the government, Fed, and the Treasury have accomplished is doubling down on the same philosophy that created the bubbles of the last decade in the first place. They were money printing, very low interest rates, and debt accumulation. So the cause of the catastrophe of 2008 has been doubled-down.
Therefore, what government has succeeded in doing is making the corporate and banking sectors appear solvent, while at the same time bankrupting the Federal Reserve and the Treasury. Once the free market takes interest rates higher, all of this charade comes crashing down, and that will reveal the insolvency of not only America, but of the European Union and also Japan.”
Here is a small portion of what Pento had to say regarding precious metals: “It’s mind boggling to me that people don’t own more physical gold, silver, and platinum (in this environment).”
