With Dexia bank failing, MF Global failing, and German government bond auctions failing, Bad Ass Billionaire Eric Sprott thinks it’s time for even the non-Austrians out there to start connecting the dots.
He predicts that we will either head into global hyperinflation (if governments put their printing presses into permanent infinity mode) or hyperdeflation (if governments can bring themselves to hit the off switch at some point).
Sprott is starting to come down on the side of deflation, rather than inflation, but in either case he thinks (and explains why) gold and silver prices will start to rise exponentially.
Eric King interviews Eric Sprott about such matters, for the ‘listeners globally’:
- Financial Crisis Worse than 2008, Gold, Silver, & More, Eric Sprott, King World News Interview, Sunday, November 27, 2011
Personally, I think Mr Sprott is giving democratic governments too much benefit of the doubt. I think they’ll simply be unable to resist the printing press button, and will be unable to turn the damn things off.
You can wire up a mouse’s brain such that if it presses a small button, it can stimulate its own neural pleasure centres in the septal nuclei (think ‘The Orgasmitron Machine’ in the Woody Allen movie, Sleeper). Such a mouse will starve to death, even if offered food within a few inches of the button, if going for the food means it has to stop pressing the button.
As mice are much more intelligent than typical government ministers in a democracy, and as printing presses brings governments intoxicating temporary pleasures (as evidenced in a recent Newsnight phrase of some BBC idiot, ‘The Bank of England will support British business with more injections of currency’), then I’m sticking to the hyperinflationary story.
However, as Mr Sprott is a billionaire, and as I am not yet a billionaire, I must listen to his argument. In either case, whether we go into hyperdeflation or hyperinflation, gold and silver save the day, so whether I am right or Mr Sprott is right is merely an interesting academic exercise.
Whatever the case, when it comes to gold and silver, Mr Sprott’s advice is to get some.
Obviously, if you think the Keynesian economists know what they’re doing, know what is causing these problems, and know what the solutions are, and if you think that the democratically-elected government politicians that they advise can be trusted to be honest, wise, and correct, then you can safely ignore him.
UPDATE: On the German bond failure, take a look at this, by Robert Wenzel, about why it failed. Curiouser and curiouser…