Weekend Edition How to prepare yourself for an economic collapse Saturday, December 11, 2010 The recent disclosures about the Fed bailouts are an important milestone in the ongoing global currency/
sovereign-debt crisis. The American people are slowly beginning to realize the people who control the value
of their money can't be trusted.
Remember… we were told the Fed's trillions of dollars in bailouts were an emergency measure… only
temporary… and only done for companies that posed a "systematic" risk to the global markets. It turns out
none of that was true. Instead, the printing has become permanent policy. The bailouts have continued –
and gotten bigger. And the rescued companies were politically sophisticated, not crucial to the economy.
What's next? True political rage over the idea we should bail out Europe. I was interviewed in the
Gold Report this past July about the building crisis in Europe. Everything I predicted has come to pass…
Porter Stansberry: From my perspective, nothing Europe has done so far is anywhere in the ballpark of
allowing them to pay down the principal on their obligations. They haven't massively devalued their
currencies, although Hungary is in the process of doing so with its florint. They certainly haven't lowered
the structural costs of their economies, and I don't know that they will be willing or able to do that.
Let me be very clear. I am not at all in favor of competitive devaluation. That's one of the big weaknesses
of the world's paper currency standards. Every country gets out of trouble by basically robbing its citizens
by taking away their purchasing power, but that is what has to be done in the world as it exists today.
For Europe to get back on its feet and to have real growth, it's going to have to massively devalue the euro,
and I expect the euro's structure to change significantly. These governments can cut their budgets and live
under "austerity," but all that's really going to do is slow down their economies even more and make them
even less competitive globally. That's why gold and silver are such important hedges for people to have.
The Gold Report: So austerity won't work.
Porter Stansberry: No, I don't think the European model is going to work. And because it's the world's
argest economic bloc, you're not going to see global growth rebound until some kind of drastic restructuring
of Europe's sovereign debts takes place, or until the euro massively devalues.
As more creditors come to doubt these debt structures, you're going to see a really big problem because
urope will be forced to monetize a lot of debt. That eventually will result in a lot of devaluation and a lot of
inflation. Investors see all this coming, and of course are withdrawing from that currency zone…
I think eventually you'll see some global solution to the sovereign debt problem… What I foresee is the Fed
opening big swap lines with the ECB, and the European Central Bank buying sovereign debts of all these
garbage states as they did with Greece. They're just going to do their very best to inflate it away.
Will they be successful? I can't say; this is a huge experiment in central banking. But if and when the Fed
starts buying up Spanish debt, the American people will go haywire. They won't stand for it. I don't want
o be long in stocks that day, I'll tell you that.
As longtime readers know, I've been warning about the current crisis since 2005. I saw it coming by
looking at the books of the world's major corporations – GM, GE, Fannie, Freddie, etc. Since then,
central bank bailouts and off-balance sheet arrangements – like the U.S. bailout of Fannie and Freddie –
have passed on these debts to sovereign borrowers.
Here's the key point to remember: Bailing out the banks and the corporations didn't make the debt go
away. It merely socialized it. And the only way to actually pay it back is through an enormous inflation.
That's what is underway right now. That's why energy prices are soaring. That's why agricultural prices
are soaring. And that's why precious metals prices are soaring.
It doesn't take a financial genius to realize we can't all get rich through inflation. Sooner or later, this thing
is going to crack. When it does, there will be hell to pay. What do you think will happen when the 40 million
Americans on food stamps can't afford to buy bread anymore because it costs $10 a loaf? Can't happen
here? It already is.
I don't think another analyst in the world has spent as much time as I have studying these bad debts and
the coming crisis. I urge you to watch the video I've made about these issues. I caution you, it's about
an hour long. There's still time to protect yourself from the crisis that's about to take our country by storm…
But not much… All I can do is warn you. You have to educate yourself. And you have to take action.
Regards,
Porter Stansberry
Saturday, 11 December 2010
Posted by Britannia Radio at 13:17