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Large financiers and central banks are preparing for a new global economic crisis and a possible global war.
On November 29th, Bloomberg reported that “Gold is the new obsession of East Europe’s nationalist leaders.”
“Just this week, Poland’s government touted its economic might after completing the repatriation of 100 tons of the metal. Over in Hungary, anti-immigrant Prime Minister Viktor Orban has been ramping up holdings of the safe-haven asset to boost the security of his reserves.
The gold rush mirrors steps by Russia and China to diversify reserves exceeding $3 trillion away from the dollar amid flaring geopolitical tensions with the U.S. Motivations in Europe’s ex-communist wing, however, can vary.”
Former Slovak Prime Minister Robert Fico urged parliament to vote for the central bank to return the country’s gold reserves from the UK.
“You can hardly trust even the closest allies after the Munich Agreement,” Fico told reporters. “I guarantee that if something happens, we won’t see a single gram of this gold. Let’s do it as quickly as possible.”
Serbian President Aleksandar Vucic ordered the central bank to boost reserves and prompted the purchase of nine tons of gold in October.
While Russia began to actively build up gold in its reserves, the Netherlands organized the export of 122 tons of gold from London, and the Netherlands isn’t an Eastern European country.
Financial Times, published an article in which Rana Foroohar, a columnist who is known for her skepticism about gold, admits that even she is starting to get intimidated by the intensity with which interest in gold is rising:
“Gold bugs have always struck me as paranoid. You have to really believe the sky is falling in order to hoard physical bars in a digital age. So, it’s rather worrying that some investors and central bankers are talking up gold.”
Recently, billionaire financier Ray Dalio explained that the dollar and, accordingly, dollar debt obligations may depreciate due to the US budget policy and the actions of the US Federal Reserve and that in this context it is worth remembering the old financial saying.
“Gold is the only asset that you can have and which it will not be someone’s debt obligation.”
Thus, it is the assumption that competent central banks and well-informed billionaires-financiers are preparing in advance for the inevitable.
The Valdai Discussion Club’s Alexander Losev also asked whether a global economic crisis was on the horizon, in an article published on the club’s website.
He cited data from the Washington-based Institute of International Finance. According to it, global debt reached $246.5 trillion in the first half of 2019, which is about 318 percent of the world’s GDP.
“However, despite the unprecedented growth of world debt in the past ten years after the 2008 crisis, investment activity in the real economy is declining, growth in the world economy and international trade is slowing and the risk of a global recession is on the rise.”
Furthermore, global debt is actually growing faster than the economy, for every 1% growth, there is a roughly 2% increase in debt.
In its half yearly report on the condition of world financial markets, the IMF warned that it will be impossible to service almost 40 percent of the corporate debt in the eight leading countries – the United States, China, Japan, Germany, Great Britain, France, Italy and Spain.
In conclusion, Losev said that the current global economy was threatened by “the seven swords of Damocles,” all at the same time:
- (1) a global credit market bubble;
- (2) the condition of the US economy on which Federal Reserve actions depend;
- (3) a potential crisis of overproduction of industrial goods, including in Germany and China;
- (4) the US trade and technological confrontation with China and other countries;
- (5) the risk of recession in the advanced states;
- (6) the behavior of the markets; and,
- (7) the financial and economic health of the developing nations.
It is currently just a matter of time which of these risks will be first to become reality and blow the house of cards down.
Since the Valdai Discussions Club is a Russian-led endeavor, the author specifically pointed attention to the relatively stable situation in Russia, but underlined that it wasn’t immune to the likely incoming crisis:
“With a strong state budget structure, conservative financial policy, low debt and a flexible money-and-credit policy, Russia is much better prepared for a world crisis than the majority of other countries. However, structural weaknesses in the Russian economy make it vulnerable if prices on raw materials fall as a result of a global decline.”
An expected big crisis is also increasing chances of regional and even global conflicts as the Anglo-Saxon elites will try to use them as a tool of delaying the crisis for themselves and opening new markets through conquering ‘non-democratic states’ and looting their resources.
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