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The western world needs to increase credit at 2% per year to keep growing. If credit expands below that, When the non-hedonic inflation measures are applied, as painstakingly calculated by John Williams of Shadowstats.com<\/a> price inflation is REALLY running around 8 – 9 percent, meaning that real GDP, when deflated by the actual price inflation, is collapsing at 7% or more!<\/p>\n <\/p>\n If a number of these things come together, the world could have financial warfare, deflation, hyperinflation, market collapse. And yet the markets are merrily going along. Do we live in a fictitious world? All what is known, if that is going to happen, the world economy will collapse sooner than later.<\/p>\n <\/p>\n The long-Term Financial Implications are a weakening dollar, which is great for gold. A weakening dollar means higher prices for all things, especially imported goods like oil. Higher prices will push up interest rates. As Russia expands its energy sales to China, the residual supply available for Europe will be smaller, driving European energy prices higher. Escalating international conflicts will lead to larger military budgets, increasing future deficits and weakening not just the dollar, but also all other currencies.<\/p>\n <\/p>\n Let\u2019s suppose as first starter it will be deflation. For that event, gold investors must read: \u2018The Death of Money\u201d written by Jim Rickards. He explains how an executive order raising the gold price to $7,000 will be the only way to break a deflationary downward spiral in the US if money printing reaches its limits and the Fed pulls back, as probably is going to happen this year.<\/p>\n <\/p>\n \u2018The Federal Reserve could make this price stick by conducting open market operations\u2026\u201d he says. \u2018The purpose would not be to enrich gold holders but to reset general price levels\u2026 this kind of dollar devaluation against gold would quickly be reflected in higher dollar prices for everything else.\u201d<\/p>\n <\/p>\n \u2018The world of $7,000 gold is also the world of $400 per-barrel oil and $100 per-ounce silver. Deflation\u2019s back can be broken when the dollar is devalued against gold, as occurred in 1933 when the United States revalued gold from $20.67 per ounce to $35 per ounce, a 41 per cent dollar devaluation.\u201d Although that was a far too low price setting for gold, causing the failure of the intended gold backing.<\/p>\n <\/p>\n His conclusion is that \u201cif the Unites States faces severe deflation again, the antidote of dollar devaluation against gold will be the same because there is no other solution when printing money fails.\u201d<\/p>\n <\/p>\n Logic also tells that money with a fixed supply like gold will be worth more in a world awash with money printing. This explanation just points a path to how it gets there. It takes several leaps forward to achieve this and timing this is always going to be impossible. But events are going to start moving fast.<\/p>\n <\/p>\n A record amount of US treasury bonds recently were sold. Russian sales have been strong since the start of the year. China\u2019s economy is slowing and this could be money coming out for a rainy day. However, this is fully in line with the thesis propounded by Jim Rickards about a US dollar collapse. Gold, he argues, would probably emerge at the heart of a new global monetary system as the only money that you can really trust.<\/p>\n <\/p>\n The Chinese and Russians are working together against the Americans, and there are many countries that would be happy to join them in dethroning the US dollar as the world\u2019s reserve currency. The historic gas deal between Russia and China is very bad news for the petrodollar.<\/p>\n <\/p>\n Also, Russia could announce a major nuclear deal with Iran, where the Russians will build, finance, and supply the uranium for many nuclear reactors. The Russians will do the same for China, and then Syria.<\/p>\n <\/p>\n <\/p>\n The world could be in the early stages of Cold War 2. The European Union will be the first victim. The EU is completely dependent on Russia for its oil and natural gas imports\u2014 over one-third of the EU-28\u2019s supply of oil and natural gas comes from Russia. As it remains a redline issue for Russia, it\u2019s certain that Ukraine will stay out of the European Union and NATO.<\/p>\n <\/p>\n <\/p>\n \u201cWall Street concerned over China\u2019s gold hoarding.\u201dLeung said that the US Federal Reserve loans gold to investment banks such as Goldman Sachs, Citibank, JPMorgan Chase, Morgan Stanley and others every year to trade in the market. The amount of gold ranges between 400-500 tonnes and the move acts to artificially suppress gold prices. When the prices are in their favour, these investment banks buy back the gold and return it to the Fed.<\/p>\n <\/p>\n But this measure is absolutely useless because China is hoarding the gold and does not follow the rules, Leung said. When it sees that gold prices are going down, the first thing it does is buy them, and does not sell when prices continue to fall. It seems that Wall Street cannot do anything to counter China on this, according to Leung. The analyst said that the People’s Bank of China is putting pressure on Washington and Wall Street as the US dollar has been linked with gold prices since its rise as the leading global currency. The Fed hopes to manipulate gold prices in its favor, Leung said, but the Chinese central bank is standing in its way.<\/p>\n![\"money\"](\"http:\/\/finalwakeupcall.info\/en\/wp-content\/uploads\/sites\/2\/2014\/09\/money.png\")
<\/a>the economy enters recession.Assuming a 2% inflation rate means credit would have to increase by $2.3 trillion this year in the USA.But who will borrow that much? The US federal deficit is falling this year; it’s projected to be less than $600 billion. The Fed is in its fourth or fifth tapering. So who accounts for the other $1.7 trillion? As far as is known, nobody.<\/p>\n<\/a>With China signing the natural gas deal with Russia and the president of China publicly stating that it\u2019s time to create a new security model for the Asian nations that includes Russia and Iran, it\u2019s clear China has chosen Russia over the US.<\/p>\n