Today Michael Pento told King World News that money supply rates and inflation have been exploding around the world. Pento, who founded Pento Portfolio Strategies, also said with currencies burning, global investors need to protect themselves. But first, Pento had this to say about the Greek situation: “The Greeks have done the correct thing. The fact that they have written down their debt is a step towards an explicit default. What they have done in Greece is something they need to do in Italy, Portugal and Spain. When you take down your debt as a percentage of GDP, the way the Greeks have, you will cause a short-term depression.”
“But at least the Greeks have explicitly defaulted on their debt. The Italians, Spanish and Portuguese should follow. But instead of allowing that to occur, they (central planners) have resorted to the ECB doing a massive counterfeiting scheme in an attempt to bailout insolvent nations.
This has never worked from Hungary, to Bosnia, to Argentina, to Weimar Germany. Inflation can never bail you out of insolvency. Because central bankers around the world believe that inflation is equivalent to growth, they are going to persist on this monetization of insolvent debt.
All of your developed countries from Japan, to Europe and America are in a condition of insolvency. As I said, central bankers are trying to monetize this debt away. It will never work, it has never worked and it cannot work....
“So the ECB has now launched their second round of this bond buying scheme. The first round was roughly 500 billion euros and the second round should be the same in size.
We all know Ben Bernanke has increased the Fed’s balance sheet by $2 trillion. That has caused money supply growth rates, as measured by M2, to increase by 10% year over year and 12% in the last six months.
So certain people are telling us that deflation is the problem and yet gas, food and import prices are all showing significant inflation. Oil is now trading over $105. So right now we have the highest price for gasoline ever at this time of the year.
Yet Bernanke is telling you there is no inflation and that deflation is a problem. The head of the central bank is on record telling people that inflation isn’t rising fast enough. Think about that for a minute, the supposed protector of a currency is saying its (US dollar) destruction isn’t fast enough.
When you have your currency burning, your purchasing power is being ignited and inflated away. The first thing you do is run towards something the government cannot increase by fiat. Governments cannot increase the supply of precious metals. People run to gold and silver. They also run to oil and agriculture.
I cannot believe investors look at the price of gold and the way it’s trading, continuously holding around $1,750, and people wonder why that’s the case. How could you possibly trust paper currencies when every central banker around the world is following the example of Al Capone?”