The Great Deflationary Collapse Continues …

by Larry Edelson,

Everything I have been warning you about is unfolding, right on cue.

I’m talking about DEFLATION — the D-word no one wanted to hear more than four years ago when I first forecast it.

The D-word that had all the hyperinflationists up in arms. The D-word that even had some of my colleagues and subscribers wondering if I had lost my mind.

After all, I too once thought that the Fed’s money printing would stir up inflation.

But when gold peaked at $1,925 an ounce in September 2011 right after Ben Bernanke announced the most aggressive Fed printing ever, I knew something was afoot.

I quickly realized that …

One, there’s simply way too much debt in the world. At more than $200 trillion of official total global debts — there is simply no way printing money could offset the deleveraging process that must occur.

Simply put, $3 trillion of Fed money printing, combined with another $2.4 trillion from other central banks over the past several years — a total of $5.4 trillion of printed money — is merely like throwing a coin in the middle of a lake and expecting a tsunami of inflation. It’s not going to happen.

Combined, all the central banks of the world would have to print far more than $200 trillion for hyperinflation to ever strike.

To make matters worse, the deleveraging that started with the real estate crisis of 2008-09 has barely gotten started.

Quite the contrary, the total global debt burden has gotten worse, much worse. Since 2007, government debt has grown a whopping $25 trillion, more than $3 trillion per year.

Total global debt has mushroomed $57 trillion since 2007, more than $7 trillion per year.

Some of the most indebted countries are absolute basket cases: Japan, debt to GDP: 517%. Spain, 401%. Germany, 258%. And the U.S., with official debt to GDP at a whopping 269%.

Two, I also realized, way back in 2011, that the U.S. wasn’t the problem, as indebted as it was, and still is. Nor would it be China, who even today is wrongly cited as the biggest threat to the global economy.

I said way back then, and I warned you repeatedly, that the biggest threat to the global economy, and the biggest trigger to set off a deflationary spiral was none other than Europe.

I was right. Europe was, is and will be the biggest threat to global growth and the biggest force behind deflation.

Why?

Europe’s problems began way back in 1998 with a half-brained attempt to create a United States of Europe with a single currency …

A currency that did not have the proper banking or reserve infrastructure in place to work.

Mark my words: By 2020, the year my war cycles peak, a short five years from now, you will see Europe torn apart at the seams, the euro fail as a currency, wars break out between member countries, and even secession movements succeed within countries.

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