For the next six months, it might be smarter to hold cash...
The Ticking Time Bomb
by Bob Moriarty
321 Gold
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We are about to learn if that thesis is true or not. The irresistible force is the $600 trillion in derivatives. The immovable object is the $60 trillion world economy. Basically a $60 trillion economy cannot support a $600 trillion bucket of used lottery tickets that everyone wants to pretend still have some value. They don’t.
The only real question is just how much actual money is left and I suspect the answer is “near zero.” That’s the ticking time bomb.
I’ve always believed that the growth in derivatives from a low of about $60 trillion in 1997 to its high point of about $800 trillion in 2008 was the foundation stone for credit running totally out of control worldwide.
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Spain and Greece both used non-transparent derivatives to improve their financial books so they could enter the EU. The cooked books are now pretty obvious and Germans are objecting to having to work to the age of 67 so Greeks can retire at 50. Tick. Tick. Tick.
I was watching some of the violence taking place in Spain today and it caused me to realize I needed to write this piece. Greece is the proverbial canary in the coalmine. I think they are going to effectively default next week. When they do, the party stops at once as a series of cascading defaults consume the financial system far faster than governments can print money to dump on the problem.
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This is an important article. Read the whole thing here:
http://www.321gold.com/editorials/moriarty/moriarty053011.html
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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