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Debt Investing: Europe on the Precipice
Pinnacle Digest writes: Browne compares Europe's current predicament to the time period right before World War I. He does not suggest we are on the verge of a World War, but that the situation has become so delicate in Europe that a wrong decision at this stage could have devastating global repercussions. Although his most recent publication was released prior to the announcement from the EU to unify its banking system, which will see the ECB take on more of the financial burden of distressed banks in Spain and Italy, the story is the same. John Browne, knows as well as anyone that it means one thing: more money printing.
Browne explains that the central banks still think the answer to the debt crisis will be solved with more debt and more money creation. In much the same way that the generals of World War I continued to order frontal offensives, even after each prior assault had proven useless, today’s politicians continue to pump fiat money into the front lines. This has failed to trickle down into the housing sector or into the job market as regulations and deflationary forces continue to stall any real growth. As the recession continues to worsen and EU banks continue to need fresh cash to stave off bankruptcy, central banks will be forced to flood the markets with even more money.
In a recession cash is king. In a depression gold is king. Our team at Pinnacle believes that as governments increase in desperateness to stimulate the economy, gold will rise as inflation becomes evident. The price action on gold today is case and point. Browne advises transitioning one’s assets more and more into precious metals.
Browne sums up the situation quite nicely, when we stated, "Confronted with economic problems that they are unable to understand and political problems that they are unwilling to untangle, they’re hoping to solve existing problems by injecting ever greater quantities of printed money into their economies.”