Felix Zulauf is a Swiss money manager who, if I understand him right, that the world is in a deflationary cycle that will last from 2 to 5 years. This is caused by deleveraging because countries have too much debt. The central banks are trying to fight this with quantitative easing. And then some shock will occur, similar to the Lehman Brothers meltdown in 2008, and in a flash (although it will take a few weeks), the dollar will lose most of its value, and there will be currency reform. See the link to the audio interview at http://pragcap.com/felix-zulauf.
Here are some excerpts from the interview:
- We have been living in a fiction for the last 20 years or so, in which we thought that we could borrow ourselves into sustainable prosperity
- When an entity has too much debt, it has to borrow more and more to pay interest. We are in that Ponzi-type of scheme. At some point you have to decrease your income because more and more goes to paying interest service on the debt.
- We are in the final end game of the system as we used to know it over the past 70 years. We are entering a deflationary period which is accelarating and the policy makers are trying to counteract it by using highly inflationary policies. We are dancing on a high rope and we don't know for certain which way the dancer will eventually fail - deflationary collapse or hyperinflation.
- The deflationary pressure on our system will intensify. We will come to the point where there will be a Lehman Brothers/AIG/Citi event in one day happening (entities of the same significance). There is no way the banking system can handle it - they will be bust. But the government can not come in again because they are perceived as being bust too. The central banks will step in bigtime and the balance sheets will expand by a factor of 50 or 100. Once that happens, you have virtually in a matter of a few weeks made the currencies valueless and destroyed them. Within a short period of time we will have a currency reform.
- I see this happening in the next 5-6 years. I can't tell you whether this will be in 2 years or in 5 years or in 7 years, but I think we will see it this decade.
- We won't see conventional inflation or hyperinflation over a period of years, but once the central banks come in, it will happen in a matter of a few weeks. Once you come out with a new currency, you eliminate part of the debt. This will be very different from anything we have seen in the last 70 years.
- If you own a bond you will lose money. Owning gold and real estate, like a farm, is a good thing. We are in a transition period.
- The rates on government bonds will reach a low within the next 12 months, and this will be the end of the 30 year bull market in government bonds.
See also: http://beforeitsnews.com/news/79/413/The_world_is_at_a_major_crossroads._Some_countries_are_at_the_end_of_a_dead-end_street.html
To summarize, I will call his view the "2015 flash meltup theory".
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