Jay Taylor: Super Deflationary Depression May Be Looming
By Anthony Wile - February 01, 2015

Introduction: Jay Taylor is the editor of J Taylor's Gold, Energy & Technology Stocks newsletter. Throughout his career, Mr. Taylor worked as first a commercial and then as an investment banker. Most recently, he worked in the mining and metals group of ING Barings in New York. Prior to that he was involved in the first gold loan made in modern times in the U.S. to Amax Minerals, a 250,000 oz. loan facility led by Citicorp. In 1997 he resigned from ING Barings to devote himself full time to researching mining and technology stocks, writing about them in his newsletter, and assisting companies in raising venture capital.

Jay Taylor's web-based radio show, "Turning Hard Times into Good Times," can be heard live on the Voice America Business channel Tuesdays between 3:00 and 4:00 PM and can be downloaded the following day at JayTaylorMedia.com. Jay's guests have included, for instance, Jimmy Rogers, David Stockman, Ron Paul, Marc Faber, Doug Casey, Eric Sprott, John Hathaway, Edward Griffin, Howard Davidowitz, Ian McAvity, James Turk, Mish Shedlock, Richard Maybury, Rick Rule, Robert Prechter and Lewis Lehrman, to name a few. He is joined weekly on podcast discussion with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity in "A Foreign Policy Week in Review with Daniel McAdams" and also weekly with David Jensen on "A Fundamental Look at the Gold Markets with David Jensen."

Anthony Wile: Hello, Jay. Let's jump right in. We asked some of the following questions when we interviewed you six months ago, so please emphasize how you think things have changed or evolved, and where you've been correct, or surprised. First, what's the biggest issue facing the West today economically?

Jay Taylor: The biggest issue facing the Western world today is "counterfeit money." Central bankers are doing exactly what mafia dons are thrown in jail for doing, namely creating counterfeit money. They create money out of nothing, which then is multiplied many times over by a dishonest fractional reserve banking system. But this banking system that is used to multiply the first counterfeit dollar into 10 to 100 times more fraudulent dollars does actually have a "raw material" from which it is manufactured. That raw material is DEBT. So whenever our current insane central bankers engage in QE, they also create an equal amount of debt into the monetary system. And because of malinvestment, income to service, that debt has not kept up with the growth of debt, as the chart shown here illustrates (click for original, slighty larger). Even if you believe the government's inflation numbers (I do not), income (GDP) is growing in a linear manner while debt is growing exponentially.

Somehow, the Keynesian PhDs from Ivy League and other elitist universities – those guys who receive all the Nobel prizes in economics – think there is nothing wrong with this picture. And seeing nothing wrong with the fact that debt is growing exponentially while income grows in a linear manner (at best), they continue to engage in the same failed monetary policies as in the 1930s only more so since the Lehman Brothers failure almost destroyed the Western world's economies. Doing the same thing over and over again and expecting different results is the definition of insanity. One wonders if our leaders are neurologically impaired or downright satanic.

Anthony Wile: Is the U.S. in a recovery, as Yellen has stated?

Jay Taylor: If you put blinders on and accept the government's inflation numbers, you can make a case that we have had a recovery of sorts, though even using the official "Pravda" numbers, even mainstream pundits admit this is the most tepid recovery by far than any we have had since the 1930s.

If you are a middle-class person like I am and if you take the blinders off and do not rely on mainstream news sources as your sole source of "intelligence" you have to believe the economy continues to shrink. Not only is the total number of employed workers continuing to shrink but average take home pay continues to decline for most employed people. Now, if you believe the CPI should measure the cost of keeping a family of four alive (as it did in the 1960s and 1970s) and if you used the same yardstick to measure the rise in the cost of staying alive as back then, economist John Williams makes the case that we have an inflation rate in the 8% to 9% range. If you factor that inflation rate into the GDP number, then indeed the U.S. economy has been in a contraction ever since the 2008-09 financial crisis. I believe that is the case.

Anthony Wile: Will QE help bring Europe out of its slump?

Jay Taylor: Europeans may get a short-term economic shot in the arm and it may buy a short period of time before debt deflation plunges it over into the abyss. And politicians may use a lot of good old Bernaysian propaganda combined with government transfer payments, entertainment diversions and lots of booze to keep the populace tranquil. But QE will never be successful if by success you mean a restoration to a truly vibrant, productive economy.

Lord Keynes no doubt scored high on any IQ test he may have taken, but they say Einstein had trouble tying his shoes. All of these very bright elite economists have trouble "tying their shoes." They simply don't live in the real world and don't observe how human beings actually behave. Or perhaps they simply want to manipulate the individual into a collectivist web that they control. These elitist economists are remarkably ignorant about how true free markets allocate scarce resources far more efficiently than a group of central planners. And if these elites intended to destroy capitalism, they could not have done a better job than they are doing now by hiding price discovery of capital by zero (even negative in some cases) interest rate policies.

Anthony Wile: How has it worked in Japan?

Jay Taylor: Worse than bad. The statistics speak for themselves. The BOJ has now had decades of QE with bigger and bigger doses coming faster and faster. Japan is a basket case. Why would anyone invest in a country that is destroying its currency and economy with zero interest rates and an impending hyper inflation as its currency is now accelerating toward a total state of worthlessness – as all Western currencies are doing? Clearly, the G7 is coordinating efforts among the various central banks of the G7 to take turns debasing their currencies so that as long as people accept these debt-based fiat currencies, they continue to appear viable. But, of course, collectively all of them are in a race to the bottom. The only currency that is stable and has existed over centuries, and that since mid-December is now gaining against all other currencies – even the "strong" U.S. dollar – is gold.

Anthony Wile: What is the point of debasing the currency?

Jay Taylor: To fool the people into thinking they can get something for nothing and to reallocate wealth from those who create it – the miners, manufacturers, farmers and inventor – to those who control it – those being the bankers and government.

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Anthony Wile: Why hasn't gold reacted more to all this liquidation?

Jay Taylor: Gold is highly manipulated by a handful of very large financial "too-big-to-fail" institutions. I would strongly suggest your readers listen to my weekly podcasts at jaytaylormedia.com/audio. The podcast called "A Weekly Look at the Gold Market Fundamentals with David Jensen" is gaining rapidly in popularity because David not only provides concrete evidence of gold market manipulation by these too-big-to-fail institutions but he explains how they destroy gold (and silver) price discovery through massive paper contracts that they can create out of nothing. This is happening just as certainly as price discovery of capital is being destroyed with massive money printing. As David has pointed out, there is more paper gold and silver traded in a day than is mined in an entire year! He provides evidence that there are a handful of really huge players that can hit the markets with hundreds of millions of dollars of "sell" orders in a matter of minutes to turn markets downward at exactly the time they would otherwise rise.

There may be a few of us "crazy" gold bugs buying into that weakness but by keeping price discovery from happening in the gold markets, these few too-big-to-fail bankers keep the masses disinterested in selling what they create out of nothing – paper assets – to buy gold. To put it simply, what we have here is a legal license held by governments and bankers to rob people of the wealth they create. It's a case of the fox guarding the chicken coup pretending to befriend us chickens. But not one in a thousand Americans are aware that the Federal Reserve is a "hungry, dangerous fox."

Anthony Wile: Are the Chinese and Indians buying gold?

Jay Taylor: From all the reports I read outside of the mainstream the answer to that is "yes," and an enormous amount of it, too. Unlike citizens in the Western world, people living there have a very healthy distrust of their governments just as the founders of the U.S. had, which is why they kicked an evil, brutal King of England out of here in 1776.

Applying the propaganda tactics of Edward Bernays, those "foxes" have learned very well how to convince us they have our best interest at heart as they print money to give things away to both rich and poor in what is rightly described as "Operation Parasite." Both the rich and poor constituency has been growing. The Rich get massive installments of QE pumped into the economy whenever the stock market throws a "hissy-fit." That drives stocks higher. Bingo! You have a transfer of wealth just like that! As for the growing number of poor, with fewer people working, a record number of people on food stamps and the aging population we now have more people voting for a living than working for a living. Yet propaganda continues to suggest things are well in America so why is there any need not to trust Uncle Sam and the Fed?

The Chinese, Indians and Russians, on the other hand, have not been so effectively "kept down on the mushroom farm" as Americans have. They know from recent history that gold is pure, unadulterated wealth that will not be destroyed as they have witnessed with their government money.

But at least with China (Russia, too) the massive buildup of gold is not only driven by individuals. It seems that a buildup of gold reserves is a policy on the part of the BRICS governments as they seek to establish their own monetary system to avoid the abuse of the Anglo-American Empire that continues to live off of the remaining spoils of the past two world wars. But as the wealth of the developing countries has grown over the past number of years, the BRICS are flexing their muscle and as the U.S. pushed sanctions on Russia, it is causing the pace of a competing monetary system to accelerate. While I applaud that on the part of the BRICS, I worry that is why the U.S. is becoming so aggressive in the Ukraine and elsewhere.

The U.S. and NATO do not want to allow the Chinese to protect their own sea lanes and they don't want to allow an elected government in the Ukraine to get too close commercially to Russia. So we have had NGOs foment an overthrow of the Ukrainian government just as the U.S. has in many other countries since it first did it in Iran in 1953. I do worry that the winds of WWIII are beginning to blow.

Anthony Wile: So why did gold move down so markedly a few years ago?

Jay Taylor: You could argue that after 10 years of successive increases it was time for a natural breather. I think there is some truth to that. But I find it very curious as to why gold was so perfectly correlated with QE money growth until the exact time when U.S. Treasuries were downgraded in August of 2011 by S&P. Up until that time both stocks and gold were almost perfectly correlated with the growth in the Fed's balance sheet.

What investors need to realize is that there are two gold markets. First, there is the real gold market, which now exists in Shanghai where before someone can sell gold they need to deposit a bar of gold with the exchange. That is an honest gold market unlike the LBMA and the Comex, both of which are fractional reserve gold markets in which futures contracts are at least 100 times larger than the physical portion of those markets. When a major player comes in with its fiat money, which it has just created out of nothing, and enters a large contract to sell gold and colludes with one in that same institution's club to pass that contract back and forth and to close it out before delivery day, it looks to most observers as if it is a real gold market. It most decidedly is not. It is a virtual market in which you may have been exchanging widgets or any other name you want to call it. But this is considered to be THE GOLD MARKET.

So what I'm saying is there is a vested interest in keeping the gold market highly controlled, especially at key moments so as to keep the masses in the dark about the value of gold and thus keep them focused on what Wall Street can produce out of nothing, namely stocks and bonds.

I'm suggesting there has been a buy and sell manipulation by an oligopoly of too-big-to-fail financial institutions who pass massive futures gold contracts back and forth like a big locomotive moving back and forth on a train track to destroy a real price discovery for gold. And what more important time to do that than exactly when confidence might have been lost in the dollar thanks to a downgrade of U.S. debt by the S&P back in 2011? Was it just a coincidence that the correlation between money creation and gold broke down at that exact time while stocks continued on an upward tear along with massive money creation? It's all part of keeping the masses down on the mushroom farm (keep them in the dark and feed them fecal matter).

Anthony Wile: Do you see it moving back up? When?

Jay Taylor: The Western world's financial system is in a death spiral and that should have led to a trashing of the dollar a long time ago, which would have resulted in a massive bull market for gold. But policy makers have and will continue to exercise all manner of sociopathic con artistry to keep the public's attention from the real cause of our financial problems, that being the destruction of money and markets, which in turn is destroying the productivity of capitalism. Continued wars and rumors of wars are being employed to help to keep people united behind their governments. Isn't it strange how "rogue" nations are those that don't cooperate economically with the U.S. by choosing not to use U.S. dollars for trade? But now there is a rising number of countries including best friends of the U.S. like Canada, Australia and New Zealand that have arranged trade with China that excludes the U.S. dollar as the medium of exchange.

So, while Putin is accused of aggression against the Ukraine I believe it's the U.S. and NATO that are engaging in clandestine efforts with possible false flags being used to justify an ultimate military incursion with the ultimate goal a takeover of Russia. Likewise, we continue to go after militant Islamic groups forgetting the CIA itself has said, "The reason they came over here on 9-11 is because we are 'over there.' "

But all this foreign policy involvement is horribly costly and a diversion that will not fix our economy. I suspect as the economy continues to worsen and when it's become difficult to put food on the table in America, trust in government and its money will, unfortunately, be lost. Then we will see not only a bull market in gold like the one we had up until August 2011, but a bull market that scales unbelievable heights. Gold will rise exponentially, not that it will have become more valuable but because the dollar will be spiraling toward its death along with all the other fiat currencies through history. Only gold has survived the test of time over thousands of years as a trustworthy currency. I suspect that will continue to be the case.

I actually think we may now be very close to a gold breakout, given the fact that gold has, since about mid-December 2014, outperformed the U.S. dollar, which has outperformed all the other currencies. It tells me that at the margin, there is growing distrust among very smart investors that the days of fiat money are numbered. And when confidence is lost in the dollar by the masses, I think silver will outperform gold because it has become far more suppressed than gold in this 3½ year correction.

Anthony Wile: Do you see deflation taking hold around the world?

Jay Taylor: Yes, I do because as noted earlier, debt is growing much more rapidly than income around the world, especially in the West. Looking back at the work of John Exter whose inverted pyramid chart is shown here, the actions of the market are following his outline to a "t."

First, the senior currency (still the U.S. dollar) gets stronger because it has the most debts so that when the system contracts more wealth flows back into that currency when debts are repaid. Secondly, the senior currency is large and liquid enough to accommodate a massive move of wealth into it.

The last stage of Exter's deflation scenario, however, sees wealth finally flowing out of the senior currency into gold, which is outside of the system. It is at that time then when not only gold but virtually all tangible assets rise exponentially relative to the fraudulent debt-based currency that we have all been forced to use for commerce at gunpoint and through the courts by governments. By the way, this is contrary to the U.S. Constitution, which mandated the U.S. dollar be defined as gold and silver. So the courts themselves have bastardized the U.S. Constitution.

Anthony Wile: Is it going to get worse? Is the world going to end up in a deflationary depression? Is it in one already?

Jay Taylor: I hope and pray that is not the case. But based on all the evidence I see and hear when I stop listening to the mainstream propaganda, it tells me that that is exactly where we are headed.

Anthony Wile: Are things worse than the mainstream media claims they are?

Jay Taylor: Absolutely! The mainstream is owned by the same foxes that own the Fed and control our government. They are "guarding the chicken coop" and we are the chickens. Alan Greenspan understood and spoke about that in his 1966 article in the Objectivist newsletter, in his article titled, "Gold and Economic Freedom." Greenspan understood that the fox must convince all of us not to "fly out of our fraudulent U.S. dollar coop" into gold or the statist socialist and fascist military agenda would die a quick death. Those are my words, not exactly the way Greenspan put it, but that is what he meant.

That is exactly why Nixon "temporarily" closed the international gold window on August 15, 1971. Had we remained on the gold standard, Vietnam and Lyndon Johnson's Great Society could not have been funded. There was a great rebellion in the 1960s and 1970s in the U.S. by young people drafted to fight in Vietnam. But now, thanks to the discontinuation of the draft and an economic depression here at home that frees up plenty of men and women to fight as "volunteer" soldiers, and given endless QE, there would seem to be no end to the wars the U.S. will get into, at least as long as the rest of the world and Americans accept the U.S. dollar. The number of employed Americans continues to fall, but were it not for 2.3 million Americans officially in the military not to mention countless thousands more engaged overseas in NGOs the employment picture in the U.S. would be even worse.

Anthony Wile: What about the derivatives market? Will that collapse at some point?

Jay Taylor: Yes. Derivatives may be the trigger for the next sudden implosion. Derivatives give a false sense of security on a micro economic scale by having individuals thinking they have eliminated risk in their own deals. But the system as a whole has become much more risky, not only because of the trillions of dollars of derivatives but because of that false sense of security. Because of the enormous leverage in the system, a relatively small failure by a counter party in a derivative transaction can start a chain reaction of defaults, which like falling dominoes accelerate into a system-wide default. Because of the massive amount of leverage, the next decline may well be much bigger than that of the post-Lehman Brothers economic decline. And with central banks now having used up their firepower with rates still at zero, the next chain reaction set off by derivatives may very well bring down the entire system, as nearly happened after the Lehman Brothers failure.

Anthony Wile: Can geopolitics bring on a black swan and market collapse?

Jay Taylor: Certainly but as I suggested previously, wars may be brought on by growing economic strains and impoverishment at home, as politicians always seem to look for someone other than themselves to blame. If politicians can convince the public that we are under threat by a foreign leader then people tend to put partisan issues aside and sacrifice for what they perceive to be the common good. I expect that is why we are seeing growing numbers of wars, which can then, of course, contribute to even more impoverishment and bring about more "black swans" that sets a derivative default chain in motion.

Anthony Wile: Is the war in Syria going well for the West?

Jay Taylor: I speak with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity in a podcast every week at jaytaylormedia.com/audio. Daniel was Ron's foreign affairs advisor when Dr. Paul was in Congress and he has helped me understand that so much of what our government tells us about its foreign policy is false. If by going well you mean a return to stability, good government and thriving economics for the people of those countries, the war in Syria has been an unmitigated disaster. Same is true in Afghanistan and Iraq and all of the Arab Spring countries where U.S. NGO's fomented revolution. But I'm sure for the military-industrial complex that Eisenhower warned us about as he left the presidency I guess it's going well.

One area that I think you can make money in over the next several years, besides gold stocks, if you don't mind owning shares in companies that specialize in killing people, is defense stocks. I have recommended in my newsletter that we buy some key defense stocks and if we make money in them, take some or all of the profit and contribute it to the Ron Paul Institute for Peace and Prosperity, which spends its efforts in spreading the truth about America's military activities overseas. I would strongly suggest your readers visit Dr. Paul's website and also listen to my weekly podcast with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity.

Anthony Wile: What's going on in Ukraine?

Jay Taylor: The U.S. used NGOs to foment a revolution against an elected government that tried to serve its constituents wisely, which meant walking away from an inferior economic arrangement from NATO and strengthen its relationship with Russia. It made complete sense for the Ukraine to do that, as Daniel McAdams has pointed out on my show. But the American neocons did not like that. Remember, they want to rule the world under a one-world government with them in charge. So it is my very strong view that the U.S., not Putin, is the aggressor in the Ukraine.

Anthony Wile: Will the Ukraine crisis end quietly?

Jay Taylor: I fear not. I fear it could lead to WWIII because there is no way Russia can lay down and let the U.S. and NATO take over Ukraine, which really has been part of Russia for hundreds of years. Not only that but much of Russia's industry including its military hardware is produced in the Ukraine, not to mention the country provides a considerable amount of Russia's food. In defending the Ukraine, Putin is defending the right of Russia to maintain its sovereignty, which I personally applaud.

Anthony Wile: Will Putin be ousted?

Jay Taylor: I'm sure the CIA and various neocons will try just as they have every place else where we don't have a military presence. The CIA tried but couldn't take out Saddam Hussein because he had too many lookalike imposters so the neocons ended up sending in our military under false pretense. Putin may be even harder for the CIA to kill but with a Republican-controlled Congress, I'm guessing there will be more wars and aggression than ever before, including covert efforts to kill any foreign leaders that don't cooperate with the military-industrial complex, which of course includes our banking establishment.

Anthony Wile: Will Europe freeze?

Jay Taylor: Parts of it may freeze. I have seen reports that Russia has cut off gas to four different European countries. I'm not sure of the impact so far but cutting off the export of energy is certainly a trump card that Putin can play as the NATO forces put pressure on him to allow a takeover of Russia.

Anthony Wile: With so many geopolitical and economic difficulties, it's hard to see a light at the end of the tunnel. Where are the West and the world headed?

Jay Taylor: I'm afraid it's to Hell.

Anthony Wile: What should people do – buy gold? Secure second homes? Second passports? Make stock investments so long as the markets go up?

Jay Taylor: To the extent those options are available, all are worthy of doing. A second home and a second passport are not possible for everyone. And for the 50 million Americans on food stamps, buying stocks and buying gold are not a likely option, either. I think you need to build a network starting with your own family and then people in your neighborhood. Ron Paul told me once that everyone should get a trade or some skill set they can use to provide value and stay alive.

But finally, we have to be reminded that as the Psalmist said, "We live about 70 years or 80 if we are strong. Then we go to the home of our ancestors."

I'm nearly 68 years old now, so I have been thinking a lot lately about eternal life and my Creator. I have prayed a lot not only for myself and my family but for a world that seems to me to be spinning out of control. But despite horrible things that have happened to humans throughout history (including the 500,000 children the U.S. military has killed in Iraq alone), I believe the Creator who set this unfathomably huge, intricately balanced ever expanding universe in motion some 14 billion+ years ago, is in control of all that goes on inside the four dimensions of time and space as well as outside of our universe. So I think people need to examine the spiritual reality of life as well as material realities.

For my own personal satisfaction, I have examined the work of a couple of highly regarded mainstream scientists/theologians who provide substantial evidence for the God of the Bible. Of course, Bernays has worked his magic in propagandizing us not to believe in such "fairy tales" and he has been very successful.

Next to a belief in gold, a belief in God is the most dangerous threat to dictators. That is why Bernaysian propaganda is being used in the West by our statist educational system and mainstream media to convince us there is no God. Remember the days when Reagan and other leaders talked about the "godless" Soviet Union? Today Putin is building up his gold reserves and he is allowing "God" into his classrooms while we in America and the West have been convinced that any respectable, sane and well educated person "knows" there was no Creator and anyone who advocates a gold-backed monetary system is also cast as a "religious nut." John Nadler of Kitco was especially keen to pull that stunt. But it all makes sense to me. Why would any blood-thirsty, power-hungry global cabal like NATO wish to have its subjects trust in God and not need "Caesar."

Anthony Wile: Thanks for sharing your perspective on what's important for people to be doing in these times. Has the stock market surprised you?

Jay Taylor: Not really. The stock market is now the god of our legislators and bankers. They will do whatever they can to keep it rising higher because that enables them to engage in a process of legally stealing from the general public with that crime being recognized. Even so, I think this bull market is nearly exhausted, no matter how much money they throw at it. I think the Fed knows it must tighten money to retain credibility but it can't do it without sending the stock market into a tailspin. So I'm guessing soon we will get QE5 to QE infinite at which time, the game may be over. In fact, before the end of this year, I'm expecting a major market decline with the S&P declining to at least 1600 and possibly much lower as confidence is lost in fiat money and a major move toward "stuff" gets underway. Of course, the most portable stuff is gold and to a lesser degree silver.

Anthony Wile: What do you think about the evidently exploding cannabis sector … Good investment opportunity?

Jay Taylor: It's a market I have not studied. I am sympathetic to a free-market approach to cannabis for a host of reasons. I think the government has used drug laws as an excuse for military expansionism in many countries, most notably those south of our border. But I don't have an opinion on investment possibilities, though I'm sure there are some. It should result in less crime and I'm guessing more tax dollars. I suppose if things get bad enough in the economy, the government might actually want all of us passively stoned just as alcohol can keep people less politically active.

Anthony Wile: Should people invest in water and farmland? Any particular geographic areas you would look at?

Jay Taylor: Both a good idea but again, neither are areas I have focused on.

Anthony Wile: Other thoughts, in closing?

Jay Taylor: I believe we are facing a tumultuous year in 2015. I think the sudden decline in oil, copper and the euro may set the derivative dominoes in motion. One candidate for the beginning of a decline is the highly leveraged shale oil debt plays. The detachment of the Swiss franc from the euro is likely to turn thousands if not millions of Europeans into paupers, unable to pay their debts. God only knows how this thing will end, but it's hard to see how it won't end badly. I wish I could be more optimistic but I have to call them as I see them.

Anthony Wile: Finally, please update us on your newsletter, "Jay Taylor's Gold, Energy & Tech Stocks" and your radio show, "Turning Hard Times Into Good Times" and other podcasts that you mentioned. How are those going?

Jay Taylor: I have been doing my radio show since March of 2005 and it is going very well, although with the 3½ year bear market in gold and gold shares sponsors have been harder to come by. More recently, I have begun two weekly podcasts that have really started to catch on. They're on YouTube and many different sites are picking them up. Those podcasts are: "Foreign Policy Week in Review with Daniel McAdams of the Ron Paul Institute for Peace and Prosperity" and "A Weekly Look at Gold Fundamentals with David Jensen." The best way to listen to any of these is to go to the podcasts section of my website, at jaytaylormedia.com/audio where you can listen to or download my weekly radio show as well as both of these newer podcasts.

Anthony Wile: Thanks for your time.

Jay Taylor: My pleasure. Thanks for passing my views along to your readers.

After Thoughts

Jay Taylor has accurately predicted much of what has happened economically in the past half-decade. Like others in the alternative media, he perceives that monopoly money printing is ultimately inimical to prosperity because it causes great booms and busts. He is aware the system is unstable and is not afraid to point it out.

Obviously, we are living through one such bust today and monetary officials are doing their best to re-inflate various bubbles in order to create the perception that the global economy is "recovering."

As Jay understands, economic stimulation via monetary easing does not create an economic "recovery" – only an unstable economic situation that will expand into overproduction on numerous fronts and then collapse, as it always does.

Jay's perspective is that the collapse is looming and that it will eventually devolve into what might be termed a deflationary depression.

We tend to believe that central banks have the wherewithal to print so much money that outright monetary deflation for an extended period of time may not be a certainty. Even in the past half-decade so much money has been printed that disinflation has been the norm it seems, more than outright deflation.

Jay also seems to believe a stock meltdown is imminent – and perhaps it is. But calling the tops of these massive equity melt-ups is quite difficult.

Central bankers, as we have reported, may now be contemplating a "Neo-Plaza Accord" that might devalue the dollar significantly, thus supercharging already highly charged equity marts. You can see that article here: Central Bankers, Please Do Not Unite on a Neo-Plaza Accord

We want to thank Jay for sharing such an extensive interview with our readers.

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