Search Blog Posts

Sunday, August 17, 2014

The Unwinding of Western Economies and the Next Golden Bull

Jay Taylor
Jay Taylor on the Unwinding of Western Economies and the Next Golden Bull
With Anthony Wile - August 17, 2014
The Daily Bell is pleased to present this exclusive interview with Jay Taylor
Daily Bell: Hi, Jay. Thanks for sitting down with us again. What's new with you? Any publications or conferences you want to mention or special appearances? What are you focusing on in your radio show lately?

Jay Taylor: I am now more focused on the gold and silver mining sector than I have been in a long time because I believe this is the most exciting time to pick up junior gold and silver mining stocks that I have seen since I began covering this sector back in 1981. 

The perfect storm for gold is very near, as many decades of lethal socialist economics is destroying capital and capitalism. When the fragility of the global monetary system is recognized by all, value will rapidly flee fiat currencies and return to gold. Thus, the holders of gold will hold true capital in the form of honest money, namely gold and to a lesser extent, silver. We are in a process of massive deleveraging of the financial system and historically, we know from over the past 300 years that when that takes place, the real value of gold rises dramatically and with that the gold mining industry enters a prolonged gold bull market. We are nearing the final leg up in the gold bull market, which I believe will take place over the next five years. With that, I believe fortunes will be made by those invested in gold and silver mining shares.

So given this view, I am staying focused on the gold and silver mining sector and I'm also using my web-based radio show, "Turning Hard Times into Good Times," to try to help as many people as possible learn about what the real reasons for our economic malaise is and what is actually true about American foreign policy. Both economic and foreign policy are so afflicted by an Orwellian fog that most American voters at best have the IQ of a moron when it comes to understanding the important issues – which is by the design of our establishment. So with the help of countless fabulous guests the message is getting across not only in America but around the world. My show can be listened to live on the Voice America Business channel every Tuesday between 3:00 and 4:00 PM and you can download each show the following day at I have a long list of amazing guests like 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.

To help on the geopolitical side in terms of what is actually happening, as opposed to the mainstream media version, I have Daniel McAdams of the Ron Paul Institute for Peace and Prosperity with me almost every week. But aside from Daniel, other outstanding guests along those lines have included the likes of John Perkins and Daniel Estulin. And I also frequently have the GATA guys on my show because I think there is little doubt but that the gold markets are being capped to keep a frenzy out of paper into real money because the day that happens, it will be the end of the Anglo-American empire.

Given my extreme bullishness on the mining shares that is, of course, the main focus of my newsletter, "J Taylor's Gold, Energy & Tech Stocks," which can be accessed here.

As far as appearances are concerned, most of the venues where I had been speaking have either shut down or have cut back so my traveling and public speaking has been significantly reduced. The reason the venues have shut down is that the gold mining industry has been in a depression starting mid-2011 so junior mining companies do not have funding available for the various mining show conferences. I take that as one sign that the bottom is all but in for the junior gold and silver mining sector.

Daily Bell: Okay, some nuts and bolts. Is there more deflation in store for the US? Have the imbalances been wrung out?

Jay Taylor: What we have had is a massive inflation of what I call "debt money" because actually, debt is the raw material from which fiat money is manufactured. You can see from this Debt/GDP chart below that there has been a very modest reversal of total debt (public and private) to GDP in the U.S. post-Lehman Brothers, but it still remains north of 340%. That is far greater than the previous extreme during 1932 of 295% and hugely out of line with a range from 1870 to the mid-1980s of between 120% and 180%. If this isn't a picture of growing insolvency, I don't know what is.

(Click on chart to enlarge. Source:

The problem is that we have all been brought up on the Keynesian lie that all we need for progress is excessive spending and "animal spirits." No need to save or delay any consumption your little heart desires. No need to worry about balance sheets. Just spend, spend, spend even if it means debt is growing exponentially while income is stagnant or declining. I guess we have come to this point because somehow humankind loves the big lie. I guess many people simply command themselves to ignore reality and believe in fairytales. 

Believing in Keynesian economics is akin to believing in the tooth fairy.

Daily Bell: You once told us the West is on a steep and slippery slope. Now mainstream economists speak of a recovery. Were you wrong?

Jay Taylor: Yes, they speak of a recovery just like they think animal spirits and excess spending funding by excessive printing press money is all you need for prosperity. Unfortunately, nothing was learned from the 2008-09 experience. No, the West continues on a steep and slippery slope. Some, like Robert Prechter, think we are approaching another Dark Age. We can only hope and pray he is wrong but I fear he may be right.

Daily Bell: Is reflation working? Is the Fed going to tighten? Is QE really over?

Jay Taylor: Reflation is working only to the extent it is holding back powerful forces of deflation caused by the creation of debt money. The system if left alone would implode into a deflationary insolvency the likes of which the world has never seen before. The Fed is fighting against that powerful force by creating more money but the problem is that what we have is not simply printing press money, but money that is manufactured by debt, and debt is growing much more rapidly than the income they hope to create by printing more money.

Daily Bell: Are we still headed away from a democratic environment, as you have indicated in the past, especially in the US?

Jay Taylor: No question about it. You and many people who read this excellent format may not agree, but I think we are losing our liberties because our statist educational system, in a very self-serving way, has eliminated from the minds and hearts of Westerners the notion of a Creator or Supreme Being. If the universe was not designed with a purpose and self-sustaining balance by an intelligent designer then we turn to Caesar, Bush, Obama, Putin or Stalin for answers to life's burdens. Creating the myth of evolution across speciation is a very clever but total falsehood that has convinced most Americans, especially those with higher degrees, that there was no intelligent designer and that there is nothing higher than man in charge of our fate. That was a very clever design of our statist politicians.

"Trust in me," Obama says, and so the people willingly give up a voice in government. Americans don't even seem to care that everything they say and do now is recorded by our government and can be used against us if we disagree with policy. The misplaced logic seems to be, "I'm not a terrorist so I have nothing to worry about." Trouble is, by assuming humans possess attributes like omniscience and omnipotence, you pave the way for dictators. Of course, we now know that Big Brother's cousin, NSA, has one godly attribute, namely omnipresence. So he knows what you are thinking and doing, and depending on the definition of a "terrorist" you may just be one by virtue of opposing your government's policies.

Daily Bell: Give us an update on the euro. Is the EU going to split up or has the crisis been weathered?

Jay Taylor: It's all about how much longer the existing ruling elite can hold the existing global monetary system together. Of course, all the currencies these days are counterfeit but as long as the U.S. military remains supreme, I suspect the dollar will be the last one to go. However, as the parasites that run American continue to consume all the remaining capital, I think the Anglo-American Empire is now approaching desperation, which is why all manner of false flags are being used to con Americans and Europeans to beat the hell out of any country that doesn't want to use the dollar. 

At some point there will be a tipping point. I thought the Ukrainian conflict might pull Europe away from the U.S. but then, just like a false flag last year in Syria, I suspect we just witnessed another in the Ukraine with the downed Malaysian airliner. Only NATO and the puppet government established in Ukraine by the U.S. intelligence operation stood to benefit from such a tragedy. 

Whether we witnessed a false flag or not, the outcome was the same.

But as the global economy continues to contract we will see how long the geopolitical winds favor the U.S. and NATO. Indeed, Mario Draghi just noted that sanctions against the Ukraine are helping to push Europe into a recession. At some point, it's hard to see how the financially and morally bankrupt Western world won't implode or explode with nations seeking to look out for their own interests in defiance of the move toward a one-world government. 

But until that day arrives, I think the dollar remains the strongest currency and the linchpin and support of the Euro.

But as economic problems become more acute in Europe, we may very well see the Eurozone yet pull apart. Or perhaps the Fed will continue printing money to fund Europe, as it did in the recent past. 

That way, Europe will continue to be indebted to the U.S. What better way for the Anglo-American empire to lord it over Europe? 

The cracks are there to drive the Eurozone apart and to drive Europe from the U.S. But it's impossible to say when a tectonic shift will occur or what will be the catalyst that results in more decentralization around the globe. The powers that be are leaning hard against it because they are parasitically feeding off of what is left of the middle classes.

Daily Bell: Where is Britain headed? Out of the EU?
​Read more from Daily Bell