Today James Turk warned King World News about the spark that will send the world into a hyperinflationary spiral, as well as the next banking crisis. Below is what Turk had to say in this extraordinary interview:
Eric King: “I have to ask you about all of the stimulation coming out of Japan?”
Turk: “We have this horse race as to which currency is going to be destroyed first: Is it the dollar, euro, pound, or the yen? And right now the yen is leading that horse race. What they (the Japanese) are planning to do is buy more government debt, which is going to be financing more government deficits.
Turning government debt into a currency is ultimately what leads to hyperinflation….
“So they are not only going to get out of their deflation, but they are also going to go into hyperinflation. This could be the spark that sends the hyperinflationary spiral into other countries as well because people are focusing attention on what the central bank is doing in Japan, and when they start to do that they will see that the central banks in their own countries are doing the same thing.
Today was an interesting day in Japan as well because the Japanese bonds initially rose in price. The yield fell on the announcement thinking the Bank of Japan is going to be buying Japanese government debt and that would increase the demand for the debt.
Then, when the central bank governor said, ‘They are not going to finance the government deficit,’ the Japanese interest rate soared. Then they backtracked and the interest rates basically were unchanged on the day, but that kind of volatility is going to become more apparent not only in Japan, but also in the major industrialized countries.”
Eric King: “James, when you discuss Japan going down, how shocking and destabilizing will that be for the financial world?”
Turk: “It could be the straw that breaks the camel’s back, Eric. We are on this path to currency destruction. Debt is a two-edged sword. It can be useful but it can also be harmful. And when you are borrowing money and turning that money into currency, monetary history shows that is how currencies are ultimately destroyed.”
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