VON GREYERZ: INTEREST RATES ABOVE 10%?

By Egon von Greyerz

Founder and Chairman

July 1, 2022

Inflation is the big issue. In the USA, the FED is raising key interest rates by 0.75%, but it is largely helpless. It is likely that interest rates will rise as sharply as they did in the UK in the 1970s. This puts further pressure on asset values inflated by low interest rates, actually a deflationary force. Everyday goods are rising at double-digit rates, pulling money out of people’s pockets, leaving less and less money for consumption and other spending. Inflation in goods and services prices and deflation in asset markets will play out simultaneously. Simple citizens will suffer particularly from this, as wage increases will not compensate for inflation. A decline in inflation driven by energy price increases is possible, but does not seem to be wanted. As if it were intentional to make everything more expensive via energy as a basic input. In the short term, arriving backlogs of goods could create an oversupply with large discounts, but in the longer term, goods will become more expensive or disappear from the market. Take precautions now. History has often proven that you can protect your assets with precious metals.

• 0:00 Intro
• 1:30 First inflation too low, then suddenly over 8% and the FED is helpless
• 2:00 Interest rates like in the 70s in England are probable
• 2:40 Inflation and deflation occur simultaneously
• 3:15 Deflation will affect bubble market investors
• 3:45 US housing market and stocks fall, yields rise
• 4:30 Do big bubble asset losses argue for deflation?
• 6:55 Interest rates above 10%?
• 7:30 Buying in corrections won’t work anymore
• 8:10 Inflation is driven by energy
• 10:10 Wage increases will lag behind inflation
• 11:00 Ukraine conflict is not the cause of inflation and economic crisis, only an accelerator
• 12:30 Sanctions are ruining the whole world, especially ordinary citizens
• 13:30 The house of cards might hold a little longer with falling energy prices
• 14:00 Incoming backlog of goods could provide opportunities for a short time
• 15:20 Not being able to afford things with high inflation is becoming a mass phenomenon
• 16:00 Precious metals protect assets, not only in former Yugoslavia
• 16:45 Refrain from unnecessary purchases