Doing The Math

Grant Williams is a strategy adviser for the hedge fund, Vulpes Investment Management in Singapore, as well as the blogger behind the popular Things That Make You Go Hmmm….  In the following video, Williams reviews the disconnects between the economic realities that exist in today’s world and the rosy pictures painted by governments, central banks and the main stream media.

  • Williams’ problem #1: The disconnect between fundamentals and equity prices.
  • Williams’ problem #2: The paradox behind China’s mysterious GDP growth during a time of reduced manufacturing, shrinking demand for raw materials and declining imports/exports
  • Williams’ problem #3: How is France able to sell its sovereign bonds at such low interest rates when all indications of its own economy are performing like those of the European periphery?
  • Williams’ final problem: The difference between the “Gold Price” and “The Price of Gold”

In the end, the laws of mathematics cannot be subverted by governments or central banks.  Central banks’ zero percent interest rate policies are damaging:

  • In the short term through the confiscation of savings and the forcing into riskier investments in the search for yield
  • In the long term by suppressing market volatility, which must be reconciled at some point


Mathematics, rightly viewed, possesses not only truth, but supreme beauty – a beauty cold and austere.
– Bertrand Russell

The Soverign Debt Solution

The Solution to the Sovereign Debt Crisis

After all is said and done, this is basically what’s been happening in Europe, where countries like Spain, Greece, Ireland, Portugal, Italy and Cyprus depend on each other and the stronger members of the European Union to keep buying their bonds, burying them ever deeper in debt (to each other).

But it’s not limited to just Europe, of course. The US is in just as bad of shape as far as debt is concerned.  In all western nations, as the cartoon above adequately portrays, there seems to be a symbiotic relationship between the banks and the countries in debt.  The banks enable the governments to keep borrowing just to be able to buy more debt from other countries’ governments, which are doing the exact same thing.  The whole sovereign bond market is one giant Ponzi scheme, just waiting to capsize.

The End Game

We have around 6 months left of trading in Western markets to protect ourselves,” according to Raoul Pal, founder of Global Macro Investor and former Goldman Sachs hedge fund manager. “The problem is not Government debt per se. The real problem is that the $70 trillion in G10 debt is the collateral for $700 trillion in derivatives.”  See entire presentation below.

It’s now more important than ever to protect your hard-earned wealth from being destroyed by inflation or even outright theft by financial and government institutions. Please see our Protect Your Assets series to learn about ways to secure your wealth in the coming economic collapse.

The End Game