What does the “Greater Depression” look like? Pento says, “Get ready for stagflation, and that’s what I call the ‘Greater Depression.’ That’s when the real chaos begins. . . . You can make an argument that the Fed can fight deflation because it can continue to prop up asset prices. That’s true, and it’s a proven fact, but what does the Fed do when inflation starts to run intractable? When inflation becomes the problem, what can the Fed do? Promise to buy stocks and print more money? What can the Fed do? Print money to buy down interest rates when the economy is in full revolt? When money managers are shorting bonds and driving yields to the moon. No, the only thing they can do is stop printing money and promise to fight inflation. That’s when you are going to get 6,000 on the Dow Jones Industrial average because there’s nothing they can do. The Fed will be rendered impotent.”
Pento suggests that people “get out of all financial products with an adjustable interest rate” and lock in at historically low fixed rates.
In closing, Pento says, “This is the best environment for gold I have ever seen in my career. This is in an environment where debt and deficits are surging. . . . So, debt is exploding, and what does gold like? It likes falling real interest rates. It likes exploding debt, and a little ticker on that is a dollar that’s weakening. That’s why I really like gold.”