Eric Sprott, CEO of Sprott Asset Management, says quantitative easing is "just debasing the currency, which will eventually lead to hyperinflation."
The recent extension of the homeowner credit and giving corporations loss carry-backs while paying unemployment benefits for an additional 20 weeks augur an inflationary if not an hyperinflationary scenario, Sprott notes.
“I really think that once the Fed has spent the $1.25 trillion buying the GSE paper that we might yet see another level of quantitative easing in the States,” he says.
Sprott does see one upside for investors, though: "You can just feel the momentum in gold — it's picking up dramatically" and so too are prospects for a plethora of little-known small and mid-cap gold stocks.
“There aren't too many choices when you're in debt to the level that the U.S. government is,” Sprott told The Gold Report.
“One way of calculating it says there's $72 trillion of debt and other way suggests it is $100 trillion. It's almost academic which calculation you use; it's just an overwhelmingly serious problem. . . it certainly seems that (the Obama administration) is going to try to spend their way out of it,” Sprott says.
Hong Kong’s chief central banker warned recently about the risk of asset bubbles forming in Asia as a result of excess liquidity globally and questioned whether quantitative easing needed to be so massive.
“In Asian economies, Hong Kong included, we've seen very massive inflows of funds due to very low global interest rates and quantitative easing,” Hong Kong Monetary Authority CEO Norman Chan recently told an investor conference.
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