“Ironically, the ECB´s zero interest rate policy designed to promote credit expansion will finally lead to a credit contraction. There will be a severe recession and a fall in the money supply. The crisis will not only endanger the banking system but the euro as such, because troubled Eurozone government will try to recapitalize their banks through a monetization of newly issued debts.”
USAGOLD note: The situation Bagus describes explains the strong demand for physical gold in Germany and other European countries. A large cross-section of the European citizenry has a very strong historical perspective passed through families as to what can go wrong with a banking system and why gold is a necessary ingredient in the properly designed asset portfolio. . . And now there is trouble brewing again on Europe’s southern flank.