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Forget 1987, This Could Be 1929 All Over Again
Analyst says economic winter could last 8 years, worst is yet to come


Paul Joseph Watson

Prison Planet
Thursday, January 24, 2008

 

The huge debt bubble, which has artificially propped up the stock market since the turn of the millennium, could cause a new great depression according to one expert, who also predicts that investors will flock to buy gold as the dollar continues to plummet.

Financial analysts have been drawing comparisons between this week's chaos and the October 19 1987 crash, known as Black Monday, when the Dow Jones Industrial Average dropped by over 22 per cent and markets sunk worldwide.

But Vancouver-based investment adviser Ian Gordon has gone a step further, seeing clear parallels between current events and those that foreshadowed the 1929 crash and ensuing depression.

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“We’re really seeing a mirror image of what happened following the [19]29 peak in equity prices in the United States, and the subsequent crash in equities,” Gordon told the Georgia Straight. “We’re seeing really the mirror of…the huge debt bubble that was built into the economy in the ’20s in the United States. We’re now seeing the collapse of the debt bubble that was built into the world economies, but principally in the United States.”

Gordon levels the blame at Alan Greenspan for creating a huge bubble by injecting too much money into the system in an attempt to offset the "economic winter" that inevitably arrives as part of the boom and bust cycle of the fiat money system, arguing that the realistic peak in the stock market occurred in 2000.

Gordon predicts that the "economic winter" will last another 7 or 8 years and that the worst is yet to come, with the continued meltdown of the dollar causing people to flock to the safe haven of gold.

“As this whole collapse in paper assets begins to unfold, causing tremendous strain on the banking system, we will see a tremendous rush to gold, to own gold,” he said. “But I think the worst is definitely in front of us, and not behind us.”

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Gordon slammed the huge 75 points rate cut as ineffective, arguing that neither banks or consumers want to engage because of the crippling problems of their existing debts.

The analyst's conclusions are in line with those of Paul Craig Roberts, the father of Reaganomics, who on Tuesday warned that the mess could result in the dollar losing its status as the world reserve currency.

Roberts also cautioned that the rush to diversify into gold could make people's assets a target for government confiscation, as happened in 1933, four years after the great depression.

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