The so-called debt crisis
Those who knew him often wish he were still with us....
I am talking about the great investor André Kostolany.
I would love to know what he would say about the current situation on the financial markets.
What would he think about the debt levels of all Western (and many emerging) countries?
What would he say or write about the financial crisis, gold and silver, etc.?
Well, André is no longer around, and I can't find a similar great investor like him anywhere.
But we do have his columns, of course, preserved in book form.
In one of these books, he talks about the 1987 debt crisis, or as the chapter is called, "the so-called debt crisis."
And this is where it gets interesting:
"One cannot claim that the largest debtor countries, Mexico, Brazil, Argentina would be bankrupt," he writes. "They do have immense wealth (geological) - but they do not have cash in their pockets. Capital and wealth are not identical to cash in your pocket. Now what would happen if these countries could not repay their debts? ... because this much is already clear today: The debts will never be paid. Well, nothing would happen. Nothing at all."
Nothing at all.
"Despite all counterarguments, people continue to spread panic with words like crash or collapse.... Many cite the American bank crash of 1933 ... but today a bank collapse is no longer possible, since central banks are free to decide to what extent they expand the money supply. Every debtor has a creditor, and that creditor is the debtor of another creditor; the last creditor at the end of the chain is the central bank. It owes no one and cannot go broke because it has the printing press in its hands.... The central bank is like the watch on the Rhine."
I wonder if André Kostolany would write this again today.
This chart below represents the growth of the money supply in historical comparison (logarithmic representation). The acceleration at the blue arrow on the right, is the time of the "COVID-19 crisis."
Nothing at all will happen....
But one thing I'm pretty sure of:
Kostolany would be properly invested in American stocks today. And he still wouldn't have much love for crash prophets and those who think you should invest all your money in gold and silver to be safe from the coming crash.
He traded for a hedge fund and then went on his own. He specializes in scalping and fast day trading. His scalping book "Scalping Is Fun!" is an international bestseller and has been sold more than 30.000 times. His books have been translated into 11 languages.