(Kitco News) - While attention is on the Federal Reserve pausing its rate-cutting cycle this week, financial analyst Lynette Zang, CEO of Zang Enterprises, is warning of a looming hyperinflationary depression, pointing to systemic issues within the global financial system.
Speaking at the Vancouver Resource Investment Conference, Zang highlighted the unsustainable nature of current debt levels and the potential for a major economic reset. "We're at the end of a currency's life cycle," she told Kitco News.
Consumer debt and economic strain
Consumer-driven economies are struggling because incomes are not keeping pace with the cost of living, forcing people to rely on credit cards, Zang explained.
With credit card delinquencies rising, it indicates that "those credit cards have been maxed out," and consumers cannot take on more debt. This is not just an issue for individuals but also for governments and corporations, though "individuals just have fewer choices than governments."
Defaults on U.S. credit card loans have surged to their highest levels since 2010, marking a troubling sign for the financial health of many Americans, according to industry data collected by BankRegData. On top of that, credit card lenders have written off $46 billion in delinquent loan balances during the first nine months of 2024 – a staggering 50% increase from the same period last year.
This comes as hopes for significant interest rate cuts in 2025 dampened at the end of 2024 as the Federal Reserve signaled only modest reductions this year. The CME FedWatch Tool forecasts a nearly 100% chance of a hold at this week's Fed meeting.
The banking system as a 'big casino'
The banking system has shifted from traditional lending to high-stakes trading. " Banks make more of their money on trading … The banks have become huge casinos, and those casinos are getting even more risky," stated Zang.
This increased leverage, or "debt upon debt upon debt," makes the system vulnerable to collapse. "The leverage inside of the system makes things look great for a minute," Zang described. "But when it implodes, it takes everything with it. It's a black hole. That's what's going on with the banks."
The tipping point and hyperinflation
The global economy reached a tipping point in 2008, but the effects are only now becoming apparent, Zang continued.
Monetary velocity, or how quickly money changes hands, has spiked, indicating "the start of hyperinflation." This pattern shift signifies that something has changed in the economy.
Zang pointed out that the U.S. is kicking off 2025 with more than $36 trillion in debt, contributing to the stretched economy. She believes that the Federal Reserve and other central banks are adding to the problem by buying the debt, thereby "printing more" money, as it has proven to be "sticky." This situation leaves little option other than hyperinflation.
"It is inevitable. We are going into a hyperinflationary depression. And unfortunately, there's no option other than that because we have to reset into a new system," she added.
While there is "a lot of hopium around" regarding the potential impact of a new presidency, Zang believes "there is no saving the system," adding, "it is dead … too far gone." She advised, "I've studied this since 1987. We are in an extraordinarily dangerous position, and it is critically important for people to create their own security."
Hard assets and community security
Zang advocates for individuals to "become your own central bank" by holding physical gold and silver. She also emphasizes the importance of community, food security, and barterability.
Converting fiat currency into hard assets can protect against inflation. "If you convert your fiat money, your government debt-based inflation-prone money, into hard, sound money, physical silver, physical gold, then inflation is your friend," she said.
Gold & silver price outlook
While Zang does not foresee a complete collapse in 2025, she predicts increased volatility, suggesting that spot silver could reach around $50 while spot gold could reach $3,500 to $4,000. However, she also points out that the actual fundamental value of gold is closer to $40,000, and silver is around $2,000.
For insights on Zang's most significant concern for 2025, watch the video above.
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