Bob Woodward on the 2020 Election

“How Can You Not Be Worried?”

Famed Journalist Bob Woodward brought down U.S. President Richard Nixon with his reporting on the Watergate scandal. Now he talks to DER SPIEGEL about Donald Trump’s "catastrophic" handling of the coronavirus, the outcome of the coming election and his new book, “Rage.”

Interview Conducted By Roland Nelles

Foto: Stephen Voss / DER SPIEGEL

Washington seems dead amid the COVID-19 pandemic. Many of the offices around the White House have been closed, and the few restaurants in the United States capital that have stayed open are usually empty.

Bob Woodward, 77, is also working from home. For decades, he has been among the most important chroniclers of political affairs in the capital. In the early 1970s, he uncovered the Watergate scandal together with his colleague Carl Bernstein at the Washington Post, leading to the 1974 resignation of President Richard Nixon. He later wrote books about the Sept. 11 terrorist attacks and George W. Bush and Barack Obama. Woodward has been awarded two Pulitzer Prizes.

For his new book, "Rage,” which was just published in German, he interviewed top government figures over a span of 10 months, including President Trump.

Due to the COVID-19 pandemic, DER SPIEGEL spoke to Woodward via telephone.

DER SPIEGEL: Mr. Woodward, in your book, you conclude that Trump is the wrong man for the job of the presidency. Why?

Woodward: I concluded that the evidence is overwhelming that he failed catastrophically in managing the virus. In a top-secret meeting with his National Security Adviser Robert O’Brien and others on Jan. 28, it was laid out to him in the clearest terms that a pandemic was coming, that it was going to be like the 1918 Spanish flu epidemic that killed 675,000 people in this country. 

Fifty million people died in that pandemic a century ago. And Trump, instead of telling the public about it, covered it up.

DER SPIEGEL: As of now, more than 8 million people have been infected with the virus in the U.S. So far, 217,000 Americans have died.

Woodward: The president could have leveled with the public -- particularly at his State of the Union Address on Feb. 4 when talking to Congress -- and laid out what's going on, what's happening. He only spent, what, 15 seconds on the virus? 

He said we are doing everything we can. And 40 million people are watching this. He could have said, "I've been warned, and we have a major public health crisis coming."  

And he did nothing of the kind.

DER SPIEGEL: Do you have an explanation for his behavior?

Woodward: I think, doing all this reporting on him and spending nine hours talking with him just this year, he doesn't understand his responsibility as president to protect the people, and he doesn't understand his responsibility to tell the truth. And he does not understand his moral responsibility to carry out the duties of the presidency. 

I know some Republican senators who agree that Trump is the wrong man for the job but will not say so publicly and are silent. Based on the evidence I had, I was not going to join the ranks of the silent.

DER SPIEGEL: Trump was willing to talk to you for your book, seemingly to explain his view of things. You conducted 18 interviews with him. Sometimes he called you during the night.

Woodward: It was after 10 in the evening.

DER SPIEGEL: You always had a voice recorder with you so that you could record him if he called you unexpectedly.

Woodward: I had to do that. Only once did I not have the machine with me and I couldn't record him. So, I took notes.

DER SPIEGEL: How did the meetings with Trump in the Oval Office go?

Woodward: The first interview was on Dec. 5, 2019, so that's last year. And I went in and took my little tape recorder, my Olympus tape recorder. I turned it on, put it down on the Resolute desk and said to him, "This is all on the record for a book that will come out in September and October," and I repeatedly told him I was recording it. He knew that, acknowledged. 

I went into the office, and he had pictures of Kim Jong Un there. He had propped in the binder copies of the letters he had exchanged with Kim, and then in the center of the desk, he had these formal appointment orders for judgeships, which are very important to him. And it was kind of like these are the props he has.

DER SPIEGEL: Trump wanted to make an impression on you?

Woodward: He showed me the pictures of Kim Jong Un, which he said were unique. But they were all familiar. The same pictures were everywhere on the internet.

DER SPIEGEL: You write about these letters that Kim Jong Un sent to him that were full of flattery, in which Kim Jong Un called him "Excellency" and once wrote that his relationship with Trump was like a fantasy film. What were you thinking when you read through these letters?

Woodward: Well, I thought this is Trump doing it his way. He told me that all he gave Kim Jong Un was "a fucking meeting.” It was risky. But Trump argues that we have not had a war, and he thought there might be a war at one point. 

I am not so sure of that. This is something Trump maybe did right. Maybe he did it wrong. We don't know. 

Having served in the U.S. Navy during Vietnam, painfully aware of war and its consequences, I have to give Trump some credit, for not having a war.

DER SPIEGEL: There were preparations for a nuclear strike. Jim Mattis, the secretary of defense at the time, went to the National Cathedral in Washington D.C. to pray.

Woodward: What a moment in history that the secretary of defense has to go pray and reflect on his responsibility that in order to protect our country, he may have to incinerate millions of people. It's chilling.

DER SPIEGEL: There are a lot of interesting scenes in the book where you describe the relationship between Trump and other top officials, including Mattis and Rex Tillerson, the then secretary of state, and then Director of National Intelligence Dan Coats. All these people come to the conclusion that this president is a threat to the national security of the United States. Why did they serve under him?

Woodward: Well, he recruited them. All three of them‑‑Mattis, Tillerson, and Coats‑‑were at the end of their careers. He made pledges or implied they were going to have control of their departments and access to him. 

And this is one of his frauds, one of his broken promises. Trump just ignored them, issued orders by tweet, no organization, no consultation. As Mattis says, it's government by Trump's impulse of the moment, dangerous, hazardous, makes no sense. 

This is a leadership failure.

DER SPIEGEL: You exposed the Watergate scandal. Is Trump in any way comparable to Richard Nixon?

Woodward: Nixon was a criminal, and we wrote that. And it was proven with his secret tape recordings. No one has proven that Trump is a criminal to my satisfaction. Yes, there are lots of questions. There's the Mueller investigation, the impeachment, but no one ever established criminality on his part. 

Trump has failed above all to protect the country from the pandemic. 

In Vietnam, the total number of deaths on the American side was 58,000, and the pandemic will soon have caused four times as many deaths in the U.S. It is the president's duty to warn the people. Trump did not do that. Instead, he denied and failed to manage the crisis. 

And there is still no plan.

DER SPIEGEL: Many people would say that democracy is in danger in the United States, and that Trump wants to govern like an autocrat. Do you agree?

Woodward: I write in the book that leadership failed, but democracy is holding on, at least for the moment. He doesn't go around shutting down the press. No one has raided my offices or home. The free press still operates. We have a functioning electoral system, though he's attacked that too.

DER SPIEGEL: The polls strongly suggest that Trump is going to lose the election on Nov. 3.

Woodward: Well, it is certainly possible that he is going to win. A number of people think it's not possible. I don't believe the polls. I talked to him at some length about this. Are you familiar with Barbara Tuchman's book, "The Guns of August”?

DER SPIEGEL: … about the outbreak of World War I …  

Woodward: … which I talked to Trump about. Barbara Tuchman points out that in Europe before the war, the old order was dying, and people didn't realize it. And I think in 2016, in this country, the old order was dying. Both parties failed to meet the moment. 

They didn’t understand the expressed and unexpressed views of the populace. And in an amazing way, Trump intuitively, not intellectually, I believe, but intuitively understood this. 

And he saw history's clock in 2016. That’s how he won. I talked to him about it, and he said, "Yes, I did.”  

And he said he's going to do it again.

DER SPIEGEL: Do you think that Trump is not going to accept the outcome of the election if he doesn't get elected?

"Pomposity stalks the halls of all institutions in the United States."

Woodward: Well, he said that, and, you know, he casts suspicion. Here again is the unthinkable. If there's any responsibility a president has, it's to ensure the transfer of power, ensure the integrity of the voting process, the most basic right that Americans have, and he's trampled all over it and said, "We won't know who's been elected." 

There is an unprecedented level of chaos and disorganization threatening the election.

DER SPIEGEL: Are you worried about your country's future?

Woodward: Yes. How can you not be worried now? We may have been living in a bubble in this country for hundreds of years. 

Yes, there have been some extremely difficult and terrible times for Americans. There have been crises like the Kennedy assassination, Vietnam. Now Trump has destroyed any sense of innocence. 

How do you restore trust in the institutions? I mean in us, for example, the news media. 

We are mistrusted. We have to acknowledge that.

DER SPIEGEL: What does that mean for you?

Woodward: I learned something that truly surprised me in the last month. The book comes out, and a reporter at CNN, Jamie Gangel, and my wife, Elsa Walsh, persuaded me, "Oh, put out audio of people, conversations with Trump." And I said, well, you know, it's in the book. They said, "No. You've got to put out the audio so people can hear themselves. 

People don't trust the news media, but when they hear it themselves, they'll accept it" ‑‑ because Trump has the most recognizable voice in the world. People will have heard those and say, "Ah. That's him. 

That's what he's saying. This is the context.” 

I think in the end people accepted the truths in this book also because they heard these recordings of the conversations. Nobody shouted "fake news."

DER SPIEGEL: You recently recounted on U.S. television that Katharine Graham, your boss at the Washington Post during the Watergate scandal, warned you that you shouldn’t become overconfident as a journalist. Why is the story important to you?

Woodward: In 1974, after Nixon had resigned, she wrote Carl Bernstein and myself a letter on a yellow legal pad: "Dear Carl and Bob, you did some of the stories about Nixon, and he's gone. Now, that's fine, but don't start thinking too highly of yourselves. Let me give you some advice. 

The advice is: Beware of the demon of pomposity." 

As you know, pomposity stalks the halls of all institutions in the United States, not just the media, but business, politics, academia, you name it. There's a lot of pomposity, over‑self‑confidence, and I thought that was a really important warning, important advice.

DER SPIEGEL: We understood that to mean you worry you might have been too harsh in your judgment of Donald Trump. Are you going too far as a journalist here? Would it be better as a reporter to stick to reporting the facts rather than saying at the end of a book: He's the wrong man for the job?

Woodward: No, I don't think I went too far. I've been thinking about whether I was leaving my territory a little bit there as a reporter. But I feel that I definitely have enough insight to make a judgement in this regard.

DER SPIEGEL: Mr. Woodward, we thank you for this interview.

Bob Woodward's new book, "Rage," was published in the United States by Simon & Schuster in September. The German edition was published on Oct. 16 by Hanser Verlag.

The Tedium of Passion

Thoughts in and around geopolitics.

By: George Friedman

I normally try to forget the books I write, at least for a while. They can be a trap, enclosing you forever. 

But I can’t escape the last book I wrote, “The Storm Before the Calm,” about the anger that would encompass American life for at least the first part of this decade. 

I drew my conclusions from moments like the Great Depression and Andrew Jackson’s assault on the eastern banks. But to a great extent I got my bearings from the 1960s and 1970s for the obvious reason that I lived through them.

It was a time of intense outrage at anyone who disagreed with you, a time of utter certainty of one’s own view. Lyndon Johnson was regarded as a baby killer, and the war in Vietnam as a tool to enrich defense companies. Opponents of the war were viewed by their critics as tools of the communists and haters of America. Entwined in this was a culture war. 

On one side was what was called the counterculture, which saw America as fundamentally corrupt, combining the dehumanization of the suburbs with insoluble racism. On the other side was what was called middle America, viewing the counterculture as degenerates who were destroying the fabric of America by rejecting everything that was decent and honorable.

I recall members of the American Legion and members of construction unions confronting hordes of anti-war demonstrators dressed bizarrely, I suspect because they wanted to show contempt for the middle class and a sense that they had transcended the World War II veterans into a higher truth. 

I was young and dressed like a slob, still my preferred sartorial statement, and went into a 7-Eleven in Boone, North Carolina, during a best forgotten road trip. The person behind the counter called me a “hippie degenerate punk” and threatened vague mayhem if I didn’t leave. 

I was in similar clothing when I denied that the Viet Cong were the heirs of the American Revolution to a young lady I thought I was getting somewhere with. She grew enraged and refused to talk to me when I called them Stalinist thugs, the latter a far greater loss than a storekeeper in Boone.

I found myself in trouble. Socially I belonged to the baby boomers, who, like the millennials today, thought of themselves as having the mission to perfect humanity. But I was born in Hungary and lived with a family that remembered its recent past. For me, the perfection of humanity was not the goal. The goal was avoiding the power of tyranny. I saw tyranny through my parents’ eyes. 

That era was a moment of great passion, with evil masquerading as the good, and people expressing it by hating anyone who disagreed with them. I love the United States because it was better than where I had come from. It did not demand perfection. 

To the radicals of the 1960s, America had to be reconstructed through revolution. To middle America, the nation had been penetrated by monsters trying to destroy it.

It all became very personal. Someone who opposed the Vietnam War did not socialize with someone who supported the war. The basic assumption that normally controls the United States – that reasonable people can disagree without loathing each other – was suspended, replaced with a passionate belief that anyone who differed from oneself was deeply flawed and likely despicable. 

Things changed only after Richard Nixon was driven from office, the anti-war activists started looking for jobs and the pro-war movement realized the war was a waste.

Passion is an overrated virtue because it has no sense of proportion. Passion makes everything look more significant than it is and sees disagreement as sacrilege. Passion makes it seem that this is the worst of times. 

Because of my parents I knew the tales of European passion, but unlike my parents I wasn’t frightened by it. I was bored by it. The core certainty of each side was not merely that it was right but that the other side was wicked. 

Passion and self-righteousness blended with a rage at those who disagreed.

The passion of Hitler or Lenin, of course, was not boring. It was evil, but there was never a boring minute around either side. 

The idea that I have mentioned in the past – that civilization is the ability to believe something, yet be open to the possibility that your belief is in error – is boring. 

Constantly drawing in your horns when your passions demand that you gore your opponent is tiring, and the inability to hate because your opponent might be right takes a glittering moment and turns it into duller shades. 

Being moderate is the foundation of civilized life, yet it’s one that always repels those who are certain that they are self-evidently right.

We are of course in a moment where respect for the views of those you disagree with has withered. This happens in America with some regularity. But the time we live in is not as exciting, tense and fraught with danger as the media might suggest. It is simply tedious. 

As Shakespeare put it, “It is a tale told by an idiot, full of sound and fury, signifying nothing.” 

As we have seen in the past, the United States is far too robust, and far too resilient, for the passions of the moment to destroy it. If it weren’t, it would have been destroyed long ago. 

Robert E. Lee couldn’t break the union, and he had a powerful military behind him. Joe McCarthy and the anti-war movement couldn’t do it. The current cast of characters certainly can’t do it. 

The founders knew that the best solution for political passions is boredom. 

Eventually the actors take a break, and the audience needs to get home, pay the babysitter and get some sleep.

For those who have never lived through this, they have never seen passion like this. 

For those who have lived through it before, it’s more of the same.

The peril and the promise

The covid-19 pandemic will accelerate change in the world economy. That brings both opportunity and danger, says Henry Curr

The theory of “black swans” says that unpredictable high impact events play a vastly greater role than most people realise. Long before 2020 scientists feared that a zoonotic respiratory disease might originate in Asia and spread globally. 

But hardly anybody foresaw the consequences. The story told by a casual inspection of most economic data is this: little happened for decades, and then in 2020 covid-19 upended everything.

Before 2020 the most sophisticated modelling suggested that a pandemic comparable to the Spanish flu of 1918 might kill 71m people worldwide and trim 5% off GDP. The death toll from covid-19 seems far lower, but the hit to gdp has been bigger. 

According to IMF forecasts in June, due to be updated after this report went to press, by the end of 2020 world output may be about 8% lower than it would have been without the pandemic. 

Instead of growing by about 3% it will have shrunk by about 5%—the biggest contraction since the second world war. By comparison, in 2009 the “great recession” shrank the world economy by just 0.1%.

The knock-on effects have been seismic. At the employment trough in April, the proportion of American 25- to 54-year-olds in work fell below 70% for the first time in nearly 50 years. In the second quarter one-sixth of young people worldwide lost their jobs. 

Working hours fell by nearly a quarter for the rest, says the International Labour Organisation. In June the World Bank forecast that low- and middle-income economies will shrink this year for the first time in at least 60 years, and 89m people will be pushed into extreme poverty, a rise of 15%. 

The effects of shutting schools for months are likely to persist for decades. And lockdowns have damaged mental health: more than 10% of Americans say they have given serious consideration to suicide.

When China locked down Wuhan in January, it was seen as something only an authoritarian, technologically sophisticated government could do. For a while Britain’s scientists did not consider calling for a lockdown because they assumed it was politically infeasible. 

Yet the readiness of almost all governments to close their economies almost entirely was just one of many surprises. In the rich world covid-19 has led to unprecedented government interventions in labour and capital markets. In Europe’s five largest economies, more than 40m workers were placed on government-funded furlough schemes. 

America boosted unemployment benefits so much that they exceeded the wages they replaced for more than two-thirds of claimants. The Federal Reserve has in effect backstopped the market for American corporate debt; Germany has offered its firms loan guarantees worth nearly a quarter of GDP.

None of this comes cheap. Public borrowing is soaring. In June the imf forecast that the overall gross public-debt-to-GDP ratio of advanced economies would rise from 105% in 2019 to 132% by 2021. 

The rising burden has fostered a new financial activism. Central-bank balance sheets have ballooned as they have created trillions of dollars to soak up government debt, and the European Union is jointly issuing debt at scale for the first time to pay for its recovery fund. Policies of a decade ago, after the financial crisis, were seen as radical at the time but now look paltry by comparison.

At first the response was framed as temporary. “What we’re trying to do is to freeze the economy,” said Peter Hummelgaard, the Danish employment minister, in March. (Denmark can claim to have inspired other furlough schemes.) Experience suggested that rich-world economies could unfreeze quickly after a disaster. 

After Hurricane Katrina ravaged New Orleans in August 2005, unemployment shot up from around 6% to over 15%, but it fell back below 6% by February 2006. And indeed it looks as if, as well as being the deepest recession on record in many countries, this will be one of the shortest. 

The recent decline in American unemployment suggests that the worst of the crisis was mercifully brief.

Yet unlike the situation after a hurricane, there is no fleeing to better economic climes. 

Just as after the financial crisis, this downturn is notable for its breadth as much as its depth. And covid-19 continues to spread. As this report was being written, the seven-day moving average of global infections hit new highs. 

America and Australia had been through two rounds with the virus; France, Spain and Britain were bracing for a second wave; India was on an upward slope; and nobody knew how pervasive covid-19 was in the poorer world. 

Though hopes are high for a vaccine in 2021, it is not certain to prove both safe and effective. Economies could yet be trying to operate around the constraints of social distancing for years to come.

Long-term acceleration

It has indeed become clearer that many changes brought about by covid-19 will be long-lasting. 

This special report argues that the pandemic will strengthen forces that were already acting on the world economy, accelerating changes in trade, technology, finance and economic policy.

Conditions before the pandemic were forged by the three biggest economic shocks of the 21st century: the integration of China into the world trading system, the financial crisis and the rise of the digital economy. As Chinese workers left rural poverty for factories, cheap goods flowed west and financial assets flowed east, helping to create low inflation, low interest rates and lost rich-world manufacturing jobs. 

The financial crisis caused a collapse in demand that further depressed interest rates even as globalisation stalled. The rise of technology contributed to a decline in competition, bumper corporate profits and a fall in the share of national income flowing to workers as superstar firms reaped the rewards of network effects and natural monopolies.

The covid-19 pandemic is a fourth big shock. The collapse in demand greatly exceeds that after the financial crisis. Saving may be elevated for years. Low and even negative interest rates are more likely to last. This will prop up asset prices even as economies are weak. 

Firms are more aware of the risks of supply chains that are both sprawling and fragile; covid-19 will increase the desire to bring them closer to home, and to diversify suppliers. And the pandemic is hastening digitisation. Consumers’ switch from physical retail towards e-commerce has quickened, and they have got used to getting some health-care and education services online.

The share prices of tech giants have soared. Even after a slump in September, the New York Stock Exchange’s “fang+” index of technology stocks had produced a year-to-date return of about 60%. Companies have adapted to remote work with astonishing speed, stepping up investments in technologies that facilitate remote presence.

The pandemic will mark a turning-point in politics and geopolitics as well as economics. 

The world will emerge from 2020 into an era of more intense great-power competition. 

The spread of covid-19 has coincided with, and to an extent exacerbated, escalating tensions between China and America. 

They have got worse than even the most hawkish observer predicted a few years ago. 

Trade disputes, with their strange focus on trade deficits and soyabean purchases, are now part of a broader battle. 

America has lobbied the world to reject Chinese 5g technology, ramped up scrutiny of foreign investors, imposed sanctions to restrict Chinese access to its semiconductor technology and is forcing TikTok, China’s most successful consumer-technology export, to sell itself. 

Chinese investment in America has collapsed. Both countries are diversifying away from each other in trade. The two economies are too integrated to decouple entirely, but they now combine far-reaching economic ties with pervasive mutual suspicion.

For domestic politics in the rich world, the pandemic represents a challenge to the status quo. 

Unlike the financial crisis, this is not Wall Street’s fault. But the juxtaposition of a weak economy with high asset prices that result from low interest rates could provoke public anger, especially if it coincides with unemployment concentrated among poorly paid service-sector workers. 

Low interest rates will make possible substantial prolonged deficit spending. How recessions are fought will change, partly because near-zero interest rates neuter monetary policy, but also because of this year’s experiments with large-scale cash transfers to households. 

There will be both the appetite and the conditions to facilitate a rewriting of the social contract in ways that many hoped might follow globalisation and the financial crisis. 

The question will be whether today’s politics is up to the job; or whether it is doomed to channel dissatisfaction with change into another round of backward-looking populism.

What changes are necessary depends on an understanding of just how substantial a structural economic shift the pandemic is likely to bring about. The story begins with trade. 

China’s Covid triumphalism could be premature

A cult of personality around President Xi threatens to bring bad government in its wake

Gideon Rachman

       © James Ferguson

In 2009, Martin Jacques, a British author, published a bestselling book, When China Rules the World. Mr Jacques is now running a victory lap. He recently proclaimed that “we will remember 2020 as the moment of the Great Transition. The year when China replaced the US as the world’s leading power.”

Believers in a “great transition” see Covid-19 as the handmaiden of history. The pandemic started in China. But the Chinese government has done a much better job of containing the disease than the US. According to Johns Hopkins University, the total number of US deaths from Covid-19 stood at over 223,000 at the end of last week compared with 4,379 in China. With the disease contained, the Chinese economy is rebounding and looks set to grow by 2 per cent this year, making it the only G20 economy to expand. By contrast, the US economy is likely to shrink by 3-5 per cent and the major European economies are in trouble.

China’s ability to enforce quarantines and test widely is generally seen as crucial to the country’s success. At a recent ceremony, handing out medals to Chinese citizens for their work on Covid-19, President Xi Jinping announced that “the pandemic once again proves the supremacy of the socialist system with Chinese characteristics”.

While the Chinese elite is patting itself on the back, the US establishment is aghast. The New England Journal of Medicine recently noted in an editorial that “our leaders have failed . . . They have taken a crisis and turned it into a tragedy.”

This scathing criticism of the Trump administration has not, however, led to the arrest of the editors of the New England journal. By contrast, last month, Ren Zhiqiang, a property tycoon, was sentenced to 18 years in prison in China. Mr Ren’s fall from grace came after he published an aggressive criticism of Mr Xi’s handling of the early stages of the pandemic, calling the Chinese leader a “bare, naked clown”. Shortly afterwards, Mr Ren was stripped of his Communist party membership and charged with corruption. Some of the doctors who first raised the alarm about Covid-19, in private exchanges, in Wuhan, were notoriously reprimanded by the police. External critics of China’s handling of Covid-19 are also treated with ferocity. When the Australian government suggested an international inquiry into the pandemic, Beijing responded with trade sanctions.

The inability to accept criticism suggests that pro-Beijing triumphalism is premature. In broad terms, there is not much doubt that China, after mishandling the initial outbreak, has done a good job of containing the disease. But some Asian democracies, such as South Korea and Taiwan, have done even better, which undermines Mr Xi’s claim that China’s “socialist system” was the key to success. China’s urge to suppress criticism also suggests that if there are continuing problems inside the country, Beijing will cover them up.

The pandemic has also significantly eroded international goodwill towards China. It may be regarded as traitorous in China to highlight the origins of the disease — or to point out that the previous Sars epidemic also originated in China. But the outside world has noticed. A recent Pew opinion survey of 14 mainly western nations showed 61 per cent thought China had done a bad job of handling Covid-19 and that distrust of Mr Xi has soared.

The international backlash compounds the challenges to the “China model” already created by Covid-19. For 40 years Chinese economic growth has been powered by trade. The country is the world’s largest manufacturer and its largest exporter. But Covid-19 has seen a sharp reduction in world trading volumes. This is happening at a time when the US is rallying international opposition to Beijing and curtailing trade in sensitive technologies. As a result, the permissive international environment that powered the Chinese economic miracle is disappearing.

China’s leadership is meeting this week to plan for the years ahead. But its ability to openly debate these problems is hampered by the thought-stifling cult-of-personality that has built up around Mr Xi. Since taking power in 2012, the Chinese leader has purged many of his rivals, abolished constitutional term-limits that would prevent him ruling for life, and forced the Communist party to incorporate “Xi Jinping thought” into its constitution.

This is no mere formality. On the contrary, government officials and even private companies are under constant pressure to praise the great leader’s banal pronouncements. As a recent column for Bloomberg News pointed out, even China’s weather-forecasters and science-fiction writers have been officially reprimanded for not doing enough to incorporate “Xi Jinping thought” into their work.

Mr Xi admires the leader cult that surrounded Mao Zedong. But blind obedience to Mao’s whims led China to disaster during his cultural revolution. Leader cults rarely end well anywhere — and there is little reason to believe that China under Mr Xi will ultimately be any different.

The US system has had a terrible few years and the American elite is rightly going through a period of self-doubt and introspection. But regular elections offer the possibility to change course and appoint new leaders. The US can get rid of President Donald Trump — and may be about to do so. China has no mechanism to rid itself of the increasingly megalomaniacal President Xi.


by Egon von Greyerz

Get ready for the biggest collapse in the history of mankind. It will be devastating and reach all parts of society, economic, financial, political & social.

But wait, it won’t happen just yet. Because before that the world will experience a LIFTOFF in markets of gigantic proportions. This will be the grand finale of this financial era. It will involve inflationary liquidity injections of proportions never seen before in history and lead to a massive explosion in many asset markets.

Most investment assets will benefit as the disconnect between markets and reality grows to distortionary proportions.


So there we have it. For investors the outcome of this election is totally irrelevant. 

In four years time, the difference for the economy and markets between a Trump or Biden victory will be insignificant.

Either one of them only has one choice. They are both facing a bankrupt country which has been running budget deficits since 1930 with four years of exception in the 1940s-50s. The Clinton surpluses were fake. Also, the US has had trade deficits for almost 50 years. 

The consequence has been an exponentially surging debt which was under $1 trillion when Reagan became President in 1981 and is now $27t. In the next four years, a $40t debt is guaranteed as I forecast four years ago but as the financial system implodes, the debt could easily run into $100s of trillions or $ quadrillions when the derivative bubble bursts.

The global financial system should have collapsed already in 2006-9 but the central banks managed to delay the inevitable demise for over a decade.


What we must understand is that the end of an economic supercycle doesn’t happen quietly. No, the conditions need to be uber-euphoric with maximum bullishness for the economy and stocks. This means that before this era is over, markets must surge in the final months, even double over a 9-18 months period.

Multiple factors are now in place for this to happen. Firstly both presidential candidates will need not just fistfuls of dollars but quantum computers that can print the required trillions and quadrillions of dollars.

The convenient excuse they have is of course Covid. Individuals not working need money, companies need money, municipalities, states and the Federal government need money.

But we mustn’t forget how the end of the final phase of this economic era started. This was back in Aug-Sep 2019 when the Fed and the ECB shouted out from the roof tops that were going to do what it takes to save the system. They didn’t tell us what the problems were, but it was clear to some of us who understood the fragility of the financial system that it was in dire straits. 

When the last crisis started in 2006, the Fed’s balance sheet was $830b. At the end of the Great Financial Crisis in 2009, the balance sheet had grown to $2t.

But no one must believe that the problem had been solved by 2009. All it was, was a temporary stay of execution. Why otherwise would the Fed’s balance sheet have grown by another $5t since 2009. 

Just looking at the predicted budget deficits in the next 4 years, plus accelerating problems in the financial system the Fed’s balance sheet is likely to explode in coming years.


So the conditions are in place for the biggest liquidity injection in financial history. For many years we have experienced a total disconnect between economic reality and markets. The coming acceleration in money printing and liquidity injections in to the financial system will be so overwhelming that it will not just fuel markets but also give a short term, albeit artificial, boost to the economy.

This is a typical course of events at the beginning of an inflationary phase which leads to hyperinflation as the currency collapses.

The paralysation of the world economy due to Covid will probably peak with the current second wave and therefore add to the optimism in markets. But no one must believe that the pandemic is the cause of the problems in the world economy. No, it has just been a very vicious catalyst which hit an already fragile financial system.

When Covid gradually slows down, the initial optimism combined with the flooding of the system with printed money might last for a year or so. But as the world realises that you cannot solve a debt problem with more debt, the real difficulties in the economy and the financial system will reemerge with a vengeance.


So let us look at a possible scenario of events following the election:

New president will flood the economy with money & boost stocks

Initial market volatility will settle down quickly and investors will respond optimistically to the new president’s promises of support to every corner of the economy.

Stock markets will surge and could double over a 9-18 month period. No cash will be left on the sidelines. Both institutions and retail investors will throw all the cash they have at the stock market. There will be a frenzy which will surpass the tech stock boom in the 1990s. There will be fanfares and blazing guns as the market seems unstoppable.

But after the likely short-term boom, there will be tears as markets fall by over 90% in real terms. And sadly most investors will ride the stock market all the way down. The big difference this time is that central banks will not and cannot save them.


The biggest beneficiary of this coming boom will be commodity markets which are at a 50 year low versus stocks. Looking at the chart below, the minimum target would be commodities outperforming stocks by 4 to 1. 

Eventually a new high in commodities against stocks is likely. This would mean commodities outperforming stocks by 20x. The first part of this outperformance will come as stock markets rise. But the final phase will be when general stock markets collapse and commodities continue to strengthen. 

Goldman Sachs expect commodities to rise 28% in 2021. They expect inflation plus a commodities deficit will drive prices higher. And this is of course what the chart below tells us.


Gold, silver and platinum will vastly outperform stocks. The Dow – Gold ratio will initially reach 1 to 1 where it was in 1980 when gold was $850 and the Dow index 850. 

Eventually the ratio will reach at least 0.5 to 1 which means that the Dow will lose 97% against gold in the next five years.

Goldman Sachs expects gold to reach $2,300 in 2021 but I believe that target is too conservative. Before gold breaks out above the August high at $2,074, a correction down to $1,800-20 is possible and would not change gold’s unstoppable rise. In this latest phase, gold is in a bull market or more correctly, the currencies are in a bear market since 1999. 

The continued debasement of the currencies is guaranteed by the central banks since they only have one option – TO PRINT AND PRINT AND PRINT until money dies.

We must remember that gold is the king of the metals and therefore the safest precious metal to hold. But initially at least, silver and platinum will strongly outperform gold but with massive volatility.

Vital to hold physical metals stored in safe vaults in the investor’s name, outside the banking system. It is important not to forget that the risks in the financial system will be at a maximum for the next few years and a failure can happen at any time.


For the smart investor, this is where more money will be made than in any area of stocks or other investments. Especially the juniors will really shine. But this is a market for specialists. So either best to follow some of the smartest investors in this area or to buy an index of these stocks. There will be many 10-20 baggers and even some 100 baggers but obviously also some losers. So important to have a spread.

The biggest risk with mining stocks is that they are normally held within the financial system. So even though they are a terrific investment opportunity, they are not the best form of wealth preservation. Therefore it is safer to have a much bigger allocation to the physical metals which, even though they will underperform the mining stocks, will see massive capital appreciation.

The chart below shows XAU gold – silver index against the Dow since 1983 when the XAU was introduced. Since then the XAU has lost 95% against the Dow. This fall is likely to be reversed in the next few years with the XAU going up 20x against the Dow . For Dow investors this means losing 95% against mining stocks.

And sadly, this is what will happen to 99% of investors as they stick to their ordinary stocks and miss the most incredible opportunity.


Printing unlimited amounts of money always has consequences. Since 1971 the dollar has lost 98% in real terms which means against gold since gold is the only money that has survived in history.

The dollar is now starting its final journey to ZERO and as the table shows, even a weak and artificial currency like the euro will outperform the doomed dollar.

A falling dollar will accelerate US inflation until it leads to hyperinflation.


Interest market is probably the most contrarian of all trades today. The whole investment world, including the Fed and the ECB believe that rates will stay at zero or below for years to come. Normally when consensus is that strong, the opposite is more likely to happen.

Also, rising a weaker dollar will cause higher inflation which will put upward pressure on rates. As investors start selling the long end of the bond market, short rates will eventually follow.

Precious metals normally benefit from negative real rates which means that inflation is higher than interest rates. Gold can still rise strongly with high nominal rates as long as inflation is higher. We saw this happen in the 1970s to the early 1980s when rates reached 20% and gold went from $35 to $850. During that time, inflation remained higher than rates.

I remember this period well as I experienced it in the UK with my first mortgage reaching 21%.


So there is now an opportunity for all investors to double their money in the stock market in the next 9-18 months as ever more liquidity will fuel stock markets.

But a Caveat Emptor (Buyer Beware) warning is in place here. Asset markets are already in a major bubble and the financial system is so fragile that it could break at any time.

So rather than chasing the last leg of this bull market which most investors will do, it will be much better to look at safer alternatives.

I have outlined them above. Physical precious metals and precious metals stocks will outperform all other markets. And these all present the best risk. Both the metals and the metal stocks will boom in the final phase of the stock market boom. And as stock markets top and then crash, the precious metals sector will continue to perform extremely well as currencies are debased.

As I stated above, the general stock market is likely to lose at least 95% against the precious metals sector in the next five years.

There has probably never before been such a clear choice in investment markets but sadly most investors will miss it. They will instead stick to their conventional portfolio which will include a lot of the already overvalued tech stocks.

Holding gold and silver stocks will be the investment opportunity of a life time. But since they are held within a vulnerable financial system, we believe that a these holdings should represent a much smaller percentage than physical metals.

To hold physical gold, silver and platinum outside the fragile banking system is the ultimate form of wealth preservation and insurance against a debt infested and unsafe financial system.

With a portfolio of some precious metals stocks and physical metals, investors will be able to ride out the coming storm and volatility in markets and also benefit financially. Of course there will be volatility also in the metals market but the trend in the next 5+ years is virtually guaranteed.

So better to avoid the coming boom and bust in the general stock markets and stick to metals.