While my opinion is that we are going down the path to becoming the next Venezuela, Argentina, Zimbabwe or Weimar Germany, there is no guarantee that this is the way it will play out here. I believe that this is most likely but when you have a third party calling the shots (Fed and other central banks) it is really in their hands as to how this may play out. If I were 100% sure that those “in charge” were absolutely going down this path I would likely go out, get every loan I could find and buy hard assets of all kinds. There are two problems with this scenario. Had I done that 10 years ago- expecting what we are seeing now back then I would have the problem of carrying that debt. If the economy were to collapse and I couldn’t carry the debt I would have been wiped out. It could be that I got the call right, but my timing was way off.

Problem #2 Let’s also keep in mind that the central banks could just arbitrarily decide that they want to crush the system. You may wonder WHY but it could be to usher in a new digital currency or some other reason. The reason isn’t important. The important thing is that just by REDUCING the “printing” they could cause a major implosion. They may even do that as a precursor to more “printing” than we can even imagine. This could ruin plans made for inflation, shake most people out, and then we could have a massive inflationary event anyway. Many people say they are long-term investors, but the truth is MOST people don’t have the ability or patience to get through a major setback. Another saying in the “markets” is “Fear is stronger than greed.”

There is a lot of talk about Central Bank Digital Currencies- which I have been writing about for the past 5 years. The simple reality is that I have been following the BIS (Bank of International Settlements- Central Bank of Central Banks) and noticed that all central banks had a mandate to have a CBDC by 2025. Whether we have a deflationary or inflationary outcome I have believed for some time that there would have to be a MAJOR economic problem to usher in this new system. I believe that anyone who has studied the Bible knows what the CBDC actually is. This could lead to about half of the world not wanting anything to do with it. To me, it appears they have to cause enough economic chaos so that a LOT of people will be begging for their help.

Isn’t it amazing that the banks, who normally have a reserve ratio (the percentage of deposits that they need to keep on hand) have a current reserve ratio of ZERO and there are runs on the banks? Isn’t it amazing that the banks that own the Fed are getting the good assets of smaller banks that appear to be being eliminated to put the power in as few hands as possible? Keep in mind in 2008 the taxpayers got the impaired assets of Bear Stearns while JP Morgan got the good assets. A similar situation is now taking place with First Republic.

The news is reported like “JP Morgan rides to the rescue!” while the reality is they are up to their old tricks of pouncing on the opportunity to confiscate assets and consolidate power further.

Is this a coincidence? Just now when the FEDNOW program is being rolled out in mid-July 2023 to provide UNLIMITED LIQUIDITY to the banks? FedNow is billed as a way to make immediate payments. This is not a final version of the CBDC but it appears to be a precursor to a CBDC. It is initially just being rolled out to the banks. As usual, this will be a way to introduce this new currency as a convenience until the trap door is snapped shut. It will be a lot easier without the nuisance of smaller banks offering an alternative.

Keep in mind that we already have a digital currency. Most of the money that has been conjured up in the tens to hundreds of trillions in the past 15 years has been with the click of a mouse and only a SMALL fraction has actually been printed. So why do we need this “new” currency?

Actually, it is very simple. It is a means of control. What our “money” can’t do today is track every expenditure you make. It also does not have an expiration date- which the new currency can have. Our “money” today cannot be programmed only to work in certain areas- the new one can. There is no way to “turn off” our “money” today but the new system will allow that to happen. Make someone “in charge” upset and you may find your Fed account with FAR LESS “money” than you had the day before.

This type of change changes the very definition of money. To be money, a currency has to be more than just a means of exchange. It also has to be a STORE OF VALUE. I have to wonder- how does ANYONE plan for retirement if the “money” you are using to save is NOT A STORE OF VALUE and can EXPIRE at the whim of those in charge?

This will likely change everyone’s way of life.

Since we can’t really know the exact path that this change in paradigm will take, I think that it is important to look at the options that appear to be out there and chart the best course that we can to take advantage of the current situation.

First, because of all the uncertainty out there I believe it is important to have assets everywhere. Since those “in charge” have been manipulating prices for over a century- but have gone off the rails in the past 15 years, just about ANYTHING could happen. Years ago, many people would present me with outlandish predictions, and I would argue about it. Today, after seeing the freak show of the last 20 years or so I can’t argue that almost anything couldn’t happen.

Let’s start with, in my opinion, the most likely outcome which would be an inflationary depression. Many people think of the Great Depression of the late 20s and early 30s. This was a deflationary depression. Actually, a deflationary depression is likely a better option to an inflationary depression because prices FELL at that time. Nobody had much but it didn’t take much to survive. Another thing that could make this depression worse is the lack of morality in our culture. Back in the 20s and 30s when people were grounded in faith, service, and concern for their fellow men most wouldn’t steal an apple if they were starving. Today our newscasts are full of stories about man’s inhumanity to their fellow men, a lack of respect for authority and a general lack of respect of people even for themselves.

Don’t kid yourselves- if we had a moral society those “in charge” could NEVER have gotten away with what they have pulled off. Our founding Fathers must be rolling over in their graves if they are watching endless foreign wars that we are mostly instigating. Billions, if not trillions being conjured up out of nowhere and creating NOTHING but purchasing power which we are using to pretend we are still solvent and powerful when all of the evidence is pointing to societal collapse and the end of an era of American dominance.

Most of the world is well aware of our weaknesses and are now joining the BRICS, SCO, ASEAN and other organizations to trade amongst themselves and not use the US dollar as an intermediary. For years we were protecting the petro- dollar with the threat and use of force. All the stories about weapons of mass destruction, the use of chemical weapons, etc. were used to give an excuse for military intervention. Sadaam Hussein decided that he would sell his oil for Euros instead of dollars. His country was destroyed, MANY killed, and he wound up at the end of a rope. Moammar Khadafi floated the idea of a gold-backed currency for Africa- the African Dinar and the most stable and prosperous country in Africa was turned to rubble and he was killed when his convoy was intercepted.

We have caused havoc all through the Middle East and Africa and now the rest of the world has had enough. As I wrote earlier, the sanctions on Russia have likely moved the timeline up but this change was inevitable. Putin is FAR different than the other dictators that we took down in the past.

Between Russia and China there is a growing cooperation both militarily and economically. Together they are proving to be a force to be reckoned with.

Just Russia and China alone would not be sufficient to undo our power around the globe but there have been many actions that have taken place that have most of the world aligned against the USA.

I believe that most people- outside the USA, Canada and Europe- have heard that the USA toppled the democratically elected government of Ukraine in 2014 and installed a puppet government. Many are also aware that this said government allowed Nazi factions to mercilessly bombard and kill Russians in the East of the country. Contrary to our “NEWS” reports- which to me are no more than propaganda declarations- Putin went in to stop a genocide. Illegal war? Who started it?

Anyway, the most glaring gaff that we made was when we exited Afghanistan and left billions in military equipment behind- and worse yet- left those who were collaborating with us to be tortured and killed by the Taliban- if caught.

It is no surprise that only days after that debacle Saudi Arabia- the key piece propping up the petro-dollar signed a security pact with RUSSIA. Keep in mind the deal was Saudi prices oil in dollars and we provide protection. How safe could the Saudis feel after watching that debacle? I believe this was the beginning of the end. Keep in mind again- ONLY because there is such demand for dollars in world trade have we been able to live beyond our means for decades. It appears the end of this paradigm is near and the piper will have to be paid.

Since then, the BRICS (Brazil, Russia, India, China and South Africa) have been making MAJOR moves. All of these countries have decided to trade amongst themselves and not use the dollar. This would be bad enough, but China has brokered a peace deal between Iran and Saudi Arabia who have been feuding for decades. Now you have Saudi Arabia, Iran, Turkey (NATO member), Indonesia, Pakistan, Mexico, Bolivia, Argentina, most of Africa and others that want to join this economic bloc. It appears that the future looks bleak for the once- mighty dollar.

This is BAD NEWS for all of us because of what may happen to prices going forward. This is just one more reason I believe that inflation is more likely than deflation- at least over time.

In this scenario I believe that hard assets are a must have. Keep in mind that hard assets are just that -ASSETS, while cash and bonds are DEBT. Yes- even that dollar you have in your pocket- it doesn’t say it is exchangeable for anything, but it does say “Federal Reserve Note” which means it is owed back (a debt) to the central bank that issued it! Keep in mind that this entity has conjured up this cash out of nowhere, have bought tens to hundreds of trillions of dollars of assets and they are charging US interest for their purchases. In addition, it is the central banks that have allowed all of these wars to take place. How many wars do you think there would be voted for if that “money” was demanded in taxes?

In any case the digital currency is massively inflationary because- like its predecessor the dollar- it is conjured up in unlimited amounts and produces NOTHING. The main difference is that the new currency can be programmed in many different ways including an expiration date. This would likely make people buy things they don’t need at the time to make sure their money doesn’t expire. This just adds to the “too much money chasing too few goods” inflation that we are seeing today.

If inflation is indeed the wave of the future as it appears to be right now, then by definition the price of hard assets has to rise. Having said that, the hard assets that provide the most value to daily life are likely to be bid up the most. Think food, water, energy, industrial materials and hard money- gold and silver. Even JP Morgan- as he was bailing out the US government said that “Gold is money- all else is credit”.

While the debt-based economic system served us well for many years the antics of central banks in this century have made a collapse of this system imminent. That doesn’t mean tomorrow, but it is obvious that the debt has become so large that it is strangling the economy and central banks have been lending to each other and buying each others debt to foster the illusion of solvency and liquidity where little, if any, actually exist. Those “in charge” are also kicking some MAJOR economic headaches down the road as they bail out public and private pensions, send billions to cities that are bankrupt any way you look at it.

Since January 1, 2024 Saudia Arabia, UAE, Egypt, Ethiopia , and IRAN have joined the BRICS bloc with over 40 other countries expressing interest in joining. Russia leads the BRICS in 2024- Be ready!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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