Weekly Article 07-31-2018
While there are many headlines to pay attention to in regards to problems in the economy and markets I have been thinking all weekend about what I believe to be the largest problem there is out there. It is a problem that rarely, if ever, gets mentioned outside of certain circles.
The problem that I am talking about is the virtualization of everything. I even saw a dating site where you can have a “virtual date”. While it may take out some danger in meeting someone that you don’t know I can’t see it being all that great.
If that was all that was going on that would be fine but it seems that people are being deceived into thinking virtual reality is reality.
It doesn’t come as much of a surprise to me because our money has become virtual money that can be keystroked into existence and it can be used to purchase real stuff. It can be used to purchase debt that is used to enhance living standards-temporarily. It can be used to purchase stocks and produce a wealth-effect- temporarily. It can even be used to create financial instruments to stifle the price of gold, silver and other assets-temporarily.
As these actions go on and on it becomes more apparent that this “money” is not really helping the real economy it is just giving the illusion that nothing has changed even though since at least 2008 we have been “printing” this money to keep up the illusion that we can afford the way we are living.
It appears the authorities are hell-bent on making sure the US dollar looks good against gold and that it gets compared to other fiat currencies- all that appear to be on a race to their intrinsic value of the paper they are printed or not printed on.
So many may ask why worry about it they’ll just “print” more and more. I don’t doubt that they just may. I will say, however, that this “printing” creates NOTHING but the illusion of demand where none actually exists. We have come to a point where this has been going on for so long now that many places are tinkering with the idea of paying people a UBI (Universal Basic Income).
Of course, we are “printing” money to pay many of our bills already so this “money” will likely have to be conjured up out of nowhere to be handed out. Many may ask “So what? It has all worked so far!”
REALLY? Unemployment, according to John Williams of Shadow Government Statistics, is 22% according to the way the US used to report unemployment numbers. Inflation is also far higher than the reported numbers as I am sure most of us know by our own experiences.
The point I am making here is that even the numbers we are fed is virtual reality. The problem with this is that it doesn’t change real reality.
The reality is that if everyone thinks that they can get a Universal Basic Income and that they don’t need to work who on earth is going to produce what we need to live? We need real food, water, energy, etc.
I don’t think anyone starving will be helped by a virtual apple or egg.
While you can “print” unlimited amounts of currencies you cannot produce unlimited amounts of actual goods to live on. We live on a finite planet. To me, this means there is a finite limit to growth- not infinite as many of our “leaders” would like us to believe. This is where the disconnect comes in and will eventually, in my opinion, lead to a major crisis as the world’s countries battle for those finite resources to take care of their own. Personally, I believe most of the rest of the world sees this problem brewing and that is why many countries are repatriating their gold and other assets as we speak.
Even though China has gone over $30 trillion into debt since the year 2000 they have at least built real estate, purchased thousands of tons of gold, purchased a staggering amount of industrial materials and have invested in infrastructure around the world- real stuff! Here in the USA we have issued massive amounts of debt and have handed it out in the form of food stamps, cell phones, and other social experiments. We have nothing to show for our “compassion”. I don’t consider it compassion to treat anyone with the disrespect that you don’t think they are capable of work. Many are in their current situations because of a lack of respect or hope. It may even be worse than that. Could it be those in charge want to keep these people down for control?
Does anyone think that Russia selling off their US Treasury Bills to buy gold is not a sign?
Anyone thinking that the robots are coming to do the work, that may happen at some point in the future, but as of today the labor of humans is what creates real wealth and assets.
I look at Venezuela and see a place that sits on some of the largest oil reserves on the planet but by mismanagement and living above their means for years by “printing” money and handing it out (socialism) the country has been literally destroyed. You can only go on so long before the real assets run out and your “virtual world” comes crashing down around you.
In the USSR the economic numbers were always great- Until 1991 when it collapsed because the numbers were virtual reality- not reality.
Anyone who thinks that economic laws don’t apply today is likely going to get a harsh dose of reality and likely soon. Those in charge are spending hundreds of billions if not trillions of dollars to keep interest rates artificially low, metals artificially low and stocks artificially inflated. The numbers become more staggering day by day to the point where $21 trillion missing from the defense department and HUD doesn’t even make the news. Of course, want important information actually gets disseminated these days anyway?
I believe it’s time to wake up and get ready for a large reset of financial and real assets. With the trouncing Facebook is taking as I write this there could be a few more signs that a change is very near.
Remember- just because a train is delayed doesn’t mean it’s not coming!
When asked how the Weimar hyperinflation happened someone answered gradually and then- all at once! My personal belief is that we have been in the gradual part for years. When is all at once?
Mike Savage, ChFC, Financial Advisor
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