UNEXPECTED! It seems amazing to me that virtually all the economic news that comes out just gets worse and worse and, in each case, it is reported as “UNEXPECTED”.
I guess when you watch the financial game shows and the mainstream media and you believe the massively massaged numbers that they put out to make sure as many people are clueless as possible, any bad news is unexpected.
Just think about the 3.9% unemployment rate. It is paraded out daily as fact and proof that the Fed has achieved maximum employment. Now, look around and tell me if 3.9% has ANY bearing on reality. The REAL fact s that the labor participation rate is at an ALL-TIME LOW and only by not counting nearly 100 MILLION working age people could we have an unemployment rate below 25%. The fact is that we have great depression level unemployment as we speak. Even though there more people here in the USA now, there are 3.1 million less people working now in 2022 than there were in 2000. (USDEBTCLOCK.ORG)
I guess this is why, when, each week we are LOSING 200,000-300,000 jobs per week it is “unexpected”.
This week’s UNEXPECTED number was 286,000 for last week. It was also “unexpected” earlier in the week when the numbers showed that manufacturing is cratering also.
Inflation is unexpectedly high. This is the case even though these numbers are greatly altered so that benefits such as social security can be increased in smaller amounts- basically theft from those that funded the system. According to John Williams of Shadow Government Statistics the actual inflation rate is north of 15% while the “official” number is 7%.
While this may not sound like a huge difference, the difference is that with 7% inflation prices will double in 10.28 years. At 15% inflation prices will double in less than 5 years. Of course, this assumes that the inflation rate stays the same during the entire time. My concern RIGHT NOW is that we are seeing prices increasing meaningfully and the trend appears to be picking up steam rather than abating.
For months and months Fed Presidents and others were paraded out to let everyone know that the inflation was an aberration that would go away shortly- even as they were “printing and buying” virtually all assets and had to know that what they were doing was massively inflationary.
Since there is information out there that China is going to go live with their CBDC (Central Bank Digital Currency) shortly, all central banks are mandated to have CBDCs by 2025, and there is information out there that the USA may launch a CBDC in 2023 I have large concerns that the US dollar could actually plummet in value at any time. This would lead to inflation rates that we can’t imagine right now.
Do you have a plan for THAT?
Another major concern that I have is that while the Fed is likely to raise rates as early as their March meeting it is EXTREMELY unlikely that they could raise rates anywhere near enough to make any meaningful difference in the negative real interest rates that we are currently experiencing.
The ACTUAL negative interest rate, if inflation was calculated correctly, would be around -13%. 15% inflation MINUS the 2% 10 year yield = -13%. OUCH!
In addition, since we are running a $4,000,000,000,000.00 (TRILLION) PLUS budget deficit just whom might it be that will fill that VOID if the Fed were to actually pull back on the “printing” at all?
What doesn’t get paid? The military? Social Security? Housing and food subsidies?
Does it make sense to anyone that the Fed or any central bank would pull back during an election year?
Personally, I believe that if the Fed did actually pull back it would be a disaster for those who are counting on the money from nowhere to survive. They actually may NOT survive.
I have seen articles that believe that the Fed- particularly in an election year will elect to prop up the dollar and fight inflation. I guess that could happen BUT personally I am not betting on it. I believe that since we are in an election year it is more than likely that deficit spending (and therefore Fed “printing”) will likely be in overdrive to make our ailing economy look as healthy as possible.
An economy that depends upon money conjured up from nowhere to give the illusion of normalcy and solvency- neither of which exist in the USA at this time- is an economy whose days are numbered.
It also appears to me that the US dollars days are numbered.
Personally, I believe buying gold like the central banks makes a lot of sense. It appears that the major banks that own the Fed believe it too because they have been major buyers also. (Those that own the gold make the rules) (Gold is money- all else is debt -JP Morgan himself) I also believe buying silver- which I believe is one of the most- if not the most undervalued asset on the planet is a prudent move. I also believe buying companies that mine these assets along with other companies that produce things we need to survive like energy (oil, gas and uranium and coal), iron ore, food, water, etc. makes a lot of sense at this time.
The central banks and their friends move the paper price of gold and silver around to make it appear volatile. At the same time there are just 2 assets that can be listed as “riskless” on the central bank balance sheet- US Treasuries and GOLD. Go figure!
In addition to making the price volatile central banks have bought record amounts of gold for the past 4 years. My intuition tells me that the more volatile they can make it look and the cheaper they can keep the price it allows them to 1) buy more for less cost and 2) keeps retail investors away so there is less competition and less upward pressure on the price.
While everyone has different risk tolerances, we all have a need to protect our purchasing power going forward. Is it more likely to achieve success in preserving purchasing power with a green piece of paper- or computer blip or with real things that cannot be conjured up out of nowhere at virtually no cost and with NO inherent value because it was created WITHOUT any production of any kind?
I know my answer and I am acting accordingly. If you haven’t asked yourself this question yet, I believe your time is getting short to be able to position yourself for what may be coming shortly.
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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