What is it that they know that they hope you don’t know? Remember, I always say watch what they do-not what they say.

I am talking about those “in charge” and their buddies at the major banks, governments, and hedge funds.

I believe that what they know is that all assets (notice I didn’t say promises to repay) derive VALUE from PHYSICAL goods.

JP Morgan himself famously said “Gold is money- all else is credit” (Another’s promise to repay) as he was bailing out the United States. All the wars we see around the world- is it any surprise that there are few, if any wars where there are no oil, critical minerals or assets that provide primary wealth?

Primary wealth is primarily natural resources. Those things needed to produce the sustenance that we all need like water, farmland, oil, gas, fishing grounds, etc.

Without these inputs secondary wealth could not be created. Secondary wealth is the wealth created by transforming natural resources into food, lumber, gas, and necessities of life.

For centuries, Europe in particular has been pillaging the world- Africa is the most noticeable by paying below market prices for their national assets and creating secondary wealth- like jewelry, nuclear power, and a myriad of other things that have kept parts of Africa in abject poverty while those who manipulate prices get wildly rich.

The markup on the secondary wealth is a large reason for the disparity between the producer and the manufacturer.

If there is a level playing field all those involved in farming, mining, fishing, etc. would all be set up to make good livings. Unfortunately, there are many who are content with taking what they can get and not worrying about those producing their necessary inputs.

Many may be asking- what is this – a geography lesson? No. But I promise there is a good reason for explaining this. You see, all of the real ASSETS that either provide or produce real VALUE are finite. There is only so much of everything here. Most of the finite assets are being used as collateral for an INFINITE amount of debt and promises to repay.

Needless to say, if the PRICE of that collateral falls it could create a cascading effect on all of us. This is one of the reasons that the Fed has purchased $90 Billion in the last 45 days or so. They can say what they want but they are funding the government because we are spending FAR beyond what we are producing and have been for decades.

The real problem- which I believe we are beginning to see right now- is that productivity cannot produce the necessary income to prop up the seemingly unlimited debt. This is not only true of our government but most other governments, cities, states, companies, and individuals.

The Fed has gone so far as to conjure up tens of trillions of dollars to bail out the banks, buy bonds that others won’t, and manipulate prices for gains. They are creating PHANTOM wealth that produces NOTHING but allows for the illusion that we are solvent and prosperous. Trust me, a prosperous nation would be socking money away- not going $2 TRILLION deeper into debt every year. The $2 Trillion is what they let us know. What about the wars, social security, Medicare, VA benefits, etc. that are “off the books.” I also believe they are conjuring up trillions to keep treasury yields from blasting off. $10 TRILLION matures in 2026 with few international buyers left. In fact, they are SELLING adding added pressure on yields- and the Fed’s keyboards.

Companies are no different. They take loans not to enhance their businesses but to buy back stock so they can announce better numbers, prop up the stock price, and cement the bonuses that they all covet. This gives a short-term sugar high to the stock PRICE but ultimately will reduce the VALUE of the enterprise because they are deeper in debt and have no (or far fewer) new projects for future growth.

Cities and states have taken the easy way out also and instead of making tough decisions they keep kicking the can down the road going deeper and deeper into debt and many have even GROSSLY underfunded promised pensions. Even with “markets” at all-time highs many of these plans are in deep trouble. I don’t even want to see if there is a substantial pullback which, in my opinion, is LONG overdue.

With rising prices- because of the unbridled money “printing” many individuals have been going deeper into debt just to maintain the lifestyle they have become accustomed to. Again, this gives an illusion that all is ok for a while but a day of reconning comes. The over 1 MILLION auto repossessions in 2025, rising foreclosures, rising delinquencies on credit cards, and mass layoffs are a strong clue that the end is not only near -but HERE for many. It always hits the most vulnerable first and then ascends up the ladder.

This faux “WEALTH” that has been created to give politicians and others the ability to say we are the richest nation on the planet while no other nation in history has run up debts like we have. It is not only an illusion of wealth, but it is actually evil because most of our “wealth” has to be repaid to someone else. We are in essence- RENTING WEALTH that has to be repaid.

I believe that most of the promises to repay will not be kept because the numbers say they can’t be fulfilled if the currency retains even a fraction of its current price. This goes for all forms of debt.

This is the main reason why HARD ASSETS are so important. They are ASSETS and not some far-off promise of repayment. The punchline here is that if and when you get paid back- it is with another unit of debt- a US dollar. A bond is a farther-off promise to repay that is likely to be paid with FAR less purchasing power than you were planning on.

Finally, if a company misses a bond payment the first loser is the common stockholder. Since many companies have more liabilities than assets everyone would likely see a 100% loss.

Keep that in mind when you hear about the next hot stock that has an exceptional story. Make sure you look at the balance sheet. Exceptional stories can lead to great losses if you don’t do some homework.

Traditional thinking has brought us where we are today. We better start thinking outside the box REAL SOON!

Be Prepared!

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 prove 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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