More is Better? It seems as if, over the past 50 years or so, many Americans have become far more wealthy than they had been in the past. It seemed that every generation expected to do better than the previous generation- until now.

When Richard Nixon suspended (temporarily) the ability to exchange dollar for gold in 1971 (still in effect) currency and bank credit have ballooned from $685 Billion in 1971 to $21.84 TRILLION now- that is admitted to. There are also Eurodollars out there (dollars produced outside the USA by loans made in dollars) that could add a few more trillions to the mix- as well as off-balance sheet items that could be virtually ANY amount.

Using the numbers we know, the debt has risen over 32 TIMES since 1971. Most of that “growth” has been in this century. Growth would be great if it was based upon production and sales but, alas, most of our GDP gains are merely a function of ever-increasing and currently out of control debt creation and money “printing”

How many times does the $3 TRILLION in deficit spending by the Federal government get spent throughout the economy?

During this time period the median income has risen by 4X. That is 8X more debt growth than income growth.

While the inflation continues to rage those “in charge” are talking a good game but are actually doing nothing to stop it. The actual rates that would likely stop inflation would also likely to be a death blow to the economy so I am not holding my breath.

Many will tell me everything costs more because of technology. That people pay for internet, cable, cell phones, etc. While I believe that is partially true the real cause for the pain can be summed up in just a few paragraphs.

ITEM                      1971 Average                     2022 Average          Increase

Median Income   $9028.00                             $35,000.00                   4X

Postage Stamp               .06                                            .58                   9.5X

New Home           $28,300.00                         $374,900.00                 12.24X

Gallon of Gas                     .36                                      4.00 +                12X

Gallon of Milk                 1.18                                      4.02                    2.5X **

Gold                                35.00                                1,950.00                  54.7X

** I have a friend who is a dairy farmer who said that if the government wasn’t subsidizing milk it would be over $10.00 per gallon- and that was a few years ago so the ACTUAL increase is MUCH higher.

Expenses have been rising FAR faster than incomes for a long time. This is likely why trillions of dollars are being conjured up out of nowhere to pay the interest on what we already owe and run the country since tax receipts only cover about half of the spending these days. That is what is admitted. I believe the numbers are far higher than we are allowed to see.

It is obvious by the above information that incomes- while up substantially have not been able to keep up with rampant rises in prices. When an average home costs 12.24 times more than it did in 1971 and your median wages have increased 4X it is obvious that a lot more debt must be deployed and purchasing power sacrificed for a new home. A gallon of gas has risen about the same amount as the real estate. Again, more money being spent on necessities.

Anyone who has been holding dollars during this time has seen the purchasing power- when measured in real money (gold) has lost over 97% of its value. This is why they compare it to Euros, Yen and other fiat (backed by nothing) currencies rather than real money. It gives the ILLUSION of strength. But anyone who looks through the proper lens can see that the value of fiat currencies are fading fast. Commodity prices are a HUGE clue!

This will likely only accelerate in the coming days, weeks and months. Even Israel, a staunch US ally has added Canadian and Australian dollars (commodity producing currencies), the Chinese Yuan and have decreased exposure to the US dollar and Euro in their foreign holdings. The US dollar is still the most heavily weighted but has been decreased 5% while the Euro was decreased 10%.

It appears to me that there is a major sea-change taking place and it is FAR from good for the US dollar and our pocketbooks. Plan accordingly.

While the global economy is collapsing for many reasons- lockdowns, supply chain disruptions, rapidly increasing prices, lack of global cooperation, etc. we are supposed to believe that our economy is “great”. This while many people are getting charged fees for not being able to keep account minimum balances in the bank, Producer prices are surging globally (30.9% Year over year in Germany) , Americans are spending more (mostly on credit) and getting FAR less. Reuters reported that strong consumer spending is underpinning the economy. Personally, I don’t believe paying more for less goods underpins anything. As an example, revolving credit- mainly credit cards was up 20.7% in February. That will happen when wages rise 2-5% and inflation in the real world is over 15%. Anyone barely making it is now nearing a cliff that is rapidly approaching.

The government can “print” money to pretend they are solvent- people, cities, states and companies can’t do that. When WILL reality strike?

The US dollar has lost nearly 98% against gold since 1971. The last 2% will likely be the most painful. While many may not like to hear it our days of a free ride “printing” dollars instead of producing tangible assets is coming to a rapid close. This is the main reason that I believe the deflation argument is not the right one at the moment. However, It all depends upon what the Fed and other central banks do. Personally, I believe they will protect their owners- the major banks at our expense until the peons (us) rise up and stop it. I am not holding my breath on that one either.

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 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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