I think it is a good time to put out what my perspective is on the current economic situation which is, to say the least, interesting.

One day we have tariffs- the next day we have a cooling off period. “Markets” are making up some of the losses incurred earlier this year and the gold has cooled off and is currently giving back some of the gains we saw earlier in the year.

The main question has to be, will this current paradigm last. My answer is a resounding NO.

It is extremely obvious that every trick in the book is being used to keep the stock and bond “markets” elevated. Of course, these are not the markets of the past where a willing buyer and willing seller set the prices of stocks and bonds thousands of times per day which led to true price discovery. Today, there in NO PRICE DISCOVERY anywhere. This is what makes this current situation so dangerous.

Currently, we are conjuring up cash to pay interest on our existing debt, buying bonds that other countries are selling, buying debt issued to retire existing debt and funding current spending. The current spending part is over $1 TRILLION in deficit spending. This does NOT include off-the books spending which could also be in the trillions. All this is doing is putting the day of reckoning off and keeping yields from exploding higher- leading to that day of reckoning whenever it happens.

The thing that I worry most about with the bond buying is that our historical benefactors are now SELLING instead of BUYING. They have TRILLIONS of dollars’ worth of our bonds. The real threat, in my opinion, comes later this year when $7.8 TRILLION in US government debt matures. Much of this debt was issued at around 2.5%. We are already saddled with over $1 TRILLION in interest expenses BEFORE we have to refinance at higher rates.

Could this be one of the reasons that the Fed is NOT lowering rates even as the economy is in freefall? I believe they are keeping some powder dry because they know this is coming. In addition, the dollar has been getting pummeled even against weaker currencies this year. If rates were lowered it could cause a disorderly decline in the dollar and upset the global economy. This could also be part of the reason that most other developed nation’s central banks ARE lowering rates.

Many people will say that this is ok. It is NOT ok. We are actually broke and going deeper and deeper into debt. Too bad most people will remain in the dark until it is too late to protect themselves. These actions keep interest rates suppressed and also aids in weakening our US dollar. This is VERY purchasing power negative.

On the stock side there is good reason to be concerned about the manipulation by buying stocks and ETFs outright and using headlines to fool the algorithms into buying. We have to keep in mind that with EVERY intervention the chasm between PRICE and VALUE gets wider and wider. You get to pay MORE of a price for your shares while the VALUE could be falling. With the economy in the shape, it is in it is more than likely that most stocks VALUES are cratering while creative accounting and buybacks mask the truth.

One glaring reason to believe this game is almost over would be when Warren Buffett has over $300 BILLION in cash. Another would be when I was watching a presentation by Stephanie Pomboy, she mentioned that if stocks dropped 50%, they would still be OVERVALUED on a historical basis.

Either the economy has to do a U-Turn and explode higher or at some future point the “market” will have to reflect the underlying economic reality.

Cash is being conjured up globally to give the illusion of solvency where none actually exists without the said “printing” taking place. This is global in scope. This is why this bubble makes all previous bubbles pale in comparison. This is not limited to any one nation or a group of countries, but the entire globe is functioning on FIAT (backed by nothing) currencies that they can conjure up out of nowhere in unlimited amounts.

What is the VALUE of an “asset” that can be conjured up in unlimited amounts at virtually NO COST because it is not backed by any tangible asset? What is the VALUE of a promise that cannot or will not be kept? What could the fallout be if distrust in US bonds hits critical mass and VERY few buyers are left?

What is the actual VALUE of gold and silver? The price suppression has been going on for so long that it would be impossible to really know until that day of reconning arrives. My guess is $25,000.00 minimum based upon the “printing” that they allow us to know about- likely FAR more has taken place than we could possibly imagine.

My opinion is that our entire economy is built on the sand of unsustainable debt and promises that the numbers say cannot be kept. Of course, inflating the US dollar’s purchasing power away will allow those “in charge” to tell us they kept those promises. At that point you may only be able to buy a meal with what once would have financed a month of bills.

The writing is on the wall and the outcome is fairly easy to see coming. The only question in my mind is WHEN. My guess is sooner than many anticipate.

Be Prepared!

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