The reason I write this article every week is to hopefully enlighten people to the real state of the economy. This is a LARGE departure from what you see on the financial game shows. In the two years building up to the latest collapse I was just reading economic reports put out by the authorities and reporting them. They were showing a contraction that was gaining speed for 18 months prior to any virus. Many were confused as to why my articles didn’t match what they saw on TV.

This contraction was global and was accelerating even though central banks from around the world were extremely active “printing and buying” most all assets. There was an illusion created that the US could be spared in a global slowdown which, I believe, has now been firmly debunked.

I have been in the USA for over 60 years and I have NEVER seen our country in such disarray and despair. I have never seen the population so divided and a lack of civility in all areas of our life.

I guess that happens when many are frustrated by rising prices, stagnant income and those at the top getting fabulously wealthy while the majority of society is seeing their lifestyles disintegrate.

We have become a nation that has lost its way. We took God out of our schools and public institutions. The void has been filled with what appears to be pure evil. It starts at the top.

Many are going to think I am talking about the President. NOPE! The top is not what many people believe to be the top. The President and most members of congress do as their told by the masters- the money “printers”. The banks, which own the central banks are the REAL top.

Those who really run things will not be seen, heard, or known by most of us. Even the bank CEOs, who have become some of the most rich and powerful people in the world answer to a select few.

It has been apparent, at least since the late 1990s when Glass-Steagall (Legislation forbidding banks with deposits from owning trading firms) was repealed, that the people in these positions care about two things- themselves and enriching themselves at everyone else’s expense. This legislation was passed to prevent another 1929-type crash in 1934.

It only took about 10 years for the banks to buy brokerages, mingle deposits with investments and have the whole system implode in 2008.

Since then, hundreds of trillions of yen, yuan, pounds, Euros and dollars have been conjured up out of nowhere to hide the fact that, without this “money” from nowhere, we would be insolvent. We would have been insolvent since at least 2008. At least the funny-money bought us time.

John Williams of Shadowstats had a couple of interesting quotes:

“The system is bankrupt, and they are just spending money to prevent an immediate collapse as opposed to having it collapse right now” “We effectively have a Zimbabwe Fed”.

For anyone who is unfamiliar Zimbabwe has an interesting history that includes going from Africa’s bread basket and prosperous, to a country that “printed” money to pretend they were still wealthy. This led to a dozen eggs costing $3 trillion Zimbabwe dollars a few years ago. Venezuela is a more recent example where it is over $3 million bolivars for a cup of coffee but an ounce of silver can feed a family of four for a month. This is what happens when you “print and buy” or “print and spend” money you just created out of nowhere. Trust me, economic laws apply everywhere- including right here. The writing is on the wall.

I have been watching in horror as protests that appear to be well warranted in the  beginning have turned into looting, riots, mayhem and murder. These looters are put up by the mainstream media as the bad guys. I agree that this looting is horrible and the after-effects will be felt in these communities for a long time to come.

This seems to take the focus off of the REAL looters. The real looters are at the top where they conjure up money from thin air, charge US interest on it and buy assets that THEY OWN. And nobody says a word.

Those in government, who should be working for US and protecting OUR interests are actually intimately involved in all of this.  When you hear some of these politicians you have to wonder “Could they really be that dumb?”

My short answer is, I believe no. They are likely bought and paid for and spout whatever they are paid to say. Or they don’t get to play anymore.

The media is also in on it. They repeat numbers that are obviously not real but, repeated often enough, become the truth. Like the 3.5% unemployment rate when 95 million  people were conveniently NOT COUNTED. Or the “no inflation” myth as the cost of living has been rising relentlessly for years and incomes not rising to match it.

Then you have the shills that spout terms like “invest for the long term”. “BTFD”, “you millennials HAVE to be in this market”. You get the idea. It’s ALWAYS time to buy!

This recovery that we are seeing in the US markets right now has been impressive. Even more impressive since our economy is forecast to fall up to 58% in the second quarter. Of course, the “EXPERTS” are expecting a V-shaped recovery so don’t worry. CLUE- Not likely.

There are many reasons for not expecting anything NEAR a V shaped recovery. The real unemployment rate, according to John Williams again is 39%. My own research from the BLS shows that 49% are unemployed so in the truest sense without any gimmicks we have 49% unemployment. Tell me how the consumer is in good shape again. Let’s also not forget that those unemployed now have no access to subsidies for health insurance. Those not working don’t pay income taxes or FICA  and will find it hard to pay other taxes like school and property taxes. Those “making more by not working” are in for a major shock soon unless the “extra” stimulus keeps coming. Look out after November.

Look out for cities, states and public institutions to have to cut WAY back because of a lack of funding. The “printing” can only go so far. Keep going and eventually the “money” will only by a fraction of what is needed to survive. Stop and there would likely be an immediate collapse of our economic system. As scary as that may sound it may be our fastest path back to a sustainable recovery and real economy.

As the “markets” recover (at least for now) many get sucked in and are likely to be hurt badly in the coming weeks and months.

A perfect example would be a bankrupt company- Hertz. Last week the stock sold for 80 cents last Thursday and was up to $6.25 on Monday. This is an 800% return on a BANKRUPT stock. Basically, this stock will likely end up at $0.00 and will expire worthless. That is what happens to common shareholders when companies go bankrupt. It was reported in Zerohedge that 80,000 new buyers of this stock emerged from on-line brokerage Robin Hood. I’m sure it is not financial pros who are using this site!

I had to learn the hard way about 20 years ago that shareholders get crushed in a bankruptcy. If anyone reads this and is holding any bankrupt- or close to bankrupt entities- you may want to take the money and run.

If, however, you have an adventurous side you may want to do what YOUR central bank is doing. You see, they, as part of the junk bond purchases own Hertz BONDS. In a default, the stockholders get wiped out, the bondholders, in a debt for equity swap have the debt turned into shares and the bondholders become the NEW stockholders in a company with little or NO DEBT.

So, should you buy the stock like the folks who think they are geniuses because they have never seen a real correction or a real market for that matter? Or should you maybe look a little further ahead and buy like the Fed is doing?

In any case, that “money” they are using is being created in amounts that are not only historic but are also likely to render that “money” worth a WHOLE lot less- or even worthless at some point.

This is why it is so important to do something else the central banks are doing. Buy Stuff. They are buying stocks, bonds, gold, silver, etc.

You can bet they know what is coming. They may even know when. We don’t have that luxury.

Personally, I like hard assets like gold, silver, and the companies that mine them, critical companies like utilities, food and water producers- things we can’t do without. Having said that, many critical companies are trading at historically high valuations and will likely be a better buy in the future than today- some possibly even after a bankruptcy. Timing is important. I also believe that real estate, while currently overvalued, will likely present some major bargains in the near future.

Change is coming at lightning speed.

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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