As I write this weekly article, I often mention that everything we see is an illusion. There is no price discovery for almost any asset because of the interference in the “markets” by central banks and their buddies at the banks that own them and other buddies at major financial firms. The media is complicit in the deceit as they willingly parrot the stories of the day.

I can’t imagine how most people must feel when they hear the propaganda being put out like:

  • The labor market is strong when everyone knows many people who have lost good jobs and can’t find a new one for years- at least a job that would sustain a family.
  • The economy is strong. How could that possibly be when every single economic indicator is pointing DOWN? Manufacturing is cratering globally and the US is leading in this regard as our trade deficit attests to. Corporate and individual bankruptcies are spiking higher and commercial real estate loan defaults are also climbing substantially. Do you feel “richer”?
  • The dollar is strong. If so, why is everything skyrocketing in price? Is it the milk or meat that changes? No. It is the dollar losing its purchasing power because of the unfettered “money printing”. They get away with saying the dollar is strong by comparing it to even weaker currencies like the Yen, Euro and others. Measured against gold (real money that is an asset) it has lost 85% of its purchasing power vs. gold since the year 2000. The scheme- compare the US dollar to weaker currencies and suppress the price of gold to give the illusion of dollar strength while it is collapsing before our eyes. I believe that the only reason we are seeing inflation APPEAR to be lower is that countries around the world are emptying their strategic oil reserves and keeping the price of oil down. This is obviously a VERY short-term answer.

You get the picture- I could go on and on but the whole point is that we have to look beyond the talking points and look at reality- even though it hasn’t mattered for years- at some point reality will rear its ugly head and the truth will be revealed. When- I can’t possibly say because, in my opinion, the system went bankrupt in 2008 and has been on a steady dose of monetary stimulus since then. It is now getting to the point where the “money” being conjured up out of nowhere is being used to pay current bills, retire old debt and giving us the illusion of solvency where, without the conjured up cash, there would be none.

Another major illusion is our “growth” in GDP which many use to determine when debt is overwhelming the economic system. I believe we are past the point of no return for these reasons:

  • Our GDP is reported to be $26.5 TRILLION. While that is a true number it includes government spending- which just adds more debt to the system. If we were to give a more accurate accounting the number would be FAR less because without the government spending the $6.2 TRILLION that they admit to- certainly far more with the off-balance sheet expenditures for wars around the world, etc. the debt burden would look FAR worse. Of course- we can’t have that now, can we? With the debts that we are admitting to- not including unfunded liabilities that DWARF the debt that is acknowledged- we are far beyond any rational person thinking that we could actually repay what we are on the hook for. Not only are we in a position with the rising of interest rates where we may owe $1 TRILLION in INTEREST this fiscal year but we are also going $1.6 TRILLION deeper into debt this year (that they admit to- actually FAR higher with off balance sheet items) If you go to USDEBTCLOCK.ORG- where most of this information is from- you can see in real time that debts and deficits are EXPLODING and the only thing going backwards is TAX receipts. So we are going deeper and deeper into debt and our ability to even carry it is getting more reliant on “cash from nowhere” to feign solvency for a while longer.
  • Think about state and local revenues as commercial real estate is collapsing in many places which means lower property taxes collected. Many places are seeing lower home prices- again lower tax receipts. Many mom and pop businesses- the backbone of America are closing up shop for good leading to less demand for commercial real estate, lowering the taxes paid on wages and sales taxes collected. Many states cities and localities were struggling financially before all of this carnage. My guess- I don’t know exactly when but- LOOK OUT BELOW!
  • The banks are so sure of the economic future that lending has slowed to a crawl. In the last few months we are seeing record amounts of loan denials. This is true for auto loans, credit cards, mortgages, etc. It s across the board. If they were confident in our economic future they would likely be lending freely.

There appears to be no relationship between economic activity and stock “markets” at this time. History shows that the economy will either have to blast off to keep up or the “markets” will have to eventually fall to get back to a real valuation. My guess is that as this plays out most people will be shocked at the lack of VALUE that they have been purchasing in stocks and bonds lately and most will be shocked at the actual VALUE of mainly hard assets and some companies that produce those assets.

Don’t be deceived and …

Be Prepared!

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