As I am writing this it was just announced that the Fed is keeping rates steady. I am also listening to Fed president Warsh spew propaganda about how the Fed is doing a wonderful job with employment. I guess he is living in an ivory tower or just blatantly lying to the American people.

As we hear how “GREAT” we are doing let’s look at a few facts that reveal the truth.

· Student loan defaults have surged to 9.2 MILLION borrowers. That is 20% of all with student debt. 3 more million are 90 days or more delinquent. Last August it was about 6 million that defaulted and 7.7 million by December 2025. Sounds positive???

· Private credit is imploding and according to Bloomberg, UBS and others are exploring structures that will package private credit funds into bonds. This is similar to what happened in 2008 when mortgages and loans were packaged into insurance “wrappers” that allowed very weak collateral to be packaged as pristine debt. The collapse of these funds started a panic in 2008. In an article by Quoth the Raven it was stated “Nothing says, “rock solid asset” quite like needing several lawyers, a rating agency, an insurance guarantee, and a regulatory-capital loophole to explain why it is safe” Buyer Beware! These are assets that those “in charge” do not want any part of.

· According to USDebtclock.org there are over 106 million working aged people who are simply NOT COUNTED in the unemployment numbers. Some are disabled, etc. but if we reported those numbers honestly, we would have worse unemployment numbers than we had during the great depression. Doing GREAT!!!

· The AI companies have been the only real driver in “markets” recently. There appears to be a growing concern that all the spending is impairing the company’s balance sheets, and the utilization numbers have been disappointing. In South Korea, their “markets” are crashing. Many may think- that is there- I am not affected. There is a MAJOR lesson to learn from this. The major reason for this crash (44% down in a month) is a result of LEVERAGE. On the way up leverage goose’s your returns. On the way down it greases the slide. Selling begets more selling as the margin clerks demand more cash or initiate forced selling. There could be a snowflake that falls here that could cause the same type of avalanche at any time. Rating agencies are taking note of the exponential debt growth and bond “markets” are flashing warnings.

· There appears to be no end in sight for the tragic war in Iran. In fact, it is spreading to new battle zones. This is likely to put even more stress on prices and supplies as we move forward. Many are worried about rising prices and rightly so. I believe that the major concern should be what may come after that- Supply disruptions and shortages of almost everything. The longer this goes on the worse it will get.

· The US population is 343.5 million people. In 2000 it was 282.3 million. There are 61.2 million more people here today. Manufacturing jobs in 2000 were 17,179,624. Today, there are 12.5 million manufacturing jobs. In 2000 the taxes siphoned out of the economy (just by federal state and local governments) was 3.56 TRILLION. Today, that same group confiscates over 10.8 TRILLION. Even at that we are running $2 TRILLION in deficits (not counting wars, VA benefits, Social Security and Medicare) and are spiraling deeper into a point of no return. Does this sound like a sustainable fiscal path?

The “answers” are always the same. More cash conjured up from nowhere will fix the problem of the day. Even though the Fed says they are not doing QE their own numbers (likely the tip of the iceberg) reveals the truth. They are MASSIVELY intervening in bond “markets” to keep rates artificially low. They admit to $250 BILLION in purchases and maturing debt starting in January and project needing another 671 billion from July to September. (Fed website).

Even with the interventions and manipulations interest rates are rising.

I have written many times that the Fed can conjure up an UNLIMITED amount of currency units, but it cannot “print up” the goods that we all need to survive. That very act is the root cause of inflation. Another thing they cannot “print up” is confidence. The lack of confidence in the central planner’s ability to effectively address the economic problems that are obvious to almost everyone now could be what causes the system to break down.

There are a LOT of questions out there right now like:

· Will the Fed hike rates? My guess is NO. They will likely talk about it but will do nothing because it could collapse many companies, increase funding costs for all levels of government and could cause deflation. Deflation has been deemed a dirty word for those with assets. Deflation would be a gift to those starting out.

· Is AI going to make millions rich? My guess is maybe. Having said that, I believe a collapse could already be underway as confidence that the rosy scenarios presented will actually come to fruition. Debt, debt downgrades, China competition, and massive power needs (that do not currently exist) are leading many to question whether all this building will actually pay off. The reason I say maybe is that the companies that survive a collapse could become great bargains at that time. I believe patience will be warranted.

· Are the gold and silver bull markets dead? My answer is no. There has never been a more positive setup for gold that I can remember. War (more spending and “printing”) collapsing economy (more social spending and “printing”) $2 TRILLION deficits and $10 Trillion in maturing Federal debt in 2026 (more “printing and buying”). You get the picture. Silver is a bit more complex because of its industrial nature but barring a total economic collapse silver should continue higher because of massive supply deficits that have been covered over by “paper contracts” that give the illusion of FAR higher inventory than actually exists.

Anyone who cannot see that many, if not most promises to repay are in grave danger is, in my opinion, in grave danger going forward.

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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