What if they don’t? Many people, because of the 24/7 mainstream media propaganda, are convinced that at the first hint of trouble in the stock “markets” the Fed will be there to reduce interest rates and goose the “markets” higher. I can’t say I blame them because for as long as I can remember- at least back to 1987 that has been the mode of operation of the central banks. They buy bonds to reduce rates and raise bond prices and buy stocks to artificially levitate the “markets”.  This can go on for only so long until reality raises its ugly head, and the true VALUE of the underlying asset is exposed.

I always wonder when I hear people saying that the Fed got it wrong, or it doesn’t understand this or that, where they are coming from. If anyone “understands” what is happening, it is the people who are pulling the strings- the central banks. I believe the MAJOR mistake that many make is that they think that the Fed and other central banks care about the regular people. What they really care about- as most corporations do- are the shareholders. Who are the shareholders? The major banks.

What if the real goal here is to carry out what Thomas Jefferson said they would do 300 years ago? What Thomas Jefferson said was that if we allowed a central bank in the USA, we would wind up renting back the land that we conquered. They will do it first with inflation and then with deflation. Let’s examine this further.

The inflation part has been accomplished. Many people have overpaid for homes, cars, commercial real estate, stocks, bonds and many other assets because of the artificially low rates which allowed risk takers to leverage up and drive prices up FAR beyond any reasonable value. Many have loaded up on” assets” but have also loaded up on debt to finance those “assets”. I am using “assets” because many of these assets are rapidly becoming liabilities. Liabilities that could eventually lead to the banks owning the “asset” because the loan gets defaulted on.

I have to ask myself, is the Fed raising interest rates to fight inflation or to destroy what is left of our once-booming economy. I don’t buy for a second that they don’t know what they are doing.

Let’s look at a few facts:

  • The Fed has raised rates at the fastest pace in history. Inflation is still rising and appears to be accelerating again as I write this. On the other hand, it is getting harder and harder for individuals, companies, cities and states to pay the interest on their debt because of rising prices AND rising interest rates. Of course, the Fed is conjuring up the cash to pretend that all is ok with US government debt as our interest payments and deficits are skyrocketing even though it is likely FAR worse than the numbers we see, because of off balance sheet expenses.
  • Many people are hitting up their 401ks and maxing out their credit cards to try and maintain the lifestyle that they have become accustomed to. According to Moody’s chief economist Mark Zandi the average American is paying $709.00 more per month than they were just TWO years ago. While incomes (for some) may have risen most have not seen an increase that can keep up with over $8400.00 per year in higher expenses.
  • While the carnival barkers on the financial game shows tout the “strong economy” all of the numbers tell a FAR different tale. Manufacturing, shipping, and inventories are all collapsing. This is not just in the USA but also globally. The Empire State Survey lays it out: NEW ORDERS PLUNGING. SHIPMENTS DOWN. PRICES PAID-UP, PRICES RECEIVED-UP. Isn’t that great? Another thing that is exploding higher is corporate layoffs, corporate defaults, and a commercial real estate collapse.

Just think about it. If the central banks keep rates artificially low and induce the public to get in over their heads and then collapse the economy, all they have to do is foreclose and they own most assets. How is someone with a 4% mortgage that is $500,000.00 going to pay that- and taxes, upkeep, etc. if they lose their job? How is a corporation that was relying on ever cheaper debt to continue to service existing debt going to survive their rates doubling this year? How are cities and states going to survive their massive deficits and underfunded pensions- especially when the SHTF and the “markets” reveal their true VALUE? How is the USA ever paying back the nearly 33 TRILLION that they admit to when we are going $1.6 TRILLION deeper into debt just this year, we have unfunded liabilities that could be up to $200 TRILLION, and TAX RECEIPTS are cratering. This while millions of immigrants are creating chaos in many major city’s budgets.

The only answer I can come up with is “print and spend” until the currency is nearly worthless, and we will pay every penny back. Unfortunately, anyone getting the promised payment may be buying a $1000.00 happy meal. Not exactly what the “investor” had in mind.

This is likely why almost all central banks and major banks are loading up on gold and silver. This is also why Blackrock- a company with $9 TRILLION in assets under management announced they are exiting US stocks and are pivoting to emerging markets as they feel they are better positioned to weather the coming storm- or so they say. Blackrock is as connected as the major banks. Just next week that BRICS meeting takes place and even if there is no earth-shattering announcement next week it appears the US dollar’s dominance is being weakened day by day.

Just this week another major development took place as India’s Indian Oil Corp. paid for oil from Abu Dhabi with Indian Rupee and not US dollars. In the past, this could have led to a less than happy response from the USA but with Russia offering advanced weapons systems to the former vassal states they are becoming emboldened and are making moves in THEIR best interests.

I can’t possibly explain how profound our US dollar losing its position as the global reserve currency is. This will lead to less demand for treasuries as issuance skyrockets, likely leading to far higher rates and large losses on bond portfolios. It could lead to an uncontrolled collapse in the dollar’s value and the inflation of today will seem like the good old days.

It just could be that this is the end game and rates will actually be higher for longer to, in my opinion, not to fight inflation but to induce a credit implosion which will allow the owners of the central bank to own it all- and it has all been done by clicking “money” into existence while creating NOTHING BUT DEBT that we are paying interest on and are on the hook for.

The clock is ticking …

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.

Commodities are generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only be a small part of a diversified portfolio. There may be sharp price fluctuations even during periods when prices are overall rising.

Precious Metals, including gold, are subject to special risks including but not limited to price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

Diversification does not ensure gains nor protect against loss. Companies mentioned are being provided for information purposes only and is not a complete description, nor is it a recommendation. Investing involves risk regardless of strategy.