The signs are everywhere that we are getting closer and closer to a day of reconning. Not only the US economy but the global economy as well. The numbers- even the fabricated ones that are meant to make things look better- are bad.

Inflation is rising and even the Fed has come out this week saying they see another bout of inflation coming “soon.” Of course, if they lower rates in September as they are expected to do it will weaken the currency and cause higher inflation.

While prices continue to rise so do JOB LOSSES. MarketWatch reported that initial jobless claims rose to 235,000. Continuing jobless claims climbed by 30,000 to 1.972 MILLION- the highest reading since 2021 during the pandemic.

Many companies are reporting earnings and even such iconic companies like Wal-Mart, Home Depot and most chain restaurants are warning that the consumer is hurting, and they are not spending on luxuries like they were. This is likely because NECESSITIES are costing so much more these days.

While we can see this information pretty easily by watching the financial game shows and information channels like Yahoo Finance, there are far more serious issues that are not being covered. This would be in the bond “market.”

Outside of a few independent sources I have seen little to no coverage of the fact that the US Treasury and the Fed are engaged in a battle to keep the ILLUSION of solvency alive by the Treasury issuing debt, the Fed funding it and the Treasury buying back matured or sold debt. This is Weimar Germany and Venezuela type action.

The facts are that since we have weaponized our US dollar and Treasuries the rest of the world has become SELLERS of our debt and not BUYERS. This is FAR more important since we are adding about $1.1 TRILLION in new debt every one hundred days. Not only do we need this new debt to continue the spending, but TRILLIONS of dollars of Treasuries are maturing this year.

If we go back to 2008 anyone old enough to remember may recall Ben Bernanke making the statement that if we don’t add billions to the system, we may not have an economy on Monday morning. This was the first seize up of the system and was likely a prelude to what is awaiting us somewhere in the near future.

The main point here is that the economic system could not fund itself, so it needed an artificial stimulus (or demand) that was created out of thin air to prevent collapse. Today, the same circumstances are playing out, but it is being hidden in plain sight. The system would have already imploded if tens to hundreds of trillions in currency units had not been created across the globe to create a false sense of security and solvency. The liquidity being provided gives the illusion of security and solvency but undermines both in the long run.

We are at a point right now where if rates are lowered our standard of living is going to take an even larger hit than we have been taking. If rates are not lowered the massive debts we are accruing will grow exponentially faster due to higher interest costs.

What it comes down to now is does the Fed lower interest rates and help the government manage debt payments? If so, the government can keep the game going a little longer, but it comes at OUR EXPENSE through higher costs for EVERYTHING. Keep in mind the Fed can lower overnight rates by saying it- all other maturities they actually have to conjure up the cash to buy the bonds that creates the artificial demand that actually causes the bond price to rise and yields to fall. This will cause MASSIVE money creation which is the definition of INFLATION.

Many people are deceived when they see headlines like “Inflation is Coming Down” when in reality the price increases that have already happened are still there and the RATE of increase is all that is contracting. Of course, that narrative is already breaking down because inflation is starting to increase in velocity as we speak.

I can’t say it in a strong enough manner- prepare for far higher prices going forward.

To me, this says buy hard assets. Not only are commodities historically undervalued versus financial assets (Leigh Goering), but they appear to be ready to break out because of the projected inflation.

My opinion is that if those “in charge” were interested in helping those not in the 1% there would be talk of HIGHER interest rates- not lower. The reason there is no discussion of that is because the 1%ers would see massive losses on their portfolios and prices for most goods would fall- helping out the economy overall but impairing the ability to extract even more assets from the rest of us.

Higher interest rates would bring down the cost for Real Estate, Stocks, Bonds, and most everything else. It would also allow those now “priced out” of owning ASSETS to buy at a price they may be able to afford and at valuations that make sense- not the bubble prices of today.

Anyone who thinks that we are not in an everything bubble ponder this.

The greatest stock investor the world has known (Warren Buffett) has been selling out of stocks and is holding over $400 BILLION in cash and/or T Bills. Insiders are selling massive amounts of their shares. People with regular jobs can’t afford a regular home-many can’t even afford the rents! Bond rates would be exponentially higher if not for the faux demand created by “printing and buying” schemes. Gold and silver would be exponentially higher if the price suppression schemes did not take place. (The exact opposite of propping up stocks and bonds). The likelihood that I see is that when reality strikes stocks, bonds, real estate and all other artificially propped up assets will collapse, and the artificially suppressed assets will go in the opposite direction.

While the timing is always hard the numbers are screaming …

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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