As many of you who familiar with my articles may know, I am bullish on gold, silver and most commodities.
My main interest comes from watching what the central banks are doing to our currency. This is the main reason for my interest in hard assets. We have already lost 98% of our purchasing power vs gold but the last 2% will likely be far more painful than the first 98% was.
While this game has gone on far longer than I could have ever imagined the beginning of the end has already started in my opinion. There are many signs that we are nearing a major inflection point.
While the central banks continue conjuring up “money” in the trillions to make things appear normal and to keep the majority in the dark as far as how bad our actual debt position is (CLUE: We are “printing” money to even pay the interest in many cases) the cracks are becoming obvious to even those paying the least attention.
I believe the very act of conjuring up currency is a fraud in itself because it has been conjured up out of nowhere and has created NOTHING. It gives the illusion of purchasing power to the conjurers and those closest to them but leads to massive problems- like scarcity, bottlenecks, and supply chain disruptions.
Those that have first access to the funds here in the USA would be the Fed who are purchasing treasuries, mortgage-backed securities, and even junk bonds that they admit to and are likely buying everything else also. They have a trading desk for a reason. This facility allows the other players to get “money” dirt-cheap and to have the banks (many times through shell companies) buy up utilities, railroads, hospitals, etc.
This has led to people who have no clue about running these businesses and calling all of the shots. All that seems to matter to them is profit-margin. I wrote last week about Wall Street (Banks) buying up the railroads and firing 25% of the staff to meet profit targets. Result: On-time schedules are suffering and far less goods are being moved.
Large companies like Blackrock are owning such large stakes in companies that they are getting board seats in these companies. This has led to ExxonMobil actually discussing shelving future exploration and production to become “more green”. Of course, the less energy we produce the higher the price is going to go.
While these are two reasons why we are seeing higher prices the main reason is that we are subsidizing people to not produce and we are seeing the very beginning of major shortages of needed goods. This has led to a reliance on this “conjured up cash” to keep people fat and happy. It likely worked for a while because we had excess supply that it appears we have run through and we are now seeing the results.
Keep in mind what money is and is not. Money has no intrinsic value, but represents a claim on future goods. Do you see the problem? The supply of goods is shrinking and yet the claims on the goods is rising exponentially.
As I am writing this Unilever- a company that produces many major products has announced it is raising prices at the fastest pace in its history. Other companies like P&G, Heinz, and Nestle are also warning of coming price hikes. So much for “transitory”.
As we work through the inventories that we have built up over decades and are not replacing these goods fast enough, prices are rising fast now but I believe could actually skyrocket shortly.
There are many who are smarter than I am who are warning of this type of outcome. In my research of prior calamities in currencies like Weimar Germany, Zimbabwe and Venezuela they all had similar characteristics like rising prices, then prices rising even faster accompanied by shortages of goods to buy and then a collapse that stunned almost everyone with its ferocity and speed. Be aware! This was all brought on by these countries “printing” money to pretend they were solvent when, in reality, they were broke and counterfeiting to feign solvency. Sound familiar?
If an asset can be created at virtually no cost, with virtually no labor needed, it is worthless in my opinion- particularly when those “in charge” abuse their ability pay for something with nothing but a keystroke on a keyboard. It only benefits a VERY FEW as we are now seeing.
We are doing the exact same thing that has led to a currency crisis 100% of the time in history yet many still believe (very naively) that it could NEVER happen here. I guess they figure that economic principles only exist elsewhere. Don’ bet on it!
All the signs are pointing to higher prices ahead. The central banks will use every excuse in the book to lay blame anywhere but where it belongs- on them and their enablers in our government. That would be almost all of our “elected” officials and appointees.
If the democrats get their way and pass an infrastructure bill- I call it that VERY loosely- the Fed would love it because it is another excuse for a few more trillion that they can easily explain away.
The day the SHTF, the curtain will be raised and we will see how we have been bamboozled. The Fed and other central banks- along with their owners- the major banks will own IT ALL.
Thomas Jefferson warned us of this in the 1700s saying that we would be renting back the land that our forefathers conquered if we had a central bank. First by inflation (debase the currency and make things so expensive that people will go into debt to keep a lifestyle or maybe even to just survive) and then collapse the system which will collapse asset prices leaving precious few items that would provide good collateral. It may be happening already as evidenced by the $1.4 TRILLION in reverse repos the Fed is lending nightly. What is it the banks fear? In addition, jobs will be destroyed leaving most people with one option- default.
This is true of people, cities, states, counties, companies and even the Federal government.
The Fed buys $4.5 TRILLION in junk bonds (that they admit to- it could be WAY more in my opinion). to wait until the SHTF and the stockholders, preferred stockholders and unsecured bondholders get wiped out (as in ZERO) and the secured bondholders own a company with all of the infrastructure, employees, contracts, etc. all with the debts wiped clean. They own the company free and clear with no liabilities. All with the click of a mouse. By the way, I believe most small businesses would be long gone in this scenario further cementing their power and control.
The Fed is buying mortgage-backed securities. My guess is that is to own a major portion of real estate. How long can we go with an imploding economy, stagnant wages, higher prices for virtually everything and have millennials paying $600,000.00 for a home? Add in the taxes and that is quite a nut to handle.
Inflation then deflation. Make people have to go into debt. Make it so there is a good likelihood that if anything were to go wrong – economically, health-wise, etc. those holding those mortgage-backed securities will foreclose on a LOT of homes.
This is just the tip of a VERY deep iceberg and the USA Titanic is heading straight towards it while the many continue to watch the financial game shows that delude them daily and the irrelevant stories that pose as NEWS these days. Bread and circus time.
I truly hope that you are one person who is paying attention and understands that our way of life may be changing forever. At least for our lifetimes anyway.
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