WHAT IS REAL?
It appears that if you watch the financial game shows and listen to the mainstream media the economy couldn’t be better. According to US Treasury Secretary Yellen the USA is “liquid” and strong.
If by “liquid” she means that we are borrowing beyond belief then I guess I agree but when I pull back the curtain I see that we are borrowing beyond belief to PRETEND that we are still prosperous and solvent. Keep in mind that not all debt is bad debt. If debt is used for productive purposes- like building bridges, highways and other things that will cause economic growth that debt can be acknowledged as worth it because it provides the ASSET that can ultimately pay off that debt.. The debt we are accumulating is BAD debt because it is being used for consumption. This means that we are going deeper into debt but are not creating ASSETS that could ultimately retire that debt. We are spending on WAR, which is destruction of assets, Food stamps, Section 8 housing, healthcare subsidies, etc. I believe we are in a doom loop.
Despite all of the propaganda to make people feel better about the economy it appears that REALITY is slapping most people hard enough that they aren’t buying the story. Even as people were being bombarded by propaganda a full 7 out of 10 people polled believed the economy was NOT getting better. (Politico)
According to Politico, members of the PCCC- Progressive Change Campaign Committee briefed White House officials about the failure of their efforts to spin the “economy is great” story. Bloomberg reports that a media blitz was launched in late June. Despite non-stop propaganda the President’s approval rating FELL from 43-41%.
It is easy for the accountants in Washington to SPIN numbers to make them appear better than they are but when people are out there living in the real world they can actually see and feel the effects of what have been disastrous policies not only here but anywhere where the globalists have become involved.
Everything is costing more and prices are rising faster than wage increases- see all of the strikes taking place everywhere. That is a sure sign.
Another sign that things are going off the rails is the fact that most of our younger generation can’t afford housing. I am not just talking about PURCHASING a house but in many areas even renting is out of reach of many. According to a Harris Poll for Bloomberg nearly 45% of adults from 18-29 live with their parents.
While I think that having the kids around longer may be nice in some ways the fact that in most cases this is likely a necessity is actually heartbreaking for this generation who obviously are not enjoying the “American Dream” as we were able to.
WHY NOT?
Because people my age were born prior to going off the gold standard and we saw stable prices for a long time. It is not like we went off the gold standard and had hyperinflation, but inflation was a huge problem in the late 1970s. It took 18% interest rates to tame inflation then.
The Fed “printing” money and allowing those who get it first- and for many years at little to no cost- allowed many “investors” to buy assets like homes, stocks, bonds, etc., which raised the cost of those assets to a point where anyone who was just starting out had a lot of ground to make up.
Companies like Blackstone, Blackrock and many others have been buying up homes which leads to less supply. This also leads to higher sales prices. Since many in our younger generation can’t afford to buy- they rent and the price of rents go higher.
While many are looking at the interest rates going up as being a major negative for the housing market I would also point out that there are many other concerning factors that are taking place.
The cost of everything else is rising. If all of our expenses are rising and wages are not keeping up then some payments that were once easy to make become more difficult if not impossible.
I would be willing to bet that many people who have been comfortable for quite a while may be feeling a pinch. The cost of food (which is conveniently left out of inflation numbers) continues to climb. You can tell everyone how “great” things are until they have to start making decisions on what purchases are most necessary. Trust me- food is at the top of the list!
Taxes are rising. The cost of energy is way up- even though we are seeing a short-term respite as I write this. As many of you may know I live in Pennsylvania and many commute to New York. I did that for a few years. I don’t miss it at all. When I was doing the commute I could make economic sense out of it. Today, I really have to wonder as the tolls have tripled, gas has tripled, and the traffic (except for the time of the lockdowns) is always a disaster. I know my son goes to the city once in a while and he knows he will pay tolls and pay an arm and a leg to park but then he gets a surprise- He was going 35 in a 25 MPH zone and the tax machines (traffic cameras) caught him. Surprise- your trip just cost another $100.00. That is not in the inflation numbers either.
While inflation is raging higher, albeit at a slower pace- all of those price increases remain and are still RISING. In addition, layoffs are rising, manufacturing numbers are collapsing, shipping companies like Maersk are reporting massive profit contractions, and government revenues (taxes paid) are falling.
Even Wal Mart has issued a warning that the consumer looks to be tapped out and lowered their future projections. None of this supports “The economy is great” story.
I also believe that the tensions that are taking place overseas are being dramatically underestimated by most people and the “markets”.
It is also pretty amazing that the stock “markets” were falling when the company buyback period was closed and has rallied since the buybacks have restarted. How long can the rally last with the economy collapsing and liquidity drying up? As we have seen- probably longer than many expect but I would keep a sharp eye on most stocks- particularly those that have high debts. Remember, if a company defaults on their DEBT the first losers- and I mean generally a 100% LOSS from which there is NO RECOVERY is the common stock shareholder.
I believe that the pullback on oil and oil stocks appears to be an opportunity for those who are in that space. Gold, silver and particular mining companies are, in my opinion, GROSSLY undervalued at this time.
Be Prepared!
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