Most people appear to believe that our current economic environment is not ideal, but I don’t think they have ANY idea of how bad things actually are.

While we hear the cheerleaders in government and on the financial game shows touting the “great numbers” reality is telling a FAR different story.

Last week I wrote about the many problems in the subprime lending space. Problems always show up in the weakest link first and many times lead to the entire chain snapping.

If inflation were indeed 3%, as we are told, the many problems we are seeing would probably not be as bad as they are. John Williams of Shadow Government Statistics reports that the CPI (Consumer Price Index), using the methodology of the 1970s, is actually 10.8% - not the 3% we are being sold.

The magnitude of the difference is stunning. Using the rule of seventy-two, the 3% inflation rate would double your living expenses in 24 years. At 10% your living expenses would double in 7.2 years. The difference would be:

· Assets at $100.00 would cost $200.00 in 24 years at 3% inflation, with 10% inflation it would cost over $800.00 if the 10% persisted.

While this is important for longer-term planning the real problem today is that prices are rising FAR faster than the “official” numbers and those that were getting by before are falling further and further behind.

Layoffs are surging higher. I believe we will see fallout in 2026 from this. Why? Because while layoffs are surging right now there are severance packages and unemployment insurance that are hiding the carnage. There are expiration dates on both.

Delinquencies and defaults are rising in all sectors of the economy. Homes, autos, credit cards, etc. Perhaps even more telling than that is that 9.7% more people this year are falling behind in utility bills. Those bills are up 12% from last year according to AP.

If the economy was as robust as “reported” I would expect to see major increases in package deliveries. While I outlined the severe cuts at Federal Express and UPS last week the USPS produced some eye-opening numbers this week.

For the fiscal year ending on September 30th.:

· First class mail revenue increased 1.5% with a 5% DECLINE in volume. This suggests that all that went up was the COST on us to use the USPS as actual deliveries were DOWN 5%.

· Marketing mail revenue was up 2.3% with a DECLINE of 1.3% in volume.

· Shipping and packages revenue increased 1% with a 5.7% decline in actual packages delivered.

Home Depot is warning in future guidance that people are not spending on home improvements as they once were and future profits will be impacted. (This tends to happen when the cost of living is taking a FAR larger bite out of your income than it used to).

The signs are everywhere that our economy is under extreme duress. Leading the way is 36,766 foreclosure filings in October- up 3% from September and 19% from a year ago. This is the eighth straight month of year over year increases. (ATTOM CEO Rob Barber)

There is even a company called “Eviction Lab” that believes more than a MILLION renters have been evicted so far in 2025 with 78,000 taking place in October.

I wrote last week about how eerily similar to 2008 our current situation is- I failed to mention that it is exponentially worse now because in 2008 the Fed started “printing, buying and manipulating markets” and have not stopped since. This means that since 2008 (at least) there has been no actual price discovery- just elevated prices while the VALUE has not even remotely kept up. More and more schemes are being uncovered that are showing just how far those “in charge” will go to keep the illusion alive.

The biggest canary in the coal mine, in my opinion, is the private credit “market.” It appears to me that those “in the know” are trying to dump these assets on an unsuspecting public as one deal after another is blowing up. Generally, these are longer-term loans that have low liquidity. The major problem is, as these “assets” are rolled out to the public they are sold as liquid while most of the loans are actually NOT liquid.

I sincerely believe that anyone reaching for an extra percent or two could get burned badly when reality sets in and there is a realization that the extra point or two came from leverage and the “safe” investment was anything BUT.

So, let’s see. We have fake “money” leading to fake prices that have no correlation to the VALUE of anything. We also have inflation which is probably going to be the problem that ends this madness. The only question I have is when.

After all is said and done people are going to want hard assets- starting with gold and silver. Central Banks are not buying thousands of tons because they’re cute. They know that gold is money and all else is credit- or someone else’s promise to repay. They also know that throughout history- as monetary regimes change the go-to asset to re-install confidence in the new system has been GOLD.

By the way, gold is the #1 performing asset class since the year 2000. Bottom line- you got better returns than stocks without the possibility of a default and a 100% loss of principal.

While I believe stocks are preferable to bonds at this time neither matches the qualities that gold brings to the table.

In addition, many are unaware that most of the gains in stocks and real estate are nothing more than our currency collapsing. Measured in gold, the S&P would have had a slightly negative return since 1971. Homes would be LESS EXPENSIVE today measured in gold than they would have been in the 1890s. (Elemental) In other words, you would need fewer gold ounces to buy a home today than you needed in 1890!

The illusion is hiding in plain sight. All of the gains (and taxes on those gains) are nothing but a collapse of purchasing power of our fiat (backed by nothing) dollar.

I believe the end of dollar dominance is upon us.

Be Prepared!

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