I have written many times that all prices are fake. To make a point, total financial “wealth” is up nearly three times since the year 1990. In 1990 global “wealth” was around $80 Trillion and global debt clocked in at $80 Trillion. Fast forward to today and global “wealth” is estimated to be $225 Trillion and global debt stands at approximately $277 Trillion today. Of course, the $277 Trillion is what is admitted and doesn’t include unfunded government promises, unfunded pension promises and layers and layers of derivatives that could be in the quadrillions of dollars- nobody knows for sure.

It appears to me that it took an extra $52 Trillion in excess debt to create this “extra wealth” that people are counting on to fund their future plans. I believe that most of this “extra” debt has been created in the past 10 years or so and much of that extra debt has already been spent- never to be seen again- in an attempt to pretend we were solvent, could actually pay our interest due and not cause an immediate panic in the markets which could have led to large drawdown in most assets. This is all in addition, of course, to the state pretending that it could take care of its citizens- many who are currently careening quickly towards insolvency. Imagine that in the greatest economy of all time. We will learn soon that DEBT IS NOT WEALTH. DEBT IS AN ALBATROSS.

Many are learning this fact the hard way as 63% of Americans are living paycheck to paycheck, 47% have blown through their savings and 82% admit they couldn’t cover a $500.00 emergency bill. 25% of those surveyed said they added $10,000.00 or more credit card debt this year just covering monthly expenses. The 21% of people who admit to spending more are spending on food and groceries. 40 million people are at risk of eviction once the emergency measures are discontinued. (Highland Solutions /Aspen Institute) According to Mark Zandi of Moodys 70 BILLION in unpaid back rent and utilities will come due January 1, 2021 if the moratorium is not extended.

Of course, what IS left is the interest due on those debts. Currently, the US is spending $ 3 trillion plus more than we are taking in. This does not include state and local deficits which would add to that total substantially.

While the central banks talk about their “toolbox” it appears to me they have one tool- DEBT. They use it to enslave the masses and enrich themselves and their masters at our expense.

Let’s take a look at some recent history and see just how many “tools” it appears they have:

First of all keep in mind that EVERY dollar, Euro, Yen, Franc, Yuan, etc. that is conjured up out of nowhere is a unit of debt that has to be serviced going forward. They conjure this “money” out of nowhere- buy assets with it and charge US interest for the pleasure. Of course, when they issue enough and we can’t even pay the interest (we have been paying the interest with more debt for a decade) they will foreclose on the assets that they don’t already own. Farfetched? Ask the Greeks.

  • 2010- Japan starts buying ETF’s in addition to bonds (Print “money” and buy stuff) The Japanese Central Bank IS the Japanese bond market and are well on their way to owning a lions share of the Nikkei Index. Picture this- their balance sheet in November 2020 stands at over 705 TRILLION Yen and their plan, since their market is still 35% less than it was in 1989, is to do MORE!
  • 2012- The ECB enacts OMT (outright monetary transactions) to buy sovereign bonds to keep rates low and the illusion of solvency alive in the EU (Print “money” and buy stuff) What would some of the southern European countries have to pay if there were real markets and interest rates- willing buyer and seller and not “money” from nowhere manipulating rates and prices?
  • 2007-2015 China “created” 63% of all new “money” during that time and went on an infrastructure spree that helped the world economy supposedly recover from the 2008 meltdown- or at least give that illusion. (Print “money” and buy stuff- at least the Chinese bought real stuff!) They at least have assets that they may be able to use to extinguish the debt at some point.
  • 2015- The Swiss Central Bank, fearing their currency would skyrocket against the Euro, started to ‘invest” in foreign assets- becoming not much more than a hedge fund. At one point they were the #1 shareholder of Apple. They still may be. (Print “money” and buy stuff) They are not alone.
  •  2017- Global Central Banks added over $2 Trillion in “money from nowhere” to prop up asset prices. (Print “money” and buy stuff)
  • 2018- Chinese banks start showing signs of stress and hundreds of billions of dollars were conjured up out of nowhere to rescue the banks and stop a run dead in its tracks. (Print “money” and buy stuff)
  • 2020- UNPRECEDENTED money “printing”, buying of assets and unconstrained debt creation globally. (Global print “money” and buy stuff in unprecedented amounts) Over $15 TRILLION so far!

Many people are under the assumption that this can just keep going. They will likely be under the same assumption the day it collapses under its own weight. It appears to me that we are getting to that point where the exponential growth of debt and “money” creation is meeting its crescendo.

The numbers that we are allowed to see are the most obscene numbers ever known in history. Who heard of a quadrillion number until those in charge started making guesses as to how many derivative bets the banks have outstanding? How much are they doing that we will find out when it is FAR too late to do anything about it?

I believe that anyone who thinks the central banks are on our side is gravely mistaken. I believe they are on a mission to buy up everything and call all of the shots. I believe that small businesses are being eradicated on purpose. I believe they are buying junk bonds- will wait for the companies to collapse under unprecedented debts- and then own those companies unencumbered. FYI- in a defauIt the common shareholders will likely see a 100% loss. There is NO recovery from that! In addition, with little to no competition they can control prices also. They have $4.5 trillion that they admit to dedicated to this plan.

If I were writing this just a few years ago I would have had myself committed but the information I see says that this is what is happening and not one in a thousand people have any clue that our country is being sold out and generations of wealth are being squandered right before our eyes.

In the meantime between 2018 and 2019 these same folks that are drowning us in debt purchased over 1500 TONS of gold. I always have to ask “If I could “print up” trillions of currency units why would I be buying massive quantities of gold? Why are the major banks doing the same while suppressing the price? My only guess is that the magic trigger fingers are nearing the end of their usefulness and they know it. If anyone has a better idea I would appreciate hearing it.

The economic law of supply and demand would seem to indicate that these fiat currencies that can be conjured up at will, at virtually no cost, and with virtually no limit would have very little, if any, value other than perceived value. As the perception becomes more clear that these currencies are doomed- as all paper currencies have been since records have been kept- the demise of “paper”, backed by nothing, currencies will accelerate. This will show up, as we are currently seeing in many places, as higher prices for everything. It will not be the “value” of those assets rising but the purchasing power of our “money” collapsing.

Currently, our US dollar is backed by the full faith and credit of the USA. We are currently the most indebted nation EVER in the history of the world. We are relying on our privilege of the world’s reserve currency to be able to “print up” all the “money” we need to give the illusion of solvency. This has been going on for over 10 years now and the acceleration, particularly since the virus hit, is stunning.

I would have to ask again- what is the value of an asset that relies on a compromised entity to repay that debt? We can’t really know the answer right now because of all the financial games being played by central, and their owner, major banks and their hedge fund buddies. We should have known the answer sometime after 2008. The day of reckoning still awaits.

Personally, I am more comfortable with assets that are not someone else’s promise to pay – like gold, silver and other hard assets along with the best companies that produce these things.

With every action there is a consequence. With every downturn there is an opportunity for those prepared and are looking for it. Are you ready?

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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