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Three Financial Bubbles at Once is Playing with Fire!

Jeremy Grantham has appeared in these comments several times over the years.  He is a co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (GMO), a Boston-based investment firm with some $62 billion under management.

Much of Grantham’s reputation and success rests on his track record of identifying speculative financial bubbles, among them Japan’s stock market bubble of the 1980s, the dot com bubble, and the housing bubble.

In letters to GMO clients, Grantham has often wondered how such bubbles are missed. “I described it as being like watching a train wreck in very slow motion…. It’s more or less guaranteed that every time we get an outlying, obscure event that has never happened before in history, they are always going to miss it. And the three or four-dozen-odd characters screaming about it are always going to be ignored…”

We wrote about Grantham’s latest bubble-spotting just last week.  Featured on the PBS Frontline documentary “The Power of the Fed,” Grantham said, “They [the Fed] have the housing market, the stock market and the bond market all overpriced at the same time, and they will not be able to prevent, sooner or later, the asset prices coming back down. So, we are playing with fire because we have the three great asset classes moving into bubble territory simultaneously.” 

Now, thanks to a Reuters interview this month, we can share more of his insights about today’s precarious stock market bubble.  This, he says, “could well be the most important event of your investing lives.”

When Do They Pop?:

“Bubbles are unbelievably easy to see; it’s knowing when the bust will come that is trickier. You see it when the markets are on the front pages instead of the financial pages when the news is full of stories of people getting cheated when new coins are being created every month. The scale of these things is so much bigger than in 1929 or in 2000.”

Today’s Stock Market Valuations:

“Looking at most measures, the market is more expensive than in 2000, which was more expensive than anything that preceded it.

“My favorite metric is price-to-sales: What you find is that even the cheapest parts of the market are way more expensive than in 2000.”

What Pops the Bubble?

“Markets peak when you are as happy as you can get, and a near-perfect economy is extrapolated into the indefinite future. But around the corner are lurking serious issues like interest rates, inflation, labor and commodity prices. All of those are beginning to look less optimistic than they did just a week or two ago….

“What pricks the bubble could be a virus problem, it could be an inflation problem, or it could be the most important category of all, which is everything else that is unexpected. One of 20 different things that you haven’t even thought of will come out of the woodwork, and you had no idea it was even there.”

What Will It Look Like When the Bubble Pops?

“There will be an enormous negative wealth effect, broader than it has ever been, compared to any other previous bubble breaking. It’s the first time we have bubbled in so many different areas – interest rates, stocks, housing, non-energy commodities. On the way up, it gave us all a positive wealth effect, and on the way down it will retract, painfully….

“But this bubble is the real thing, and everyone can see it. It’s as obvious as the nose on your face.”

Isn’t it time to get some of your wealth off the bubble grid?  When the bubble pops there will be a stampede to the safe-havens of gold and silver.  We recommend you take advantage of today’s prices and beat the rush.

The Fed insists inflation is transitory.  

But what does that mean?  Well, it does not really say.  

Month after month now inflation has been running hotter than expected.  Some of our friends and clients may remember Fed chairman Powell’s telling a Senate committee in February that inflation would not be a problem.

But when the evidence of higher prices became impossible to ignore, the Fed tried a new dodge:  inflation is only transitory.

We are not sure that is working now.  Last week Powell returned to the Senate and confessed that the Fed does not understand the prevailing inflation.

After months of higher-than-expected inflation, we will tell you what is transitory:  the Fed’s credibility.

It is not just we who say so.  Here are a few snippets of comments from members of the Senate Banking Committee during Powell’s latest appearance:

Senator Bill Hagerty (Tennessee):

“I’m very worried that the Fed’s continued level of asset purchases and balance sheet expansion is facilitating this runaway spending that the Democrats are imposing upon us, and adding to the inflationary pressures that these trillions of additional dollars are going to continue to add to our economy and continue to add to the debt that our children are going to continue to bear…”

Senator Thom Tillis (North Carolina):

“I’ve got to beat the inflation drum for just a minute here. The FOMC members insist inflation is transitory, but it hasn’t inspired a lot of confidence in me.”

Senator Pat Toomey (Pennsylvania):  

“The Fed’s policy is especially troubling because the warning siren for problematic inflation is getting louder. Inflation is here, and it’s more severe than most, including the Fed itself, expected….

“For the third month in a row, the Consumer Price Index was higher than expectations. Core CPI… was up 4.5% in June; the highest reading in almost 30 years….

“Now, the Fed assures us that this inflation is transitory, but its inflation projections over the last year have not inspired confidence. Last June, the Fed projected that PCE… would be 1.6% for the 12 months ending 2021. Then in December, the Fed raised that figure up to 1.8%. And how the Fed’s most recent PCE forecast for 2021 year-end is 3.4%.”

As we have explained many times, like all unbacked, irredeemable fiat currencies, the US dollar is a confidence game.  When confidence begins to fail, the currency loses value, slowly at first and then accelerating.

Confidence in the Fed’s policies is cracking like thin ice on a pond.  It is losing confidence not simply domestically among members of the political classes and the public, but internationally, too.

Confidence is won by performance, honesty, and reliability.  For thousands of years and around the globe, no monetary unit has inspired more confidence than gold.  Unlike paper money, real gold is not corrupted by governments, central bankers, or politicians.

No wonder that when confidence in the paper money begins to crack, gold represents the best possible alternative for wealth protection and profit.

The Inflation Outlook

“Invest in inflation,” advised Will Rogers.  “It’s the only thing that’s going up!”

That advice has never been better.  One of the great scandals of American monetary policy is the extremes the authorities have gone to in an effort to conceal the speed with which the money is losing value.  

When the index they use shows prices rising too fast, they are quick to reconfigure it.  If skyrocketing food and energy prices make the political classes look bad, their servitors come up with “core” inflation that excludes food and energy.

If you would like to investigate this class of flimflammery for yourself, look to the component of the Consumer Price Indices called “owners’ equivalent rent.”  It accounts for 24 percent of the CPI, but it is quite a sleight of hand, one that helps conceal the real cost of living.

Even so, CPI numbers are rising at an alarming rate.  In May, consumer prices rose 0.6 percent.  Now the June report is out showing prices for the month having risen 0.9 percent.  That is the biggest one-month jump since 2008.  June’s numbers annualized would yield double-digit inflation.

Other June numbers:

The food index rose 0.8 percent.

The energy index rose 1.5 percent.

The used car and truck index climbed 1o.5 percent.

Meanwhile, according to a Wall Street Journal survey of economists, Americans need to “brace themselves” for several years of higher inflation rates than they have experienced in decades.  

But what does that mean, brace themselves?  It is a phrase that people use often.  Merriam-Webster says it is “said to warn someone to be prepared for something.”  So, to brace yourself means to prepare for some additional stress or difficulty.  

But it not just mentally anticipating something, gritting your teeth in advance.  A brace is something that provides added support or strengthens a position or structure.

How do people brace themselves for years of renewed inflation thanks to years of rapid money printing?  More than just resigning themselves to a falling standard of living, how do people prepare for their money losing value?  

We are glad you asked because that is what we do.  We help people prepare.  We are specialists in real money, gold, and silver. 

You can close your eyes and think, “Oh, no! Another monetary crisis!  Here it comes.”  But that does no real good.  

Instead, you can really brace yourself and strengthen your portfolio, your wealth, and your retirement by diversifying into the world’s most prized and enduring form of money.

Is Surging Inflation the Last Straw?

We have been champions of common-sense Constitutional policies for a very long time: sound money, limited government, responsible budgets.   

Along the way, we have often felt lonely pointing to the Federal Reserve’s role in enabling the opposite: fraudulent, unreliable money, gargantuan government, and uncontrolled spending.  For a brief shining moment after the mortgage meltdown and the housing bust, with millions losing their homes and jobs, it looked like Americans might be noting the hidden hand of the Fed behind the destruction and the egregious bailout of the Fed’s banking cronies.  The best evidence was the thousands of voters that greeted the Ron Paul presidential campaign across America with signs and chants calling for the end of the Fed.

But it didn’t last.  The media didn’t like it and went to some bizarre lengths to limit the movement’s exposure.  For example, when Ron Paul easily won the Fox News poll after one of the Republican debates, one of the network’s leading hosts quickly disavowed its own poll.  

We would like to make clear that we are not some Ahab obsessed with the Fed white whale for personal or for no good reasons.  The Fed’s operations are a mystery to most people and therefore few understand its reach into every nook and cranny of American life.  We have described its economic distortions and damage many times in many ways in these comments.  But for today we will reduce it to its bare essential:  Since money is half of every financial transaction, and the Fed regulates the conditions of money and credit, the Fed has a hand in everything. 

Everything. 

But now the Fed may have gone to far.  Because inflation is surging and it has the economy at the breaking point, even some of its usual supporters may be scurrying away to avoid blame for the coming calamity.

The latest and most unexpected example is a Frontline documentary that aired Tuesday night (7.13.21) on PBS.  Since PBS is government television (the Corporation for Public Broadcast receives hundreds of millions of US taxpayer dollars every year), we were a little surprised to see its recent documentary, “The Power of the Fed.”

The website Wall Street on Parade headlined its preview of the program this way: The Federal Reserve Has Radically Changed from a Central Bank to a Bailout Kingpin.  Americans Just Haven’t Paid Attention – Until Tonight.

Here is its preview:

“The Fed’s radical makeover of itself began in December of 2007 when the Fed decided, on its own, that it had the authority to secretly pump out trillions of dollars in cumulative loans to prop up the mega banks on Wall Street, as well as to the foreign banks that were on the other side of Wall Street’s hundreds of trillions of dollars in derivative trades. The Fed secretly ran that program through at least July of 2010 according to the eventual audit that was conducted by the Government Accountability Office…. 

“The Fed’s latest massive bailout operation began on September 17, 2019, months before there was a case of COVID-19 anywhere in the world. The full scope of this operation and other bailout programs remain a dark secret at the Fed, casting a pall over investors’ confidence in the transparency and stability of the U.S. financial system.

“Frontline writers and producers James Jacoby and Anya Bourg… will now become part of a rarefied group of individuals who have mustered the determination to cut through the Fed’s insidiously cultivated armor of Fed-speak and the preposterous structure that allows it to create trillions of dollars of money electronically out of thin air for bailouts, with only feigned oversight by Congress.”

The program does not get everything right; its producers are not students of monetary history and of prior episodes much like today.  Of course, it doesn’t mention that Constitutional money, gold, and silver, were meant to preclude exactly what the Fed has done.  Or that now that it has done what it has done, that you can still protect yourself from its paper and digital money folly.  

But it does give some of an idea of how close the Fed’s grandiose risk-taking has us to the brink of tragedy.  

In our next post we will cite just a few specific things in the program that miss the mark and others where its aim is true.

You can watch the entire program HERE.

“Long term, gold is the most significant guardian and guarantor of protection against inflationary and other forms of financial risks.”

We have said that sort of thing many times.  But this time it is a quote from a European government.  The more we hear foreign heads of state and central bankers talking like this, the more clear it is that the paper money illusion that gripped the world after World War II is beginning to fade.

The assessment of gold’s significance comes from the president of Serbia, Aleksander Vucic, as he announced that the National Bank of Serbia is ramping up its gold holdings from 36.3 to 50 tons.  That is an increase of 440,00 troy ounces.  Serbia has a population of fewer than 7 million people.

Much of the attention on foreign gold buying as protection from the US dollar in recent years has been focused on larger nation-states, with Russia and China leading the way.  But now, other smaller countries are lining up to add gold to their national reserves.  

Last month we reported that the Hungarian central bank announced it had tripled its gold reserves with a purchase of 63 metric tons of gold in March. Thailand is reported to have purchased 9o tons of gold in April and May.

The first half of 2021 also saw the announcement from Russia that henceforth its sovereign wealth fund – the entity that collects profits from Russian-state oil production – will no longer hold US dollars.  Gold represents a part of the fund’s diversification plans.

The coronavirus pandemic slowed global economic conditions and accordingly the ability of central banks to maintain higher rates of gold acquisition.  Now plans are being reinstituted.

Bloomberg News:

“Central banks from Serbia to Thailand have been adding to gold holdings and Ghana recently announced plans for purchases, as the specter of accelerating inflation looms and a recovery in global trade provides the firepower to make purchases.”

Higher oil prices “are also boosting bullion purchases by oil exporters, including Kazakhstan,” according to a Bloomberg source.

A World Gold Council survey finds that 1 in five central banks intends to add to their gold reserves over the next year.

We recommend that our friends and clients do the same.

“Stagflation” is one of those made-up words.  Like “rockumentary,” a documentary about rock music, or “brunch,” combining breakfast and lunch.  Stagflation describes an economic malady so well that it has become widely used for a period of weak or stagnant economic growth accompanied by inflation.

The 1970s are often referred to as the stagflation decade, a period in which both gold and silver soared.

Now, if economist Nouriel Roubini is right, we are entering another period of stagflation.  The famed NYU professor insists a “slow-motion train wreck looks unavoidable.” 

Indeed, much higher debt ratios today threaten to make conditions much worse than in the 70s, according to Roubini.  Debt ratios are three times higher than in the stagflation decade.  It sets the stage “for the mother of stagflationary debt crises over the next few years.”

As we have written repeatedly, the Federal Reserve has painted itself into a corner.  Roubini describes it this way:

“Making matters worse, central banks have effectively lost their independence because they have been given little choice but to monetize massive fiscal deficits to forestall a debt crisis. With both public and private debts having soared, they are in a debt trap. As inflation rises over the next few years, central banks will face a dilemma. If they start phasing out unconventional policies and raising policy rates to fight inflation, they will risk triggering a massive debt crisis and severe recession; but if they maintain a loose monetary policy, they will risk double-digit inflation – and deep stagflation when the next negative supply shocks emerge.”

For the monetary system itself, there is really no way out, except straight through the crisis itself.  The inevitable attempts to forestall a reckoning will only make the crisis bigger.  But while there is no systemic fix, individuals can protect themselves and their wealth in a time-proven way –  with gold and silver.

“The stagflation of the 1970s will soon meet the debt crises of the post-2008 period,” says Roubini.  “The question is not if but when.”

Contact us today.  Take steps to protect yourself now, before the “unavoidable” train wreck.

Meditations on Money for the Fourth of July

Today’s governing classes have abandoned the Founders’ intent to erect the new Republic on the sound monetary basis of gold and silver.  The result has been an ever-growing polarization of wealth, an endless gusher of paper money, and a mountain of unpayable national debt

Here is a collection of the Founders’ thoughts about monetary matters.  As you celebrate Independence Day with friends and family, spend a few minutes thinking about which of these observations is relevant to our situation today. 

“Specie [gold and silver coin] is the most perfect medium because it will preserve its own level; because, having intrinsic and universal value, it can never die in our hands, and it is the surest resource of reliance in time of war.”

— Thomas Jefferson

“The refusal of King George III to allow the colonies to operate an honest money system which freed the ordinary men from the clutches of the money manipulators was probably the prime cause of the revolution.”

— Benjamin Franklin

“The power to make any thing but gold and silver a tender in payment of debts, is withdrawn from the States, on the same principle with that of issuing a paper currency. Bills of attainder, ex-post-facto laws, and laws impairing the obligation of contracts, are contrary to the first principles of the social compact, and to every principle of sound legislation.”

— Federalist Papers, #44

“The trifling economy of paper, as a cheaper medium, or its convenience for transmission, weighs nothing in opposition to the advantages of the precious metals… it is liable to be abused, has been, is, and forever will be abused, in every country in which it is permitted.”

— Thomas Jefferson

“To emit an unfunded paper as the sign of value ought not to continue a formal part of the Constitution, nor ever hereafter to be employed; being, in its nature, pregnant with abuses, and liable to be made the engine of imposition and fraud; holding out temptations equally pernicious to the integrity of government and to the morals of the people.”

— Alexander Hamilton

“Paper money has had the effect in your state that it will ever have, to ruin commerce, oppress the honest, and open the door to every species of fraud and injustice.” 

— George Washington

“If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered. The issuing power should be taken from the banks and restored to the people, to whom it properly belongs.”

— Thomas Jefferson

The Year Inflation Returned!

2021 is half over, so with this post we look at where we are heading into the second half of what we can call the year of inflation’s return.

We suspect that our technically oriented readers will find it significant that gold bounced off lows around $1,678 twice this year, in both March and April.  One would expect gold to find strong support at those levels going forward.  

Gold closed on June 30 at $1,771.60.   

Silver finished the first half of 2021 with a June 30 close of $26.19.  Silver touched a low of $23.76 at the end of March.

US government debt finished the first half of 2021 at $28.3 trillion, up $600 billion in the six months.  

Of course, the big story of 2021 so far is inflation’s return, a story easily captured in the financial news headlines: “Gas Prices Surge to 7-Year High Ahead of Independence Day Weekend!”  Another: “Home prices in March saw highest growth in over 15 years!”

One more: “And Now Prices Are Really Soaring: June Rent Jump Is Biggest On Record”’

Bank of America analysts warned us in May of “transitory hyper-inflation” ahead.   Now it looks like the “transitory” part is on its way out.  Indeed, soaring prices may last for a long time.  That is according to the latest from BofA Chief Investment Strategist Michael Hartnett, who writes now that, far from transitory, soaring US prices may last up to 4 years.

Harnett says it is “fascinating so many deem inflation as transitory when stimulus, economic growth, asset/commodity/housing inflations (are) deemed permanent.”

Meanwhile, the inflation numbers keep inching higher and higher.  The latest Consumer Price Index shows a 5 percent increase in consumer prices over the past 12 months.  The increases over the past two reported months, April and May, would produce an annual inflation rate of more than 8 percent.  In any case, it is the largest 12-month increase in inflation since August 2008.

Deutsche Bank has observed that with its inflationary policies and its misunderstanding of monetary conditions, the US Federal Reserve will lead to a “chain of financial distress around the world.”

And finally, news flying in below the radar in the first half of this year of what we have called one of the most important and revealing financial megatrends of all:  central banks de-dollarizing and moving their reserves to gold.  

The Hungarian central bank announced that it had purchased 63 metric tons of gold in March, tripling its gold reserves.  But that was not the largest gold purchase of the year.  Sources report that Thailand purchased 9o tons of gold in April and May.

The first half of 2021 also saw the announcement from Russia that henceforth its sovereign wealth fund – the entity that collects profits from Russian-state oil production – will no longer hold US dollars.  The Russian National Wealth Fund is estimated to hold $119 billion in liquid assets of which $41.5 billion is in US dollars.  But the fund will abandon the dollar at once and henceforth be diversified among other currencies and a 20 percent gold allocation. 

We think de-dollarization at this time of inflation’s return is sound advice for our friends and clients.  Take steps now to prepare for growing turbulence in the second half of 2021.  Speak with a Republic Monetary Exchange gold and silver professional without delay.

What Are Investors Most Afraid Of?

A new survey from Deutsche Bank has the answer.  Not surprisingly, the Federal Reserve figures in two out of three of their biggest worries.

First on the list is inflation.  Thank the Fed for that.

Second on the list is a new COVID variant.  

Third is fear of a central bank policy error.  We’re talking about you again, Fed!

The realization that the Fed is the biggest source of investor fear – 0ccupyig both the first and third places – undermines its claim that it promotes the effective functioning of the US economy.  

The United States used to be on a gold standard.  Now, says Jim Grant, we are on a Ph.D. standard.

Gold has proven to be more reliable.

Ron Paul Says…

“The road to authoritarianism is paved with fiat currency.”  So says the former congressman, presidential candidate, and monetary expert.

In his latest newsletter, Dr. Paul writes, “Germany’s Deutsche Bank recently released a paper warning about the Federal Reserve continuing to disregard the inflation risk caused by easy money policies designed to “stimulate” the economy and facilitate massive government spending. Germans have reason to be sensitive to the consequences of inflation, including hyperinflation. Out-of-control inflation played a major role in the collapse of the German economy in the 1920s, which led to the rise of the National Socialists.

“This pattern could repeat itself in America where we have already witnessed the rise of authoritarian movements. Last summer, groups exploited legitimate concerns about police misconduct to ferment violence across the country. Can anyone doubt that an economic crisis that leads to mass unemployment, foreclosures, and maybe even shortages will result in large-scale violence? Or that the violence will be exploited by power-hungry politicians? Or that many people will once again fall for the big lie that preserving safety requires giving up their liberty?

“… We may still have time to prevent collapse in America, or at least to make sure the collapse leads to a transition to a free society. The key to success is spreading the ideas of liberty until we have the ability to force the politicians to dismantle the welfare-warfare state and the fiat money system that is the lifeblood of authoritarian government.”

Need a Laugh?

 The Cleveland Federal Reserve has produced a series of three animated Lego videos explaining inflation.  We won’t spoil the hilarity by telling you exactly what they say, but to at least give you a taste, the second one ends with this teaser: “So, who helps keep inflation under control?  The Federal Reserve!”

The third episode tells us “that with the help of the Federal Reserve, there is just the right amount of inflation!”

All we can say is “God help the poor propagandized American people!”  Here’s the link to the Cleveland Fed so you can watch for yourself.

A Republic Monetary Exchange precious metals professional can help you create a gold and silver portfolio that will meet your personal wealth protection needs and prepare you for the financial dislocations ahead.  

Call today.

Things We Think Our Friends and Clients Should Know

In news that is important for gold and silver investors, we reported in March about an FBI raid on a private storage vault company in Beverly Hills.  While the indictments were against the vault company itself, and there were no allegations against the company’s clients, the government broke into the customer’s individual and private storage boxes, taking all their contents and personal possessions.

The Orange County Register reported, “Customers of U.S. Private Vaults learned the FBI raided the Beverly Hills company after an indictment for federal crimes. More to their horror, those customers learned their precious valuables were being held at an undisclosed location and that they would need to identify themselves to the FBI to reclaim their property.”

“In other words,” the Register wrote, “people must prove their own innocence to secure their property’s return.”

The Institute for Justice, the national law firm that litigates for individual rights and liberty, has now taken the case, launching a class action suit claiming the FBI exceeded its warrant when it took possession of the contents of 800 safe deposit boxes.  

From an IJ press release:

“The FBI’s warrant for the raid did not include permission to do a criminal seizure or search of the contents of the rented boxes – only U.S. Private Vaults’ own business property. The government promised it would only look into the boxes to identify ownership, but it immediately broke its word. Once in the location, agents opened hundreds of boxes, ran any currency in front of drug sniffing dogs, and made copies of records in peoples’ boxes.

“Now the government is forcing people to submit to an investigation to show they owned their property legally before it is returned. The lawsuit, filed in U.S. District Court for the Central District of California, alleges that the government’s shocking behavior violates the Fourth and Fifth Amendment rights of Jennifer and Paul Snitko, Joseph Ruiz, Tyler Gothier, and all others who rented boxes at U.S. Private Vaults.

“ ‘The government’s dragnet search of innocent peoples’ private security boxes is the most outrageous Fourth Amendment abuse that the Institute for Justice has ever seen,’ said IJ Senior Attorney Robert Frommer. ‘It is like the government breaking into every apartment in a building because the landlord was dealing drugs in the lobby.’ “

“Jennifer and Paul Snitko never thought they would need to worry about the federal government seizing the items they placed in the box they rented from U.S. Private Vaults. They stored possessions valuable mainly to them: Paul’s father’s will, backup hard drives, old family watches and Paul’s flight log. The Snitkos filed a claim form with the FBI, but when they asked an agent what the process was to get their property returned, the agent replied that she did not know. And when they asked when they would get their property back, the agent conveyed that there wasn’t any time frame.

“Privacy and property are essential rights of all Americans,” said IJ Senior Attorney Rob Johnson. “The government treats box holders as somehow suspicious just because they held their property in a private and secure facility. But privacy is a constitutional right, not a ground for suspicion. If the government can get away with this here, we all will be at risk of similar intrusion in our own private space.”

We will continue to track this case for Republic Monetary Exchange’s friends and clients.    

It is always a good time to cite the Fourth Amendment, as we did in March: “The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause….”

The Federal Reserve has faked out the gold market with fake news… and provided us all a chance to buy gold at bargain prices!

It seems funny to thank the Fed for anything, after the damage it has done to the US economy and the dollar all these years.  But whatever the reason, we are glad to have a chance to buy more gold and silver for less money!

Here’s the story in a nutshell.  Last March, Fed chairman Powell said he could foresee no increases in interest rates before 2024.   

Then, in the face of rising price inflation, the Fed signaled on Wednesday (6/16) that it could raise interest rates by the end of 2013.  

The Fed is a notoriously bad economic forecaster.  Its guesses about what the GDP would do over the years have been so wide of the mark that if the Fed predicted that the sun will rise in the morning, for the first time in human history, you might not want to bet on it.  

Now the Fed is predicting what it will do by the end of 2023.  

Not the end of this year.  Or the end of next yesr.  

At the end of the year after that!  

Puh-lease!

Even Powell said the Fed’s projections “should be taken with a grain of salt.”

Chuck Butler, who writes The Daily Pfennig, shares our view about what the Fed might do down the road:

“The key here is they are saying 2023… if I’m not blind, and can see a calendar, that’s 1 1/2 years from now… There’s a whole lot of good and bad that can happen between now and 2023… So, why were the markets so moved to push all these asset classes to lower levels? Well, for one, they were surprised by the statement… And they got their panties all in a wad, when Powell sounded so hawkish…  

“…  The Fed admitted that prices are rising faster than they forecast 3 months ago… So, if their forecast for prices is wrong, then their forecast for rate hikes is probably going to be wrong too… 

“I know what the Fed is thinking here folks… That inflation is rising faster than they expected, and their hands are tied for now to combat it, so they’ll try to jawbone inflation down with talk of rate hikes 1 1/2 years from now… 

“And in the end… What they have done is give every procrastinator a buying opportunity… When was the last time you could get Gold below $1,800 or Silver below $27?”

So even though the Fed intends to leave its fake money pumping at a rate of $120 billion a month, $1.44 trillion a year, suggesting that it will pull forward any rate increases spooked some people on Wall Street, creating a buying opportunity for savvy investors.

Gold Never Lies!

If you are putting money in the bank, you are probably taking a real beating.  

“People who have money in the bank, in their savings, are losing 5 to 12 percent of their purchasing power annually.”  So says investment guru Kyle Bass.  He’s one of the guys who saw what was going on and made a fortune when the housing bubble burst. 

Bass is the founder and chief investment officer of Hayman Capital Management.  While the official Consumer Price Inflation report say that prices have risen at a 5 percent rate over the last year, Bass says the actual inflation rate is probably about 12 percent.

Appearing on CNBC recently, Bass said that investors and retirees need to start thinking about how to preserve their purchasing power.  “We think it [inflation] is running about 12 percent, and with short term interest rates still at zero, that means people who have money in the bank, in their savings, are losing 5 to 12 percent of their purchasing power annually. 

“We have 34 percent more money in the US system than we did 14 months ago.

“Of course, we’re going to have inflation and it’s going to be significant.”

 Bass is right to be skeptical about the government’s inflation numbers.  In fact, we think one also must be skeptical about everything said in the mainstream financial media.

Here is an example.  It is from a piece headlined “Why everything is costing you more money,” by someone called the editor-at-large and anchor at Yahoo Finance:

“If everything seems like it’s costing you more money right now that’s probably because it is — the saving grace being that perhaps things get a bit cheaper in the fall.

“But it’s important to understand as an investor— and consumer —why inflation has picked up. Indeed it has major implications on everything from monthly budgeting of one’s finances to investment portfolio construction.”

The author goes on for six hundred words or so, quoting people from Goldman Sachs and JPMorgan, about this and that behind isolated higher prices.  But his account, like so many we have perused over the last couple of months, make no mention at all of monetary policy.  It says nothing about the Federal Reserve.  Call it the elephant in the living room, if you like.  And that’s a good metaphor, since the Fed has jacked the money supply up to elephantine proportions.  

Or call it the crazy aunt in the basement, something that people know is there, but studiously avoid mentioning.  Since money is half of every transaction, it is simply unfathomable that an “editor-at-large and anchor” should try to explain why prices are rising without talking about money. Professional economists must be aware of what the Federal Reserve has been doing to the dollar. 

It is just apparent that many of them do not want to talk about it.  

You simply cannot rely on the government’s inflation numbers either, especially since the record is clear that the formulae for calculating inflation have been adjusted many times over the years in response to political pressures.  And, because when the mainstream press tries to explain why costs are rising without reference to the $28 trillion national debt or a word about the $4.2 trillion dollars the Fed has manufactured out of thin air to fund that debt, you simply cannot rely on them as honest or knowledgeable brokers of financial information. 

Inflation, it has been said, is like a country where no one tells the truth.  But gold is different.  Gold is not the money of states, central banks, or politicians.  It cannot be manufactured out of thin air or created by decree.  An ounce of gold is an ounce of gold whether it is minted in country A, B, or C.  

Gold seeks no political advantage.  It neither lies nor conceals the truth.  It answers to no cronies and is indifferent to the latest trendy economic theories.  That is why people have made gold the enduring and most trusted monetary asset of all time.

When the wheels come off the money-printing bus, when a real financial reckoning asserts itself in a crisis, when the truth, as it always does, wins out in the end, you will be glad to own gold.

“..that our Keynesian central bankers think inflation is good for everyday Americans and therefore relentlessly strive to generate more of it is one of the great follies of the present era.“

 -David Stockman

A lot of mainstream financial journalist could have taken some time off.  (In fact, we think the public would be better informed if a lot of them took a very long time off!)

When the Consumer Price Index numbers were reported last month many of them told us that “inflation is running hotter than expected.”

Now, with new numbers just out from the Bureau of Labor Statistics, they can just re-run their old stories while they enjoy time in Cape Cod or the Hamptons.  Because once again, “inflation is running hotter than expected.”

Our question is this:  Who is setting their expectations?  After all, the CPI has it has been trending up every month since January.  

They might have considered the Fed’s topsy-turvy policy of keeping interest rates below the inflation rate.  Have financial journalism’s Keynesian blinders kept them from noticing? 

And if that is not enough of a clue, maybe they should have noticed the little, old $4 trillion in Fed money printing since late 2019.  Do they think that the authorities can print all that money without consequences?

Here is the latest “unexpected” CPI news.  In May, consumer prices rose 0.6 percent.  That is after a 0.8 percent increase in April.  

It amounts to a 5 percent increase in consumer prices over the past 12 months.  The increases over the past two month would produce an annual rate of more than 8 percent.  In any case, it is the largest 12-month increase since August 2008.  

It was only weeks after that surge in consumer prices that gold and silver exploded to the upside.  Accordingly, we think this would be a good time to update your gold and silver portfolio.  

Because after all, what is headed our way shouldn’t be unexpected.

Have you noticed that nobody much is talking about the US debt these days?  We scour the news and especially the financial media pretty carefully and it seems that most are hauntingly silent about the debt these days.  

It is a little bit like the Sherlock Holmes story about the dog that didn’t bark.  Maybe no one much cares about the debt these days because they know that the Federal Reserve will just print the money to cover it.

Last month we pointed out that Congress voted two years ago to suspend the national debt ceiling until July 31 this year.   We wrote, “Over the next 12 weeks you will hear a fair amount about the nation’s already unpayable debt and about the debt ceiling.”

We were wrong.  We have been listening for the debate to begin, and so far, it is just crickets.

Oh, sure, if you hunt you can find a couple of little things.  A handful of congressmen began pushing a measure last month to eliminate the national debt ceiling entirely.  The big-spenders do that all the time.  Another headline crawled by that said something about the US being one of only two countries with a national debt ceiling.  We didn’t read it because it seemed to fall under the category of “so what?”  Are we to be ashamed to have measure in place to limit our debt—even if politicians try to make it ineffective—just because others don’t?   

Maybe it is so quiet because everyone knows that the national debt is unpayable and we are holding our breath to see how long until the endgame.

Economist Keith Weiner has been thinking about the endgame, too.  He writes, “That the debt is unpayable may be obvious, but the endgame is not obvious at all. At first glance, it looks like the government will default. However, as the issuer of its own currency—and the world’s reserve currency at that—there is no reason to default.

“The government can always get as many dollars as it needs. It can always sell more bonds.”

Well, it can sell more bonds to the Fed anyway, which will finally only make the endgame more destructive.

The only real solution is for individuals to buy gold and silver so the aren’t taken down with the collapsing debt.  

May was the eighth month of the current fiscal year.  So, in just two-thirds of FY2021 on the books, Washington has managed to blow up this year’s debt by an astonishing $2.1 trillion.  That’s $184 billion more than the first eight months of the year before.

Still the debt ceiling looms ahead.  But since we know that the debt will continue to climb, pulling our gold along with it, we will just relax and listen to the Washington crickets.

Germany Set their own record for annual gold purchases in 2020

Recently we wrote that due to the brutally destructive German inflation of a hundred years ago, Germans to this day retain a suspicion of money printing.   Now we learn from a World Gold Council blog post that Google searches for “inflation” in Germany have been trending higher since October.  No wonder.  German inflation expectations reached a five year high in March.  The post notes that “Germans bought more gold bars and coins in 2020 than in any previous year, by some margin. And so far in 2021, they have maintained a pace of investing that far outstrips the historical average…”  

Last year we reported that Germans lined up outside bullion dealers’ offices to buy physical gold before the imposition of new bureaucratic regulations on gold purchases.

64 percent of inflation-wary Germans believe that gold is a good safeguard against inflation and currency fluctuations.  The WGC says the German gold investing is likely to remain elevated the rest of this year.

Russia Dumping US Dollars

But there is even more evidence that overseas gold buying will be strong in the months ahead, thanks to more de-dollarization.  Russia has announced that its sovereign wealth fund – the entity that collects profits from Russian-state oil production – will cease to hold US dollars.  

The Russian National Wealth Fund is estimated to hold $119 billion in liquid assets of which $41.5 billion is in US dollars.  But the fund will abandon the dollar at once and henceforth be diversified among euros (40 percent), yuan (30 percent), and gold (20 percent).

Global de-dollarization moves are a growing phenomenon among sovereign nations that seek to protect themselves from both US sanctions and from promiscuous US monetary policies.  

A Kremlin spokesman said that “”the de-dollarization process is constant. It is, in fact, now visible to the naked eye.”

De-dollarization will continue and will certainly pick up steam as US inflation numbers rise.

We recommend our friends and client get ahead of the curve by taking steps to de-dollarizing with a portfolio of gold and silver that meets their wealth protection objectives.  Your Republic Monetary Exchange precious metals professional is ready to help.

Are you ready for the “Incredible Shrinking Candy Bar”?

As inflation runs hot and destroys the purchasing power of the currency, product manufacturers and markets find inventive ways to conceal price increases.  The most common means of hiding price increases is by reducing the size of the packages you are used to buying.  For example, you might be used to buying a five-pound package of sugar for one price, when suddenly it becomes a four-pound package for the same price.  

They hope you do not notice.  Cereal manufacturers will package their products in boxes that seen from the front are the same dimension as always.  But the box is narrower and holds less/

So, get ready for the incredible shrinking candy bar.

There are other ways of hiding prices increases.  Materials may get cheaper.  Furniture that was once made of solid wood begins to be manufactured in particle board.  If installation of a purchase was free, now it becomes an extra charge.  Did you used to get a two-year warranty?  It may be only a year next time.

A recent Washington Post story cited a typical example of “shrinkflation” packaging: “Walmart’s Great Value paper towels, for example, went from 168 2-ply sheets per roll to 120. The price, at $14.97, remained the same for a dozen rolls despite the nearly 30 percent drop in the product.”

Here’s another: “Tillamook County Creamery Association, a farmer-owned cooperative in Oregon, reduced its family-size containers of ice cream from 56 ounces to 48 ounces earlier this year, bringing it on par with its competitors. The price, though, remained the same at about $6.”

The practices are partly an effort to fool their customers, and partly a necessary means of staying profitable.  It is too bad companies feel they must go to such lengths but rising prices across the economy are not their fault. 

They know that consumers do not understand that rising prices reflect the currency being debauched by the monetary authorities.  So as prices continue to rise, consumers may even stage protests against ranchers and farmers and grocery stores, while the real culprits in Washington escape like a thief in the night.

You cannot stop the destruction of the currency.  It is a fait accompli.  The $28 trillion national debt is a result of money that has already been spent.  The new money has already been printed; the number of dollars has increased by 33 in the last 17 months.

You can, however, protect your wealth with precious metals.  Gold and silver quietly rose about 8 percent in May, signaling inflation’s comeback.

No matter how it is “packaged” – in bars or coins of various sizes and from differing issuers, an ounce of gold is an ounce of gold.  

Speak with a Republic Monetary Exchange professional today.  Let them help you create a portfolio of gold and silver that will protect you from inflation.

We go to great lengths at Republic Monetary Exchange to make sure our friends and clients are well-informed about financial and monetary affairs.

The truth is the more people learn about the short fuse burning on the US debt bomb and the unhinged policies of the Deep State Money Manipulators, the more they understand the importance of owning gold and silver.  

But our efforts are not entirely commercial.  The looming debt and monetary calamities are only the financial symptoms of so much more that has gone off the rails in the American Republic.  A return to the principles of the Constitution will require an informed citizenry, and we wish to do our part in our area of expertise.

So, we use our radio messages and sponsorships to alert you to things going on in the economy and government.

For some, out Gold Market Discussion shows up each week in your inbox, while our blogs provide you with a deep archive of informed commentary and the stories behind the economic stories that drive the markets.

And you will find Republic Monetary Exchange’s team of gold and silver professionals to be experienced and knowledgeable.   They are willing to take time to answer your questions and unravel the mysteries of the failing US monetary system so that you can protect your wealth, yourself, and your family.

And now, we are working on more ways to make sure you are prepared for the monetary crisis ahead.  

It is part of our mission.  

More details soon.  

 “Stay tuned!”

The United States will spend over $300 billion on interest expense this fiscal year.  And that is with record low interest rates.

That represents nine percent of all federal tax revenue.  It is about $2,400 per household.

Those are just a few of the troubling details from a new report from the Committee for a Responsible Federal Budget.

Here are more:

• Interest rates are climbing.  In early March 2020 and again in August 2020, the ten-year US Treasury was 0.5 percent.  Now it has bounced higher, to about 1.6 percent.

• Thanks to the pandemic lows in rates, interest on the national debt will drop from $375 billion in Fiscal Year (FY) 2019 to roughly $300 billion this year.  

• While the passing  interest rate drop provided a brief respite to the debt service load, the US added nearly $7 trillion of new debt.

• If interest rates rise as the Congressional Budget Office projects, the cost of debt service will more than double by 2029.

We think interest rates are almost certain to rise much fast than CBO and CRFB projections, especially with inflation running hot.  In the first quarter of this year consumer prices were climbing at a 7.5 percent annual rate.  It stands to reason that if the dollar is losing value at such rates, lenders – buyers of US Treasury debt – will demand much higher interest rates as an inflation premium.  

As former Reagan budget director David Stockman remarks, “from the year 2000 to 2020 alone, interest expense rose by only 41 percent, even as the publicly held debt soared by 535 percent.”

The CRFB report acknowledges that possibility rates will climb faster than projections with this statement:

“The interest rate on ten-year Treasury bonds is already more than half a percentage point higher than projected. If all rates end up being 50 basis points above projections, interest costs would increase by $1.7 trillion. Interest spending would increase by $3.6 trillion if rates were one percentage point higher than projected [emphasis added].

What has this to do with gold and silver?  The Fed has purchased around half of the US debt issued in about the last year.  Where did it get the money to do that?  It printed it!

Clearly, it will have to purchase even more debt as interest rates rise, a prospect made certain by rising inflation.  That means more printing, which means still higher rates, which means more debt, which means…

The Fed is in a box of the Fed’s own making and the best way to protect yourself from the consequences is with gold and silver, the enduring money of the ages.  Speak with a Republic Monetary Exchange gold and silver specialist today to learn more.

Because we are in the business of helping people protect themselves and their wealth, we have written often about the consequences of inflation: the destruction of the purchasing power of the currency.  

Long experience shows that owning gold and silver are the best means of personal protection from currency destruction.

Digital money printing by the Federal Reserve has escalated to a magnitude that it is now measured in the trillions of dollars.  And now the consequences are becoming evident even in government price indices.

With this post, we wanted to provide you the clearest possible explanation of what causes inflation and how it can be cured.   So, we turned to an old piece by Henry Hazlitt.  Hazlitt was a celebrated economics writer, once an editorialist for the New York Times and a Newsweek columnist.  He is also the author of the perennial bestseller Economics in One Lesson.

Henry Hazlitt passed away in 1993.  What follows is his six-point description of the cause of and cure for inflation:

1. Inflation is an increase in the quantity of money and credit.
Its chief consequence is soaring prices. Therefore inflation—if we misuse the term to mean the rising prices themselves—is caused solely by printing more money. For this, the government’s monetary policies are entirely responsible.

2. The most frequent reason for printing more money is the existence of an unbalanced budget.
Unbalanced budgets are caused by extravagant expenditures which the government is unwilling or unable to pay for by raising corresponding tax revenues. The excessive expenditures are mainly the result of government efforts to redistribute wealth and income—in short, to force the productive to support the unproductive. This erodes the working incentives of both the productive and the unproductive.

3. The causes of inflation are not, as so often said, “multiple and complex,” but simply the result of printing too much money.
There is no such thing as “cost-push” inflation. If, without an increase in the stock of money, wage or other costs are forced up, and producers try to pass these costs along by raising their selling prices, most of them will merely sell fewer goods. The result will be reduced output and loss of jobs. Higher costs can only be passed along in higher selling prices when consumers have more money to pay the higher prices.

4. Price controls cannot stop or slow down inflation.
They always do harm. Price controls simply squeeze or wipe out profit margins, disrupt production, and lead to bottlenecks and shortages. All government price and wage control, or even “monitoring,” is merely an attempt by the politicians to shift the blame for inflation on to producers and sellers instead of their own monetary policies.

5. Prolonged inflation never “stimulates” the economy.
On the contrary, it unbalances, disrupts, and misdirects production and employment. Unemployment is mainly caused by excessive wage rates in some industries, brought about either by extortionate union demands, by minimum wage laws (which keep teenagers and the unskilled out of jobs), or by prolonged and over-generous unemployment insurance.

6. To avoid irreparable damage, the budget must be balanced at the earliest possible moment, and not in some sweet by-and-by.
Balance must be brought about by slashing reckless spending, and not by increasing a tax burden that is already undermining incentives and production.

Ron Paul has something to say about both

April’s big jumps in prices are not going to mean changes in the Federal Reserve’s near-zero interest rate policies, according to gold expert and former Congressman Ron Paul.

The Consumer Price Index rose 0.8 percent in April.  Over the last 12 months, the CPI is up 4.2 percent.  Wholesale prices rose 0.6 percent in April.

According to Dr. Paul, Fed chairman Powell “does not want to admit that the real reason the Fed will continue to keep rates low is that increasing rates will cause the federal government’s interest payments to rise to unsustainable levels.”

“One way the Fed increases the money supply — and thus lowers interest rates — is by purchasing US Treasury securities,” writes Dr. Paul in his latest weekly column.  “These purchases increase demand for US government debt, keeping government’s borrowing costs low. An expansionary monetary policy thus enables increased federal spending and deficits. Since the lockdowns, the Fed has worked overtime to monetize federal debt, doubling its holdings of Treasury securities.”

It is an important point.  The normalization of interest rates would make the US government’s $28 trillion debt virtually unpayable.  A mere two percent increase in rates across its debt portfolio will add well over a half-trillion dollars to federal interest rate expense alone.

Dr. Paul’s warnings are the same messages we have been sharing with our friends and clients in this space.  He writes, “The refusal of Congress to cut spending means the Fed will keep increasing its balance sheet in an effort to monetize skyrocketing debt. Eventually, the increasing debt and inflation will lead to a major economic meltdown. The meltdown will likely include a rejection of the dollar’s world reserve currency status.”

It will be a long time before anybody in congress knows as much about money and markets as Dr. Paul.  You should know that when he talks about protecting yourself and your family from a financial crisis, he means with gold and silver.

Last year we cited these remarks from Paul:

“The dollar’s value goes down.  It never keeps up.  There are more dollars around.  The purchasing power goes down.  Real wages go down.”

“Big government always undermines personal liberties and encourages wars.

“The issue is liberty, and liberty cannot be preserved without sound money.”

Dr. Paul is the author of Gold, Peace, and Prosperity, End the Fed, and The Case for Gold.

Pay No Attention to the Mainstream Media!

 By now you probably know that price inflation is running hot.

The government’s Consumer Price Index rose 0.8 percent in April.  Over the last 12 months it is up 4.2 percent.  

For the three-month period February-March-April, consumer prices are up 7.0 percent.  And climbing.

Wholesale prices rose 0.6 percent in April.  For the last 12 months wholesale prices are up 6.2 percent. 

Now, since we do not pussyfoot around about things, let us state clearly what these numbers mean:

The dollar’s purchasing power is falling.  It is falling faster than it has in years.

As you have no doubt heard in news reports about these government indices, the media goes to great lengths to state it differently.  For example, here is a verbatim report from the Wall Street Journal:

Consumers are seeing many prices jump for a variety of reasons as the U.S. economic recovery gains momentum. Used-car prices have surged as global chip shortage has reduced production of new cars. Many companies are passing on the higher costs they are facing for crops, oil and truckers’ wages. Airfares and hotel-room rates are climbing as consumers start traveling again after a year of restraint during the pandemic. More broadly, rising prices reflect strong consumer demand fueled by widespread Covid-19 vaccinations, easing business restrictions, trillions of dollars in federal pandemic-relief programs and ample consumer savings.

You will note that the fact that the Federal Reserve has printed 4 trillion dollars of no objective value since late 2019 does note figure in the “variety of reasons” the nation’s leading financial journal gives for rising prices.

Reviewing these blog posts, their description of the monetary policies at work, and their impact, it turns out that we have been a better source for financial clarity than the major US media.  We are more embarrassed for them than we are proud to keep scooping them.  But what matters most is that it is not good for the American people to be confused, and unprepared for what is coming.

In any case, we are grateful that we have been able to provide crucial financial information to our friends and clients.  We do not copyright these commentaries because we want you to feel free to share them with your colleagues, friends, and family.

And we always welcome your referrals and are glad to take time with people who need to learn more about the coming monetary calamity and how to protect themselves with gold and silver.

“It’s time for a change” in Fed policy.  

So said legendary hedge fund manager Stanley Druckenmiller in a Wall Street Journal editorial the other day.

We first dropped Druckenmiller’s name in this space over a year ago in a piece about Wall Street’s big money players who were buying gold.  

We have identified the pandemic period as the introduction of Modern Monetary Theory to American policy, a development in which the lines between fiscal and monetary operations are erased.  So, we shared Druckenmiller’s thoughts again last Fall when he ratified our observation, saying, “the merging of the Fed and the Treasury, which is effectively what is happening during Covid, sets a precedent that we’ve never seen since the Fed got its independence.  It’s obviously creating a massive, massive mania in financial assets.”  

Given that policy, Druckenmiller had no trouble seeing price inflation of 5 – 10 percent ahead.  

That was in September.  With the Federal Reserve’s continuation of a money-printing spree that has taken the US into uncharted financial territory, we wanted to pass along a few of Druckenmiller’s latest observations.

“Excesses of fiscal policy are already visible,” he and a colleague wrote in the WSJ (5/10).  “Consumers are spending like never before, construction is booming, and labor shortages are ubiquitous, thanks to direct government transfers. Two-thirds of all relief checks were sent after the vaccines were proved effective and the recovery was accelerating. Opportunistic politicians didn’t let the pandemic go to waste. Especially after the Trump years, Congress has decided to satisfy its long list of unmet desires.

“Isn’t the Fed’s independence supposed to act as a counterbalance to these political whims?” he asked.

In a follow-up interview on CNBC, Druckenmiller said, ““I can’t find any period in history where monetary and fiscal policy were this out of step with the economic circumstances.”  

“Not one.” 

“If they want to do all this and risk our reserve currency status, risk an asset bubble blowing up, so be it. But I think we ought to at least have a conversation about it,” Druckenmiller said.

The world’s central banks are already issuing their verdict on the dollar, as they move their reserves into gold.

“The problem has been clearly identified. It’s [Fed chairman] Jerome Powell and the rest of the world’s central bankers,” he said. “There’s a lack of trust.”

Druckenmiller is right.  And when trust in paper currency erodes, gold moves up.

Speaking last year about the housing bubble, Druckenmiller said, “Look, everybody loves a party, but inevitably, after a big party, there’s a hangover, and right now we are in an absolutely raging mania.” 

No wonder Stanley Druckenmiller likes owning gold!

The National Debt Ceiling!

So once upon a time long, long ago (we have heard) America had a political class that thought the country should be managed responsibly.  Many of the founders were vigilant about the new Republic and abhorred the idea of it being buried in debt.

But eventually less responsible people took over.  When it became clear the debt was burgeoning out of control, this new class thought they could create a mechanical solution to “save them from themselves.”  If they could not be trusted to craft financially responsible budgets, they would create a statute that would cap their irresponsible deficit spending for them.  This was called “the nation debt ceiling.”

But it did not take long for even more reckless politicians – if you can imagine such a thing – to drift even another degree further away from financial responsibility.  Having left behind their own duty to be accountable, they soon found it necessary to minimize the restraint of the statutory debt ceiling.  They found that they could simply “raise” the debt ceiling to accommodate their deficit spending.  

Now, it is true that raising the debt ceiling every year or two tended to shine a spotlight on the metastasizing debt and their recklessness.  Since they did not like that exposure, they came up with yet another degree of separation from responsibility.  

They decided to minimize the nuisance of frequent debt ceiling increases by simply “suspending” the debt ceiling entirely for prolonged periods.  During those periods there would be no restraint on their spending whatsoever.  Each time Washington spends more, the debt ceiling automatically increases.  In other words, there is no debt ceiling at all.

Now a new monetary fantasy is taking over.  Since the Federal Reserve is buying larger and larger shares of US debt issuance with made-up money created with nothing more than a digital keystroke on a computer, why not simply cut out the middleman?  Why should the US Treasury borrow money and issue debt instruments at all?  Why not simply let the Fed create as much money as the politicians want to spend?

That is the promise of Modern Monetary Theory, which is all the rage in Washington now.  And you cannot get more separated from financial reality and responsibility than that.

To bring the story up to date, Congress voted two years ago to suspend the national debt ceiling until July 31 this year.   

 Over the next 12 weeks you will hear a fair amount about the nation’s already unpayable debt and about the debt ceiling.  We hope this short tale will serve as a kind of playbook as you listen to the political debate.  It will make clear that the only way to have a financially responsible nation is to have responsible people making decisions.  All other measures are simply added degrees of separation from responsibility.

When the monetary and financial system has become this far removed from responsibility, it is, as the saying goes, “every man for himself.”  

In other words, you cannot trust the system to protect your money and your wealth.  You must do so for yourself.  The bitter lessons of history teach that that is best accomplished by acquiring gold and silver.

Just a short message today to let you know that in establishment financial circles the term “hyperinflation” has popped up.  

In a post last week, Temporary Inflation, we pointed out that — unable to deny that prices are rising throughout the economy – the Fed and the Biden administration have begun using the talking point “transitory.” 

It is a meaningless term.  All inflation is transitory.  It always ends sometime.  It may end in the destruction of an entire nation and its economy as it has in so many times and places, but it always ends.

But now we have seen the ante raised by a major bank with the introduction of the term “transitory hyperinflation.”

Last week a Bank of America/Merrill Lynch analyst, took note of the huge spike in the use of the term “inflation” in earnings calls from S&P 500 companies (see chart).

The head of US Equity & Quantitative Strategy at BofA wrote that this points to “at the very least, “transitory” hyperinflation ahead.”

Hyperinflation is not a term tossed around lightly.  The term hyper comes from Greek, meaning over or above.  One might say someone is hyper-sensitive or hyper-active.  It is a mistake to try to pronounce that some fixed level or inflation rate is hyper-inflation.  It is an attempt to ape the physical sciences in which measurements have quantifiable meanings.  Like the temperature at which water freezes or boils.

But hyper-inflation is not a particular number.  It is a prevailing monetary condition.  You know it when you see it.  Double-digit US inflation in the 1970’s, as destructive as it was, was not considered hyper-inflation.  

Hyper-inflation ruins entire countries and destroys economies.  In hyperinflation, people catch on to what is being done to the money.  They become desperate to exchange the failing currency for anything tangible that has real value.  The financially sophisticated prey upon the naïve.  Nobody enters into transactions expecting to deal fairly; everyone is hoping to use superior knowledge or guile to exploit someone else.  

Hyper-inflations pave the way for even more criminal government, as can be seen in the experiences of Germany and France.  They usher in a war of all against all.

And they leave ruination in their wake.  

The best protection is owning gold and silver.

It is not a good thing that a major financial institution sees hyperinflation ahead.  Even if they try to soft-pedal it by calling it transient.

We urge you to find out more.  Speak with a gold and silver professional at Republic Monetary Exchange today.

That is what President Biden has spent or intends to spend to get a long-term lease on the White House and the Capitol.

Add it up yourself.  First there was $1.9 trillion in “stimmy” spending.

Then he followed up with his $2.3 trillion “infrastructure” boondoggles bill.

And then he announced the $1.8 trillion “families” initiative.

And that is just the first hundred Biden-Harris days.  There are 1,361 more Biden-Harris days left! 

Oh, they are buying a long-term lease on Washington, alright.  Never mind record debt and deficits, or government trust funds running dry.  It is what politicians have been doing for generations:  buying their offices by spending your money.  It is really a pretty good trick.

Biden may pull this flim-flam off, even as the country is already struggling under unpayable debt.  (If the debt were not already unpayable, the Fed would not have had to print trillions of funny money dollars to buy US Treasures and keep the debt funded).

Climbing out of the depths of the Covid shutdown, reminds us of the song about being down so long, everything looks like up.  And then there is the druggie high of all the stimmy money providing a rush of prosperity euphoria to the public.

Serving in a senior capacity with three presidents, Nixon, Ford, and Reagan, Pat Buchanan has seen these fights close-up.  With his practiced eye, he says it is likely the Biden-Harris people with get what they want:

“We are coming out of the economic free fall of 2020 and the pandemic that produced it.

“COVID-19 infections, hospitalizations and deaths are fractions of what they were at the height of the pandemic. Vaccinations, while tapering off, continue in the millions daily.

“And all those billions of federal dollars sloshing through the economy are going to make tens of millions of Americans feel better.

“While the TV audience for Biden’s address tilted Democratic, the 85% approval of his speech in one poll, along with the 75% who said it made them more optimistic about America, suggest that this is Biden’s moment.” 

Meanwhile the small, but once active coalition of congressmen who were thought of as deficit hawks, fiscal conservatives, a few from both parties, have been missing in action.  

There may still be enough resistance to trim Biden’s wish list a little, but not enough to turn back the socialist armies running America now.

David Stockman puts it like this: “The denizens of the once-and-former party of the old-time fiscal religion are waking up this morning to wonder what hit them.

“After all, how do you compete with free maternity leave, free childcare, free pre-school, free elementary and secondary education, free community college, nearly free university, virtually free ObamaCare, free elderly care and, to boot, after $3,600 per child tax credits, essentially no income taxes at all for upwards of 75% of adult Dem voters?

“That is, the Dems are going with universal free stuff for all while the going is good.”

Apparently, the economic lab experiments in the Soviet Union, North Korea, East German, Cuba, and Venezuela have not been enough.  The American people have not learned from all that bitter experience that socialism creates poverty and ruins nations.

Gold set its last high over 9 months ago.  We do not know the day or the hour when it will break out again, but we are staring right into the death-pocked face of prosperity and currency-killing policies.  Fortify your gold and silver positions now, because the longer the consolidation, the bigger the breakout.

Earlier this year we wrote in this space that if you visit the grocery store and discover food prices seem to be rising, contact a Republic Monetary Exchange professional right away and take steps to protect yourself with gold and silver.  

Because the value of the dollar is going down.

Now the news is coming in thick and fast.  Here is a CNBC story (4/27): 

February home prices see the biggest gain in 15 years, S&P Case-Shiller says.

Nationally, prices in February rose 12% year over year, up from 11.2% in January, according to the S&P CoreLogic Case-Shiller home price index….

The 10-city composite rose 11.7% annually, up from 10.9% in January.

The prices in the housing index are two months behind, but report prices still rising even as interest rates trended higher.  

The housing component of consumer prices shows just how far from reality the official Consumer Price Index numbers may be.  The Bureau of Labor Statistics does not count home prices in the CPI. It maintains that if one owns a home, it represents a capital good and not a consumption item.  But since shelter is a consumption item, it must include shelter in some form.  So, it has cooked up something it calls “Owner Equivalent Rent” instead. The BLS asks homeowners how much they think someone would pay to rent their home unfurnished and without utilities.  

How homeowners are supposed to know, it does not say.  It is using unfounded speculation and opinion from laymen to determine a major component of the CPI.  It is all very fanciful and reveals part of the reason why the government’s inflation numbers do not seem to match what people actually encounter. When it reported a 0.6 percent increase in consumer prices in March, the biggest monthly jump in more than nine years, it may have seriously understated real-life conditions.  Wolf Richter says using the Case-Shiller home price number would generate a year-over-year CPI not of the reported 2.6 percent, but of more than 5 percent.

However, it is in the government’s interest to keep the CPI numbers low.  Higher numbers reflect badly on the political classes and are used to index Social Security Cost of Living Increases (COLA) and other costly benefits.  

Enter Economist John Williams.  His consulting service and website ShadowStats offers an alternative to government inflation statistics.  He writes, “the ShadowStats Alternate CPI-U estimate restates current headline inflation so as to reverse the government’s inflation-reducing gimmicks of the last four decades, which were designed specifically to reduce/ understate COLAs.”  The ShadowStats alternate calculation finds that the year-over-year inflation rate in March was up a hair-raising 10.4 percent as compared to the 2.6 percent official BLS report.

Meanwhile, here is a Bloomberg News story from just a few days ago (4/23):

The Grocery Price Shock is Coming to a Store Near You!

This week, the Bloomberg agricultural spot index – which tracks key farm products – surged the most in almost nine years driven by a rally in crop futures….

Overall, global food costs have surged for 10 straight months, the longest rally in more than a decade…

When people notice they are being victimized by inflation, gold and silver prices begin to move higher, sometimes quite suddenly and dramatically.  So let us repeat our recommendation from earlier this year:  

If you visit the grocery store and discover food prices seem to be rising, contact a Republic Monetary Exchange professional right away and take steps to protect yourself with gold and silver. 

As we write this commentary, the Treasury Department reports that the US national debt is $28.168 trillion.  

That’s a lot of wampum!

A year ago, it was $24.461 trillion.

A year earlier, in April 2019, in was $22.027 trillion.  

The debt has been growing fast, up by more than $6 trillion in two years!  If only that were the whole story.  

Sorry, but it is not the whole story.  The real debt is much, much larger.  The real national debt now exceeds $123 trillion, more than four times the officially reported number. 

And that works out to about $800,000 per taxpayer.

The non-profit organization Truth in Accounting (TIA) takes a dim view of sketchy government accounting.  That is because the government does not account for its promises and obligations in the same manner that federal law requires of public companies.  So, TIA looks at promises that government has made, promises upon which people depend, but which are not funded.  Things like Social Security and Medicare benefits and federal employee retirement provisions.

If you think that the US economy can keep functioning at today’s level if peoples’ Social Security benefits fail – benefits they count on to pay their mortgages, power bills, and for groceries – then read no further.

But in fact, 64 million people receive Social Security benefits.  All the people they do business with and all the people who do business with those who do business with them depend to one degree or another on those payments.  

It’s like the game Jenga where you pull out one block at a time until the whole thing topples over.  Truth in Accounting President Sheila Weinberg puts it into perspective with this anecdote paralleling the problem of politicians and unfunded government liabilities:

“For years you have hired people to do work around your house. Instead of paying them in full every year, you use the money to buy holiday gifts, so that you are popular with your friends. Each year you tell your household workers that your children will pay the balance you owe, when they grow up. 

“Have your budgets been truly balanced?”

The choices the government has to deal with its debt are painfully few.  Most are utterly inadequate.  In 2012 presidential candidate Mitt Romney thought he could make a dent in the problem by getting rid of public TV and Big Bird.  

There is really only one alternative:  painful, slow-motion debt repudiation through inflation.  Recipients will still get their Social Security automatic deposits… which they can spend on cat food.

Of course, none of this had to happen, but the political classes thought they could replace honest accounting with sketchy accounting, and real money with unbacked paper money.  

It fooled some of the people some of the time.  But you can’t fool all of the people all of the time.  

If you have had enough of them trying to fool you with fake accounting and fake money, speak to a Republic Monetary Exchange specialist about how to protect yourself with gold and silver.

Between the (wholesale) Producer Price Index and the (retail) Consumer Price Index, inflation is the word of the day!

With the Federal Reserve printing trillions of dollars, most of which has long been levitating the stock market and now the housing market once again, it is evitable that it would also spill over into wholesale and retail prices.  Here is a sampling of headlines and observations about the surging of price inflation.

REUTERS (Washington, 4/13/21) – U.S. consumer prices rose by the most in more than 8-1/2 years in March…. The consumer price index jumped 0.6% last month, the largest gain since August 2012, after rising 0.4% in February.

REUTERS (Washington, 4/9/21) – U.S. producer prices increased more than expected in March, resulting in the largest annual gain in 9-1/2 years and likely marking the start of higher inflation as the economy reopens amid an improved public health environment and massive government aid….  In the 12 months through March, the PPI surged 4.2%. That was the biggest year-on-year rise since September 2011 and followed a 2.8% advance in February.

WOLF RICHTER (Wolf Street, 4/13/21) – The problem in the CPI is the homeownership component, the “Owners’ equivalent rent of residence,” which accounts for 24% of overall CPI. It is based on surveys of homeowners’ estimates of how much their home would rent for. And this CPI for “Owners’ equivalent rent of residence” in March rose just 2.0% year-over-year….

Had the homeownership component of CPI risen in line with the Case-Shiller index, the overall CPI would have jumped by 5.1% year-over-year – nearly double the published rate of 2.6%!

MICHAEL SHEDLOCK (TheStreet.com, 4/14/21) – U.S. import prices advanced 1.2 percent in March, 1.3 percent in February, and 1.4 percent in January.

The 4.1-percent increase from December to March was the largest 3-month rise for import prices since the index advanced 5.8 percent in May 2011. 

The price index for U.S. imports increased 6.9 percent from March 2020 to March 2021…

DAVID STOCKMAN (Contra Corner, 4/12/21) – There is no other way to say it. The Fed chairman and his demented band of money printers are so blindly, mechanistically and monomaniacally committed to the will-o-wisp of 2.00% inflation that they are willing to literally destroy the money and capital markets to achieve it.

ROBERT WENZEL (Economic Policy Journal, 4/9/21) – Rather than being a conservative steward of the U.S. dollar, Powell is like the drunk who wants to take one more drink before hitting the road. He sees no danger ahead only because he doesn’t seem capable of clearly seeing ahead at all.

Current Fed policy is one of the most reckless in the entire history of the Fed and there is not one member of the monetary policy-setting committee, the FOMC, raising any kind of significant concerns.

The Fed is going to be so slow reacting to the developing price inflation that the great danger is it could get way out of hand. 

Buckle your seat belts and hug your gold coins.

CLOSING NOTE:  We keep reading this week in stories about the death of swindler Bernie Madoff that he ran the biggest Ponzi scheme in history.

If a Ponzi scheme is – as defined – a fraud that requires ever new investments to pay off the promises of prior investments, we think the US Government should top the list.  The US is incapable of paying off today’s bondholders without selling new bonds tomorrow.  Faking $60 billion in account statements is quite a scam, but it falls far short of $28 trillion.

Do they think we are stupid, or do US officials really mean what they say?

It’s really getting hard to tell whether they think we are just plain stupid…

OR…

… whether they are just so stupid that they believe what they say.

You be the judge.

Here is some of the background.  China is the world’s largest gold producer.  It is also the world’s largest gold refiner.  In addition to aggressively adding to its official central bank gold reserves, China is reported to have substantial additional reserves off the books, held in the name of the army, the communist party, and other institutions.

Now China has created a new cyber yuan, a government digital currency.  This is a major step toward independence from the US-controlled SWIFT global trade settlement system and away from the dollar’s global currency privilege.   As Bloomberg News writes, “The dollar’s current dominance in cross-border transactions gives the US Treasury the power to cut off much of a business or even a country’s access to the global financial system.”

The entire world has been chafing under US use of this leverage as a tool for imposing costly compliance with American foreign policy positions and sanctions.  A low-grade revolt is underway far and wide.  But the US does not seem to notice. According to the Bloomberg story, “US officials are reassured that China’s intentions aren’t to use the digital yuan to evade American sanctions, according to people familiar with the matter.”

Oh, really?  US official are “reassured”?   When China’s every move, from its gold policies, to its raft of bilateral and multilateral trade agreements that end-run the dollar, to this new digital yuan?  

Yet US officials are reassured that China is not aiming at evading American sanctions?

They whistle past the graveyard and want us to join in?  Do think we are stupid?  

Or are they too dumb to understand what is going on?

You be the judge.

For what it is worth, financial historian Naill Ferguson has concluded they just don’t get it.  He writes, “American monetary authorities [are] underestimating the threat posed to dollar dominance by China’s pioneering combination of digital currency and electronic payments.”

Whatever your verdict, when the dollar’s future is in hands like this, it is better to own gold and silver. 

The reality on the ground for silver can be expressed in one word:  shortages.

The price of real, physical silver remains disconnected from the “spot,” or paper benchmark prices.  

It is a little like the old Soviet Union, where the posted prices in stores might have been low, but the shelves were all empty!

That is because those prices were not real.

Today there are shortages in both the gold and silver markets.  As we reported recently, even the US Mint has been affected by the divergence between the real physical gold and silver prices and the benchmark paper or “spot” prices.  The Mint has been unable to acquire enough bullion at benchmark or spot prices to meet investor demand for both metals (see US Mint Can’t Meet Demand for Gold and Silver).

While there are issues with both gold and silver paper markets, the silver shortages are the most pronounced.  

We believe that these industry-wide shortages will be resolved by much higher prices.  

Because Republic Monetary Exchange anticipates conditions like this, we still have physical gold and silver available for immediate delivery.  

You should know that the situation appears to be getting worse.  It is not limited to just the United States.  Just the other day we were alerted that Britain’s largest bullion dealer is running out of real silver for delivery.

The advice in the trades is for people to convert paper silver investment vehicles to real physical silver while you can.   

In the meantime, other dealers are unable to make delivery to their clients in a timely manner.  Many are asking their clients to pay them today for silver that will be delivered at some unspecified time in the future.

We strongly recommend against that.  At Republic Monetary Exchange, we subscribe to best practices for our client’s protection and profitability.  And that includes immediate delivery of gold and silver when you buy and immediate payment when you sell.

Speak with a Republic Monetary Exchange gold and silver specialist today.  Take steps to protect yourself and your family with real precious metals.

I, Franklin D. Roosevelt, President of the United States of America, do declare that said national emergency still continues to exist and pursuant to said section do hereby prohibit the hoarding of gold coin, gold bullion, and gold certificates within the continental United States by individuals, partnerships, associations and corporations….

Whoever willfully violates any provision of this Executive Order or of these regulations or of any rule, regulation or license issued thereunder may be fined not more than $10,000, or, if a natural person, may be imprisoned for not more than ten years, or both; and any officer, director, or agent of any corporation who knowingly participates in any such violation may be punished by a like fine, imprisonment, or both.

It was 88 years ago this week that the US government made it a criminal offense for American to own monetary gold.

Our thanks to Tho Bishop at the Mises Institute for reminding us of the infamous anniversary.  Bishop writes:

“The order was one of the several disastrous responses to the Great Depression that succeeded in escalating the financial crisis. Later in the year, the US Congress would pass a resolution retroactively supporting the legislation; however, it was the determined autocratic leadership of FDR that made way for these unprecedented measures. It would be a crime for Americans to hold gold for over forty years, until President Gerald Ford reversed the order in 1974. 

“This episode has several lessons for the current financial environment, particularly given the acceleration of tyranny-by-expert rule that has taken over much of the worst this past year.

“The underlying legislation that evoked by FDR’s executive order was the Trading with the Enemy Act of 1917—a by-product of World War I—despite the fact that the US was in no way in a period of war in 1932. Similarly, we have seen war on terror–inspired financial legislation increasingly used against American citizens. For example, in the name of “fighting terrorism” the US PATRIOT Act significantly increased know-your-customer laws, empowering federal regulators to use the traditional banking system to better track the economic behavior of American citizens.”

The objective of Roosevelt’s gold grab was twofold: first, to devalue the dollar then and there, and then to get gold out of the way.  Gold’s role in the monetary system acted as a brake on the Fed expansion of money and credit and the endless growth of the State.  It was an impediment to deficit spending that had to go.  Gold had to go because it made the individual’s financial well-being dependent upon himself, instead of upon State benefactors and the decrees of the monetary authorities.  It was a bulwark against the erosion of property and individual rights.  Gold had to go.

Roosevelt’s action was a brazen affront to free American people and an assault on the Constitution itself.

To this day it reminds us that private ownership of gold is not just a means of protecting our individual wealth and prosperity.  It is an assertion of the liberty that the founders, great men like Washington, Franklin, Jefferson, and Madison, intended for the new American republic.

A Key Reason to Own Gold!

The US dollar’s share of global currency reserves continues to fall.

One financial blogger headlines the story with this question: “Central banks getting nervous about the Fed’s drunken Money Printing and the US Government’s gigantic debt?”  (WolfStreet.com)

Of course, they are getting nervous.  

The dollar’s share of global reserve functions has eroded from 85 percent in the 1970s.  It is now down to 59 percent, off seven percent since 2014.

Because we believe that the erosion of the dollar reserve function is one of the most decisive developments in the financial world, we have reported on it along the way.  

We tracked Russia’ almost total abandonment of its dollar reserves in favor of gold, writing in 2019 that “Russia, seeking to protect itself from a dollar crisis, continues to reduce its holdings of US Treasury bonds while beefing up its gold stock at an accelerated pace.  

“The Bank of Russia, the central bank, bought 8.8 million troy ounces of gold in 2018, increasing its total gold holdings by 14.9 percent.”  See Russia Adds Gold, Surpasses China… (For Now!) 

In 2919 we wrote, “Like Russia, China’s gold acquisitions can only be described as aggressive.  From 1,054 tons in June 2015, it now boasts reserves of 1,852.  

“In other words, China has grown its official gold holdings by 75 percent in 3½ years.”  See China Adds 10 Tons of Gold to Its Reserves in December.

More recently, we pointed out that the US foreign policy establishment is shooting the dollar in the foot with its promiscuous reliance on sanctions as a primary tool of foreign policy.  We cited a New York Times story that found increasing resistance to US sanctions and the development foreign account settlement options that bypass US control.  See Where Does the World Turn to as it “De-Dollarizes? 

Wolf Street writes, “The US dollar’s status as the dominant global reserve currency is a crucial enabler for the US government to keep ballooning its public debt, and for Corporate America’s relentless efforts to create the vast trade deficits by offshoring production to cheap countries, most prominently China and Mexico.

Talk to a Republic Monetary Exchange precious metals professional about the reasons why gold and silver are your best defense against the declining role of the dollar.

Biden intends to send federal spending to levels not seen since World War II.

He is doing so at a time that federal debt is already about 129 percent of gross domestic product.

Biden announced the $2.3 trillion dollar plan last Wednesday.  It is described as providing funding for bridges and roads, expanding access to high-speed internet, improving public transit, and encouraging the adoption of electric vehicles.   It is not described as a plan to stovepipe money to the politically correct and the politically connected.  

But it is.  It’s a politician’s fantasy come true.

There is still another shoe yet to drop.   The infrastructure measure is the first of a two-part plan that the administration will seek to move through Congress.  A second plan, to be revealed in April, focuses on remaking American life by escalating the State’s role in childcare, healthcare, and education.  It is not described as a means to stovepipe taxpayer money to a vast new social engineering scheme.

But it is.  It is collectivist’s fantasy come true.

Biden’s plan rests on raising corporate tax rates 21 to 28 percent.  This will make its way to price increases on the goods and services American corporations provide.  Fueling further price hikes at a time that there is widespread fear that inflation is beginning to reassert itself is particularly tone-deaf.

Accordingly, the people will pay more for the necessities of daily life.  State cronies will fill their pockets at the end of the Biden pipeline.

As the Biden plan advances you will hear like a constant drumbeat the talking point that the measure will so unleash America’s productive might that it will pay for itself.  That has been the ceaseless mythology of State for years: that we can spend our way to prosperity.  But if all the constantly rising state spending and intervention in the economy pays for itself as alleged, how has the national debt grown to $28 trillion?  

(See our posts on “the marginal productivity of debt,” Doom Loop, Part I and Doom Loop, Part II.)

The non-partisan Committee for a Responsible Federal Budget address this very issue:

“As the details come out, you’ll hear advocates claim these new investments will actually pay for themselves through new growth or that deficits don’t matter. That was not true during the 2017 tax cut debate and it certainly is not true now.

“Investing in reliable and resilient infrastructure can help the economy, but the research is clear that the return is fairly modest. In fact, analysis from the Congressional Budget Office and Penn Wharton Budget Model suggests that returns on debt-financed infrastructure investments could well be negative.

“Since the start of the crisis, we have taken on more than $5 trillion in debt to fight COVID, with much of it being justified. But we also borrowed nearly $5 trillion before the crisis for tax cuts and spending increases that were not justified. We are becoming dangerously numb to borrowing massive amounts of money.

“Strong nations borrow when necessary, not when it is politically convenient. It is important for the future health of the economy that we are willing to pay for our priorities.”

The US national debt is already unpayable.  As the government, boondoggles, crony capitalism, debt, spending, and money-printing all grow, gold and silver provide a time-tested means of withdrawing from the doom loop.  Speak with a Republic Monetary Exchange professional today.

Mark this moment as one when the fate of the global currency reserve dollar took a turn for the worse.  The Washington foreign policy establishment just drove its most important adversaries into a marriage of convenience with one another, binding them together in a defensive union against US global hegemony and hastening the end of the dollar’s special privilege.

No more slow-walking.  The dollar will now begin racing to its fate.  

Although they have been divided by a 2,600-mile border that has come close to erupting into open warfare in the past, today Russia and China have mutually agreed-upon boundaries and the countries are key trading partners.  (Vladivostok, the Russian port city on the Pacific may long be in contention; it is closer to Japan than to Moscow. But for now, it is a back-seat issue.)

Russia has always been on the frontline of the battle against Islamic terror and expansionism, a role that might have been exploited more wisely by the West over the last generation.  The irony is that it is the US foreign policy establishment that has sought to drive a wedge between Russia and the West, driving Russia into China’s arms, foolishly creating a new power-bloc.  China and Russia’s mutual cooperation is all the more notable today as US diplomatic influence around the world wanes.  

Now hard on the heels of the failed US-China summit in Anchorage, the foreign ministers of China and Russia, Wang Yi and Sergey Lavrov met.  No matter one’s viewpoint on foreign affairs, Lavrov must be regarded as one of the most skillful diplomats of our time:  well-informed and insightful, measured and unflappable, candid and well-spoken.  

Accordingly, it is important to take note of Lavrov’s remarks in which he clearly called for moving away from the dollar in international trade now:

“The United States has declared limiting the advance of technology in Russia and China as its goal. So, we must reduce our exposure to sanctions by strengthening our technological independence and switching to settlements in national and international currencies other than the dollar. We need to move away from using Western-controlled international payment systems.” (Emphasis added).

We are not positioned to make foreign policy.  Our job is to help our friends and clients protect themselves and profit from events beyond our control.  But it appears to us that what we are witnessing on the international stage is something out of Sun Tzu’s The Art of War: attack your enemy when he is weak.   Because of the weakness implicit in the metastasizing of US debt and the ballooning of trillions of unbacked Fed dollars, this explicit challenge to the dollar’s global reserve comes at a time of maximum impact.  

We have written about de-dollarization many times. In December, we noted a Financial Times piece on the history of world currency reserves. It wrote:

“Before the U.S., only five powers had enjoyed the coveted “reserve currency” status, going back to the mid-1400s: Portugal, then Spain, the Netherlands, France and Britain. Those reigns lasted 94 years on average.” 

Now the dollar has had about a 100-year run as the go-to currency.  That is about as long as any reserve currency seems to last.  

But while national currencies come and go, gold endures.  

We invite you to speak with a Republic Monetary Exchange gold and silver specialist to find out why owning precious metals is your first line of defense against global de-dollarization.

Big Changes are Coming to America

“The best way to destroy the capitalist system is to debauch the currency.”

Attributed to Lenin by J.M Keynes

Now that the currency is being debauched, get ready for the reshaping of America!  

From the New York Times:  

“[President Biden’s} advisers are preparing a set of proposals intended to reshape the U.S. economy and other parts of American life (emphasis added).  If they pass, they will almost certainly have a more lasting effect on people’s lives than the virus-relief bill that Biden signed two weeks ago. And while the proposals include measures on health care and taxes, they are broader — more diffuse, a critic might say — than the top priorities of other recent presidents.”

In addition to the infrastructure portion of the measure which is sold as mostly funding for highways, roads, bridges and government buildings, but is also windfalls for cronies, boondoggles for politicians, and above market pay for political constituencies, the New York Times says the Biden spending measures include funding for monthly payments to people who have children, “as well as a big expansion of paid family leave,” the expansion of Obamacare, making “pre-K universal for both 3- and 4-year-olds, through federal funding of local programs, and increasing funding for community colleges.”

And that is before all the log-rolling and vote-buying that goes on in what used to be called the world’s greatest deliberative body.

To sum up, the US has spent $6 trillion on boondoggle-laden stimulus/bailout measures since COVID-19 arrived on the scene.  And there is more of that kind of spending to come…

… further debauching the dollar.  From Thesaurus.com, here are a few synonyms for “debauch” that fit its application to a currency:  abuse, betray, bastardize, ruin, subvert, vitiate.  

And now the inflation chickens are coming home to roost:

From the Wall Street Journal:

“Lumber, one of the biggest costs in home-building after land and labor, has never been more expensive and is more than twice the typical price for this time of year. Crude oil, a starting point for paint, drainpipe, roof shingles and flooring, has shot up more than 80% since October. Copper, which carries water and electricity throughout houses, costs about a third more than it did in the autumn.”

Today, instead of another chart of the spending, debt, and money printing, we’ll let a picture speak a thousand words.  The price of lumber, at an all-time high, is reported by the National Association of Homebuilders to be adding $24,000 to the price of a typical home.  

See for yourself:

When a wide spectrum of prices starts to climb, it is generally because the currency is being debauched.  When the currency fails, it threatens not just the economy, but the entire social order and the rule of law.  Informed people must take steps to protect themselves.

Own gold yet?

“Tighten your seat belt!”

That is the advice from publisher and one-time presidential contender Steve Forbes.  H is the editor-in-chief of the business magazine Forbes.

“This is bad stuff, this massive printing of money,” says Forbes.  

Forbes has always understood that gold needs to have a place in the monetary system.  Otherwise, the politicians are undiscipline and unrestrained.  

If they are not tied down to the earth, they go floating away into economic outer space.

Commenting on the Biden agenda on Newsmax TV earlier this year, Forbes warned that Washington is ignoring the real problem.  “The real danger is printing money,” Forbes said. “That’s going to lead to inflation. I’m surprised the markets haven’t woken up to that, but that’s going to mean higher interest rates, huge economic dislocations.”

“This is bad stuff, this massive printing of money…. They just don’t know when to stop.”

Forbes explained that wealth “come[s] from people creating real resources, not the government printing press.”

Forbes foresees Carter era economic stagnation, higher prices, and interest rates from today policies.  “This is really going to do damage to the economy.” 

“They don’t realize what’s coming. They think they can semi-socialize this economy, and they really believe we’re in an era where you can print money with no consequences.”

“The Fed is going to have a crisis on its hands,” Forbes said.  “They think a little bit inflation is good.

“They’re going to have a firestorm on their hands before the end of the year.”

If the government will not take steps to stabilize the dollar, you must take steps to stabilize your own portfolio.  Contact Republic Monetary Exchange today and let one of our gold and silver professionals show y0u how to meet your personal profit and protection needs with precious metals.

Hint:  It is a precious metal, gold in color, one that been honest money for thousands of years.   Hmmm…

America’s European allies are fed up with being pushed around by Washington politicians.

We have been telling you that for years, but now even the New York Times has noticed.

De-dollarization is on display as central banks around the world move to add gold to their currency reserves.  (See our two-part posts Strange New Respect for Gold here and here.) 

They are turning to gold because of the rank recklessness of US debt and Federal Reserve money printing.  They know this debt will never be repaid and that much more legalized dollar counterfeiting is inevitable. 

But the monetary considerations are only part of the story.   

Resentment and push-back against US diplomatic bullying figures in as well.  

A New York Times piece, Europe Struggles to Defend Itself Against a Weaponized Dollar, (3/12/2021) provides details about this part of the story.

A brief excerpt:

“The American willingness to punish its European allies and impose sanctions on them in pursuit of foreign-policy goals continues to rankle.

“It is an underlying tension, a ready reminder of the asymmetric power of the United States. That is especially so when it comes to what are known as secondary sanctions. While Iran and Russia, for example, maybe the primary target of sanctions, the secondary sanctions punish other countries and companies — very often European — that do business with them as well.”

“Increasingly popular with Congress, secondary sanctions have been deployed to coerce allies to fall into line on any number of issues. In recent years, those have included the Nord Stream 2 natural gas pipeline, Iran’s nuclear program, and the socialist governments of Venezuela and Cuba. The great fear is that they would someday be used by the United States against China — or even vice versa — leaving Europe squeezed in the middle.”

The cost of US sanctions is taking a big bite out of the business of some big players. The NYTimes story reports US sanctions on Iran cost the French energy giant Total of $2 billion in lost business, “while Siemens lost a rail contract worth $1.5 billion and Airbus lost $19 billion.”

The US harms itself by hastening the end of the global dollar standard with this promiscuous use of sanctions.  In November we wrote that the SWIFT payments system, the leading international account settlement facility for world banks and commerce, is watching the US dollar share of its settlements decline. Since the US uses the SWIFT system as a tool of its foreign policy and sanctions enforcement, important new alternatives to bypass SWIFT are coming online.  

At a time the US needs all the foreign creditors it can get, it is making the dollar – and our country – an object of foreign resentment.  

It reminds us of Ron Paul’s observation about the growing resentment, that when the US does have a meaningful financial crisis and needs international support of one kind or another, we may experience more piling-on than support.

The take-away is that the movement away from the dollar will grow from today’s pace into a sudden stampede.  Take to heart the example of the foreign central banks that are moving their assets into gold.  

We can help you do the same with a sensible plan and portfolio designed for your personal needs.  It is what we do for our clients.

There are two things you need to do:  Protect yourself from the coming crisis.  And help end the Fed and get the government under control.

That is the advice from former congressman and presidential candidate Ron Paul.

It will be a long time before anybody in congress knows as much about money and markets as Dr. Paul.  You should know that when he talks about protecting yourself and your family from a financial crisis, he means with gold and silver.

We will get to Dr. Paul’s own words in a moment.  But here is what is going on.  Federal debt is now over $28 trillion dollars.  The deficit just last year was $3.1 trillion.  The Fed had to print trillions of dollars to keep the government funded.

As Dr. Paul and the Congressional Budget Office note, this will be two years in a row that the federal debt exceeds the productivity of the entire country, the Gross Domestic Product.  

That is not good.

The CBO is now forecasting a $2.3 trillion deficit for this year.  But that does not begin to include everything Washington wants to spend money on.  The Biden “stimulus” package is almost $2 trillion dollars.  Then so-called “infrastructure” package could reach $4 trillion over ten years.  And there are all the demands of the big government, big spending constituents that Biden owes his election to.  They all want something.  Free something.

That is where the Federal Reserve comes in.  Chairman Powell recently said, “Well, so what we said about the bond-buying program is that it will continue at least at the current pace… [emphasis added].  

The Fed’s current pace is printing $120 billion a month.  Made up money.  Unbacked.  Digital bookkeeping entries.  Fiat money.  $120 billion a month is the current pace.

Here’s a link to Ron Paul’s most recent weekly column.  We think the last two paragraphs deserve to be featured by us:

“Unless the government changes course, America will experience a crisis greater than the Great Depression. The crisis will include a final rejection of the dollar’s world reserve currency status. There will also be much increased price inflation. At that point Congress will have no choice but to limit spending, although it will try to hide cuts in popular entitlement programs by ‘adjusting’ government measures of inflation. Congress could then blame the Fed for the reduction in value of government benefits.

“Those who know the truth have two responsibilities. First, ensure they and their families are protected when the crash comes. Second, redouble efforts to spread the ideas of liberty and grow the liberty movement so politicians are pressured to cut spending and debt and to end the Fed.”

“If the wealth tax passes, go out and buy yourself some gold because people are going to rush to find ways of hiding their wealth.”

That’s the advice form Leon Coopeman,  It doesn’t matter to him that much if the government takes away rich people’s money, because he already has plans to give his fortune away.

But it matters to the country.  “I’m a better capital allocator than the U.S. government,” says Cooperman.

That’s true.  Investors are determined to find productive places to put their money.  They aren’t always successful, but they want to earn a return, so they need to find opportunities that generate more wealth.  

Politicians, on the other hand, are generally looking to buy votes.  The money they get their hands on goes straight to consumption. 

But production precedes consumption.  Consumption is totally dependent on somebody first producing something. 

C.ooperman is a billionaire hedge fund manager.  His fund, Omega Advisors, didn’t make money for its clients, or make Cooperman rich, by consuming the money they placed with Omega.  They had to find way to make it productive.

Individuals are always better allocators of wealth than governments.  

Now Elizabeth Warren and Bernie Sanders are pushing a new wealth tax that would levy a tax of two or three percent on the very biggest fortunes in the country.  

That’s how socialism gets a foot in the door.  It promotes policies designed to “get the rich.”  But they end up getting everybody.  Ever heard the phrase “bracket creep”?  It referred to the way that years of inflation pushed people into higher and higher tax brackets on phantom increases in their real income.  Soon the middle class were paying tax rates that were designed to get the rich.

Since a wealth tax taxes existing capital, not income, the subjects of a wealth tax would have to pay it out of their current income.  That means less total investment out of current income year after year; or if their current income is not sufficient to pay the wealth tax, it means the liquidation of some of their capital year after year to meet the tax bill.  In either case it means less investment capital.

Socialists love the smell of class warfare in the morning.  But their victims do not.  So, face it, many of the wealthy will just pack up and leave.  Taking their wealth with them.  Leaving America less well capitalized.  

Cooperman says, “We’ve got to decide whether we’re a capitalist nation or a socialist nation.”  Look at the people in the Biden administration.  Look at congress.  It is clear that we are headed down socialism’s desolation road.

We have described gold before as capital on strike.  Cooperman says, “If the wealth tax passes, go out and buy yourself some gold because people are going to rush to find ways of hiding their wealth.”

But it is not just the wealth tax.  The more socialism we get, the more people are going to buy gold to protect themselves and their hard-earned money.  

You shouldn’t wait for the wealth tax.

The Fed really has America’s monetary situation screwed up.  

Badly.

The last three Fed chairmen have printed money to beat the band:  Bernanke, Yellen, and Powell.

They have done the work of three men:  Larry, Moe, and Curly.

The Fed itself and the lapdog financial press call what the Fed has done under this hapless threesome many things:  Quantitative Easing, open market operations, yield curve control, debt monetization, liquidity operations, demand management, repurchase agreements, TARPing, deficit accommodation… and probably other names we can’t even remember.

But it is all money printing.  It will eventually destroy the dollar and bring the US economy crashing down with it.  That’s because money printing creates no new wealth.  It only debauches the value of the currency, while a dependable currency is a necessary condition for a strong, dynamic, prosperous economy.

Right now, the Fed is buying $120 billion a month with made-up money.  At the same time, Washington’s deficits are out of control, and yet it has another $1.9 trillion stimulus package on the drawing boards

We have shared the following chart before.  It shows Fed assets, the total amount of things like government bonds that the Fed purchased with money it just conjured electronically out of nothing.  We still call it money printing because that is how it was all done not so long ago.

On the day Bernanke was put in charge of the Federal Reserve, on February 1, 2006, its assets had been fairly stable, growing slowly.  They totaled $832 billion.   Think about that.   At that moment, the Fed had been in existence for 93 years, after all of which its assets were less than $900 billion.  Now, just 16 short years later, its assets have exploded to $7.590 trillion!  

Under Bernanke, Yellen, and Powell, the Fed’s assets have grown more than 800 percent.

That is a lot of money printing.

Today the Fed is purchasing $120 billion of bonds a month (by printing the money, needless to say).  This is intended to keep interest rates down.  

But it is not working.  Interest rates are moving up.  Last August the yield on the US 10 year treasury was 0.52 percent.  A week ago, it reached 1.54 percent.  It climbed a full percent in six months.  How much more money-printing, asset purchases must the Fed implement to keep interest rates from rising?

No one knows.  But the Fed can’t let rates rise for long.  The cost of a two percent increase on outstanding US debt, now $28 trillion, is $56o billion a year.  

Besides the inescapable fact is that the more money the Fed prints, the higher rates will eventually go.  Because eventually investors will demand an interest rate premium over the rate of inflation.  So, the more the Fed prints to keep rates down, the less the dollar will be worth.  And the higher rates will go, compounding the debt beyond comprehension.

All of this is implicit and inevitable in what these Fed chairmen have done.  Imagine, all that expensive education, graduate schooling, and fancy degrees, and they know less than nothing about what they have done.

Buy gold and get the heck out of the way of Larry, Moe, and Curly’s train wreck.

Here is an illustration from a Wall Street Journal opinion piece by John Greenwood and Steve H. Hanke (2/21/21) called “The Money Boom Is Already Here.”

It shows Washington pumping a lot of money into the canyons of Wall Street.  The sub-headline reads, “Since February 2020, the M2 supply has increased 26%—the largest one-year jump since 1943.”

We are glad the nation’s largest financial paper finally took notice of the money bubble.  We have been writing about the growth of the money supply pretty much continuously, including:  

A GIFT TO INVESTORS 2021-2-20

GOLD ALWAYS WINS IN THE END!  2021-2-9 

23.6 PERCENT OF ALL US DOLLARS WERE CREATED IN THE LAST YEAR!  2020-10-18

THE NEW STAGFLATION DECADE!  2020-9-13

There have been many others.  Here is a chart we published earlier this month showing the way gold tracks the increasing money supply.

We commented, “If appears now that gold has some catching up to do.”

Greenwood and Hanke write, “Speculative manias are in the air, as evidenced by the recent price surges for bitcoin, a digital asset with a fundamental value of zero, and GameStop, a declining retailer. Along with the other economic trends—a strong recovery, surging commodity prices and an uptick in inflation—those asset bubbles have a clear cause: the massive expansion of money and credit.

“Yet America’s fiscal and monetary masters are turning a blind eye…

“The looming danger for the economy isn’t only that the monetary printing presses have been in overdrive since the pandemic began, but also that they are already set for the same in 2021. A monetary surge for this year is locked in…

So we already know that the money supply will likely increase by at least another $2.3 trillion over the current year. In other words, even without any new lending or further purchases of securities by banks, the M2 money supply will grow by nearly 12% this year. That’s twice as fast as its average growth rate from 2000-19. It’s a rate that spells trouble—inflation trouble.”

The great economist Ludwig von Mises had an evocative name for the end stages of what Greenwood and Hanke call “the money boom.”

He called it ‘The Crack-Up Boom.”

“But then finally the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against ‘real’ goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

“It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German Mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last.”

Do not wait for the Crack-Up Boom to appear to start buying gold and silver.  Take steps to protect yourself and your hard-earned wealth today before it is too late.

Michael Burry, made famous in the movie about the bursting of the mortgage bubble The Big Short, has gone on a tweetstorm warning about looming US inflation.

Burry, who was played by Christian Bale in the movie, made himself and the investors in his fund hundreds of millions of dollars by shorting mortgage credit instruments.  In his new warnings about inflation, Burry is not talking about just a little inflation.  Between Modern Monetary Theory policies, unconstrained debt, and money supply growth, Burry is citing the precedent of the historic Weimar Republic hyper-inflation the brought Germany low a hundred years ago.

The evidence for the return of inflation is all about us.  Just days ago, we reported on the big jump in the Producer Price Index and that food prices climbed 3.9 percent higher last year.  

We also reported recently on the rising prices of building supplies here.

We have written repeatedly about Stephen Roach’s crucial warning of the collapse of the dollar’s value.

But now other news on the price inflation front is coming so fast and from so many places that it will soon be hard to keep up.

Shipping and trucking rates are soaring.  New and used vehicle prices are climbing. Gas prices are up almost 25 percent in just the last few months.  (Biden will eventually pay a political price for halting construction of the Keystone XL oil pipeline.)

Import prices are reflecting the dollar’s weakness.  Import prices rose 1 percent in December and 1.4 percent in January.  

This week a Wall Street Journal piece confronted the fact that the Federal Reserve’s inflation metrics underreport asset inflation and housing inflation.  

For example, the following graphic shows the “owner’s equivalent rent” metric that is used in calculating the housing component of the Consumer Price Index, compared to the Case-Shiller index of national home prices, which has turned sharply higher.

We think Michael Burry is right again.  Each new federal budget, each deficit dollar spent, each act of liquidity injection and stimulus by the Fed is another step in the devaluation of the dollar.  The US dollar is “the big short” of our age.

Let us help you protect yourself and profit from looming price inflation.  Owning gold (and silver) is the easiest and safest way that we know of being short the dollar.

If there was not a problem with paper money, there would be no reason to own gold and silver.

If paper money was as good as gold and silver, then all the paper currencies that have failed throughout history would still be around.  

Still around like gold and silver.

Once again, we are experiencing some troubling conditions in the precious metals markets.  It is not the first time.  Once again, many dealers find themselves without supplies to deliver to their clients.  

We saw the same kind of conditions last year at the beginning of the COVID-19 pandemic.  

And it will not be the last time.  We will see problems like this again.  That is because they reflect real problems in the economy.

So, what is going on?  Once again, we are seeing shortages of real silver.

Shortages of physical silver products, coins and bullion, are a replay of the shortages that occurred last year.  

The United States Mint said just weeks ago that it was unable to meet surging demand for its gold and silver bullion coins due partly to pandemic-driven demand and plant capacity issues.

The price of real silver and paper silver substitutes have diverged.  The paper price is one thing, but you cannot get real silver at that paper silver price.  

You can only get paper promises, while the premiums on real silver have risen.

So, while the US Mint cannot meet demand, some dealers are taking money and promising delivery sometime, somewhere down the road.

They say pay them now, but it will be weeks before they can come up with your silver.  

That is a bad idea!  Do not do that!

Once again at Republic Monetary Exchange, we have foreseen this situation.  

We have real silver for immediate delivery.  On the spot.  

If paper money held its value like gold and silver, we would not be having these problems.  That is why we recommend you take today’s market conditions as a warning to make sure you have an adequate position in precious metals.

Q:  What’s that on the horizon?

A:  It sure looks like consumer price inflation.  But go to the grocery store and have a look for yourself.

Here is the lead paragraph from a Bloomberg News story this week (2/16): “There are signs that the food inflation that’s gripped the world over the past year, raising prices of everything from shredded cheese to peanut butter, is about to get worse.”

We have spent more time than we should explaining that inflation describes a behavior by the monetary authorities that debauches the value of currency over time.  Just last week we commented on it this way:

“But just because the price of bread is not going through the roof today, don’t let the mainstream media or politicians tell you that there is no inflation or that the currency isn’t suffering devaluation.  That is because sustained price increases in any of those other places throughout the economy [dot com stocks in the 90s, housing prices in the early years of the 2000s, and stock and bond prices today] reflect state meddling or corruption of the supply of money and credit.” 

“… Eventually the debauching of the money will show up in the price of bread… and in the price of everything else.”  (See Gold Always Wins in the End!)

We didn’t have to wait long to see rising food prices hit the news.  The Bloomberg headline shouts, “The World Will Pay More for Meat as Food Inflation Deepens!”

It explains, “Now farmers — especially ones raising cattle, hogs and poultry — are getting squeezed by the highest corn and soybean prices in seven years. It’s lifted the costs of feeding their herds by 30% or more. To stay profitable, producers including Tyson Foods Inc. are increasing prices, which will ripple through supply chains and show up in the coming months as higher price tags for beef, pork and chicken around the world.”

It is really time to start making a paradigm shift in our thinking and language.  Buckminster Fuller thought it would make a big change in our understanding of things if, as we watched the breaking of dawn in the morning, we would realize that the rotation of the earth on its axis is actually turning the spot on which we stand toward the sun.

We don’t actually know what the impact of Fuller’s suggestion would have on people’s thinking about things, but we do know it would be true.  By the same token, people should realize that as the price of gold goes up, they are actually seeing the purchasing power of the dollar go down.

If people began to think in that way, they would soon realize that governments far and wide, and throughout time destroy their currencies.  That is why people who know this turn to gold and silver for protection.

The politicians can’t print precious metals.

If you visit the grocery store and discover food prices seem to be rising, contact a Republic Monetary Exchange professional right away and take steps to protect yourself with gold and silver.  

Because the value of the dollar is going down.

…Gold Goes Up!

We have been asking our friends and clients recently if they have invested for the Biden presidency.  In our new radio commercials, we point out that Biden and his supporters want the government to pay for everything.

Everything!

Now, we don’t want you to think we are exaggerating, so here’s the latest:  Senate Majority Leader Chuck Schumer and congresswoman Alexandria Ocasio-Cortez have announced a federal package to fund funeral benefits for those who die with or of COVID-19.  

$267 million will go to New Yorkers alone.

People die from a lot of causes.  Some have even died from the effects of the government’s lockdown.  Schumer and AOC have not moved to pay for their funeral expenses.

But let us be clear.  The government is not paying for those funerals.  Biden and his team are reaching into some people’s pockets to give money to other people, and then acting like the government is paying for it all.  But of course, the government has no money of its own.  Everything it spends it must first take from someone.

When people become convinced by politicians like Biden, Schumer, and AOC that they can have something for nothing, their demands become endless.

So, the politicians have money printed and the currency destroyed to further the illusion that they themselves are giving free stuff to everybody.

That is why we are asking if you have invested for the Biden years.  Free stuff for everybody, even free funerals, is the name of the game.

The Fed printed three trillion dollars last year.  That was under Trump, a conservative.

Imagine what it will do now under Biden.

Gold was up about 25 percent last year under Trump.  Imagine what it can do under Biden.

Silver was up 48 percent last year.

Imagine what it can do in the Biden-Harris years.

If you have not yet invested for the “free stuff for everybody” Biden years, , speak with us today.  We help people protect themselves and profit with gold and silver.

Republic Monetary Exchange “Best Practices” Mean Immediate Delivery!

A Reuters news story sums it all up this way: “The United States Mint said on Tuesday (2/2/21) it was unable to meet surging demand for its gold and silver bullion coins in 2020 and through January, due partly to pandemic-driven demand and plant capacity issues.”

As the US government’s spending plans go unchecked and as the Federal Reserve continues to pump unbacked money into the economy at a frenzied pace, more Americans are seeking the protection gold and silver offer.  Last year sales of US gold bullion coins rose an astonishing 258 percent.  US silver bullion coin sales climbed 28 percent in 2020.

The blistering pace continues in 2021.  In January, American G0ld Eagle sales were 290 percent higher than the same month a year earlier.  

Heavy buying – what the Mint calls “continued exceptional market demand” – is only one part of the Mint’s difficulty.  Covid-19 restrictions have impeded supply chains as well.  

The Mint is also redesigning US bullion coins for release this summer.  Its intent to have supplies of the new coins for the launch will also impinge on the production of bullion coins between now and then.

Shortages of physical silver products, coins and bullion, are a replay of the shortages that occurred last year with the COVID-19 shutdown.  Once again, many dealers find themselves without supplies to deliver to their clients.  

Just as Republic Monetary Exchange distinguished itself last year by continuing to make immediate delivery while others could only offer long delays, we again continue to make immediate delivery of precious metals to our clients despite the Mint’s struggles and even in the face of the potential silver squeeze the developed in conjunction with the Redditt/GameStop saga.

Here at Republic Monetary Exchange, we always recommend best practices for our clients.  We do not think clients should be sending money to boiler room operators far away who cannot make immediate delivery.  Avoid the needless risk of placing and paying for orders elsewhere with dealers that are asking for advance payment and then promising delivery at some uncertain date in the future.  

We have gold and silver in inventory.   

You can buy today and take delivery today!  Isn’t that the way business should be done?  Protect your wealth in these times of economic upheaval.  Contact us today!

“At some point someone is going to make the obvious observation, which is that income inequality, which is making our country unstable, is being driven from one main source.  And that is the Federal Reserve, which is shoveling money to Wall Street, excluding most people from that payoff, and hurting a lot of people like savers in the process.

“Maybe we’ll have that conversation at some point.  Hopefully soon.”

We couldn’t have said it better ourselves, although we have said the same thing many times.  But those were the words of Fox News host Tucker Carlson on his show Monday evening (2/1/21). Carlson was wrapping up a segment on the GameStop Saga in which he commented on the concentration of wealth in this country, something that is inherently unstable in any country, and could not happen but for the monetary distortions authored by the central bank.

It is not the first time in recent weeks that Carlson has pointed to the Federal Reserve behind the curtain of American economic disarray.  We hope he continues, and we hereby entitle him to use the reporting and analysis on our blog in his research.

Hedge fund billionaire Paul Singer commented on the Fed’s role in America’s growing inequality, recently as well, referring especially after its massive monetary intervention in the mortgage meltdown:

“I think the central banks came to enjoy their role of being Samson holding up the global financial system and economy. And they weren’t punished by consumer price inflation, they didn’t understand that this asset price inflation, which had a secondary or tertiary positive effect on growth and employment. But they didn’t understand that was a form of inflation, that that’s where the free money and the money printing went. And so they didn’t at all take into account that they were exacerbating the inequality that became a populist political theme.”

Speaking of income inequality, here’s a peek at what the leading banana republics are doing these days.  Venezuela leads the pack in currency destruction, with an annual rate of 1,945 percent.  

How do the money printing policies of banana republic central banks differ from our own?   The answer to that question is a persuasive reason to protect yourself and your family with gold and silver.  

A Republic Monetary Exchange professional can provide you with valuable guidance.

Suppose a hundred years ago some far-sighted benefactor, someone a few generations back, wanted to leave some wealth for their descendants – including you.  Would you be better off if they left you $10,000 cash in bills or $10,000 in gold?

A hundred years ago American money was gold. Americans commonly carried and conducted commerce in $20 gold pieces.  They were the coins of the realm.  But if you thought carrying them around – especially in great quantities – was inconvenient, you could use paper money.  A US $20 note issued by the Treasury was just a claim check, or a warehouse receipt for gold.  If you wanted to, you could walk into any bank or go to the Treasury and exchange that paper $20 note for real gold.  No questions asked.

So your benefactor would have had a choice.  Which would you have wanted then to leave, paper or gold?

You probably don’t have to think about it too hard.  The US dollar has lost about 95 percent of its purchasing power since 1921.  (Someone naïve argued about that with us once.  “That’s impossible,” he said.  But figure it out for yourself.  If inflation reduces the purchasing power of the dollar by just two percent this year, and three percent the year before… add in more than a few years of double-digit inflation along the way, and soon you will find that the loss of purchasing power really adds up!)

As for the $20 gold piece, it contained just a little less than an ounce of gold, .9675 ounces to be exact.  Based on a recent gold price of $1,840, just the gold content of a $20 gold piece would be $1,780 ($1,840 x .9675 = $1,780).

So the price of gold has increased 89 times!  Think about that in percentage terms.  Your gold has increased 8,900 percent!  An average of 89 percent a year!

(The story is even better than that because, thanks to their rarity, desirability, and for other reasons, investors and collectors prize those beautiful coins beyond just their gold content.  Ask your Republic Monetary Exchange gold and silver professional about this.)

As for the paper money?  Well, it lost most of its purchasing power.  That is the common fate of unbacked paper money throughout time.

So by now, even if you had never thought about our question before, you will have doubtlessly concluded that you would have wanted your would-be benefactor a hundred years ago to leave you real gold instead of paper money.  

Our story says something about real money and wealth preservation in this day and age. 

But it is only part of the story of wealth preservation.  In our next post we will fill in the rest of the story with details about the durability of gold and silver through long ages.  And we will tell you a story about the recent discovery of a treasure of gold and silver from 900 years ago. 

Don’t miss TALK ABOUT WEALTH PRESERVATION!  Part II.

Is Silver the New Oil?

Silver was up 48 percent last year.  

Now leading refineries and banks in Switzerland are telling their clients to expect even greater silver price increases by the end of 2021.

Perhaps they are expecting four years of the most financially irresponsible administration in US history.

That is just one of the reasons we are recommending you buy silver now, too.  

But there is another reason.  Some people have begun calling silver “the new oil.”

It is not hard to understand why.  Silver is a vital component of the burgeoning solar energy industry.  

With the government tilting toward renewable energy with more stimulus spending and tax credits, demand for silver will grow stronger than ever.

Citing growing green energy demand, Saxo Bank, the Danish investment bank, is predicting silver will climb to $50 this year: “Turbocharging the rise in the silver price in 2021 is the rapidly rising demand for silver in industrial applications, especially use in photovoltaic cells used in solar panel production. In fact, a real silver supply crunch is in the cards in 2021, and it frustrates the full-throttle political support for solar energy investments under a Biden presidency, the European Green Deal, and China’s 2060 carbon-neutral goal, among other initiatives.”   

Others in Europe calling for the sharply higher silver prices this year include the major Swiss precious metals refinery and fabricator MKS PAMP Group, which expects silver to reach $40 an ounce this year, and the German bank group Degussa.  It is calling for silver to rocket to $47 an ounce this year.

Would you like to know more about silver for wealth preservation in times of governmental financial recklessness?  Are you interested in profit opportunities in silver with the growing demand for solar energy?  If so, contact a Republic Monetary Exchange precious metals professional today.

Poor Joe Biden.  Democrats in control of both Houses of Congress.  Janet Yellen at the Treasury Department.  Jerome Powell at the head of the Federal Reserve.

Biden has a retinue of “doom-loopers”.  And he doesn’t even know it.  

Doom-looper Yellen testified at her confirmation hearing this week (1/19) that low-interest rates make Biden’s big spending plans affordable.  Along the way, Yellen made a perfunctory comment about the need for federal debt to be put on a “sustainable” path – eventually.  They all say that: “Eventually.”  But of course, like “someday,” “eventually,” never comes.

More needs to be said about this.  Those low-interest rates that Yellen says excuse Poor Joe’s astonishing spending plans, come at the expense of more money printing, which, as a former Fed head herself, Yellen knows so well.  As the doom-loopers use low rates as an excuse for more debt, the debt level swells to the point that it becomes completely unmanageable when interest rates do rise.

In other words, the doom-loopers will eventually discover that interest rates cannot be allowed to rise.  Their doom-loop is a trap of their own making.  They must try to keep a lid on rates in perpetuity, else the government will crack up on the reefs of bankruptcy when rates do normalize.

But keeping a lid on rates requires ever-new levels of money-printing.  Which in turn erodes the future value of the dollar.  This means lenders will require a premium on interest rates to offset the ongoing devaluation caused by money printing.  

And of course, to complete our description of the doom-loop, servicing that premium will require still more money printing.  Which further devalues… well, you get it.  There is no way out.

That’s why Yellen should be the iconic face of the doom-loopers.  

David Stockman describes the tenure that earned Yellen $2.3 million in speaking fees from places like Citibank:  

 “Yellen’s turn at the helm of the Fed between January 2014 and January 2018 resulted in an especially egregious descent into negative real money market rates and therefore a bonanza for Wall Street speculators and carry-traders. That’s because her four-year term occurred during month #55 through month # 103 of the longest business expansion in history.”

“That interval is by all reckoning the sweet spot of the business cycle, meaning that if there was ever a time to dispense with heavy-handed monetary “stimulus” and allow honest price discovery to operate on Wall Street and interest rates to normalize, that was the time.”

Yet what did Yellen do given that opportunity of prolonged growth?  Did she take steps to tame the money-printing impulse?

Stockman:

 “She did not. Unaccountably, the Yellen Fed marched in just the opposite direction. Upon taking office in January 2014, the Fed’s balance sheet stood at $4.071 trillion, but Yellen kept the printing presses running red hot, driving the Fed’s balance sheet to $4.5 trillion by June 2015….

“That’s right. By month #103 of the longest business expansion in American history, this Keynesian deus ex Machina had expanded the Fed’s balance sheet by another 9% from massively bloated level Bernanke had left behind.”

Somebody once said that gold is capital on strike.  This is the moment to choose not to be victimized by the doom-loopers in charge of our economic future.  All we can say is get out of the way of their destructive policies!

Ready for the New Breed of Spenders?

Washington has seen its share of big spenders.  Bush and Obama were among them.  Trump was an even bigger spender.  

But now, Washington is home to the biggest spenders of them all.

Even before Biden’s inauguration, his Treasury secretary nominee appeared before the Senate for confirmation.  Janet Yellen uttered these words:

“Go big.”

The people on Capitol Hill who should be keeping a brake on government spending have been missing in action for years.  So now, when the biggest spenders ever show up muttering “go big,” the brakes are off entirely.  

Before the current fiscal year got under way, the Congressional Budget Office estimated that the deficit would total $1.8 trillion.  That was in September.  Now, just a few months later the Committee for a Responsible Federal Budget estimates that it will total $2.3 trillion.  

But the new bunch still intends to “go big.”

Going big means that even that $2.3 trillion guesstimate is low.  We think the river of red ink will overflow the banks of last year’s $3.1 trillion deficit.  

That means the national debt will be well over $30 trillion dollars.  And that will happen just as foreigners are backing away from funding Uncle Sam’s debt habit.

Consider:  After seven years of negotiations, China and the European Union have just announced a new “comprehensive” agreement on investment.  The deal comes just as China has become the EU’s largest trading partner, surpassing EU trade with the US.  

One thing is clear, with increasing EU-China trade and investment, there will be less demand for the US dollar as a middleman.  That redundancy will strike right at the heart of the dollar’s reserve currency role.  And that means a lower dollar and higher gold. 

Still, no matter the dollar’s fate, the Biden-Harris bunch plan to be the biggest spenders ever.  How will they manage to do so?  By turning to the crackpot Modern Monetary Theory being pushed by persons of considerable influence with the Biden-Harris bunch.  (We’re looking at you Alexandria Ocasio-Cortez and Elizabeth Warren.) 

We’ve written about MMT before (see MMT and Helicopter Money) and are afraid that now, as it becomes a fact of our economic life, we’ll be writing about it again soon.

But for now, buy gold and silver to protect yourself from the madness of the biggest spenders ever.  

And go big!

Did the authorities really think they could throw $3 trillion more into the US monetary mix without causing price increases?

No, they didn’t think that.  Mostly they didn’t think at all.  They just did it.  And because they are preparing to do even more of the same, you can expect 2021 to be the year that consumer price inflation raised its ugly head.

Here is just some of the evidence:

Prices are climbing fast at the level of raw commodities.  Corn, soybeans, and wheat are at the highest prices in years:

And now prices are beginning to climb at the retail food level:

Food prices climbed 3.9 percent in 2020.  That is twice as fast that the Fed’s nonsensical inflation target.  But take heart: higher food prices will only hurt people who eat.

If you don’t eat, you won’t notice a thing.

But it is not just food.  Cotton prices are at highs that have not been seen in several years.  Major appliances were up about 17 percent last year; used cars and trucks up 10 percent; the cost of elder care rose 7.5 percent.

The Federal Reserve’s latest “Beige Book,” a regularly scheduled report on economic conditions in the Fed’s 12 regions of the country. was released Wednesday (1/13).  Upon review, economist Robert Wenzel says “there is a strong current of increasing prices” across the country.

Sure, airfare, hotel rates, and the cost of business attire are all lower.  But only because the lockdown has decimated the customers for each.

But be aware that more stimulus spending is coming, which will further raise prices.

Meanwhile, Fed officials far and wide and starting to talk about raising their inflation targets.  They are bound to lose control along the way.  A number of observers are pointing out the Fed “may not be able to control how fast the dollar inflates, so we could jump from inflation to hyperinflation overnight.”   That is correct; a thin line divides the two.  The Fed is always behind the curve.  Long before the results of one round of money-printing have worked their way into consumer prices, the Fed will have already launched another round.

We recommend you review your portfolio today with a Republic Monetary Exchange precious metals professional.  You will be glad you did.

So far, the gold and silver bull market that began by our reckoning in August 2018 has been fairly typical.   

Don’t misunderstand!  We’re saying it has been typical for a powerful bull market!  The move so far has been most impressive.  Gold is up almost $700 an ounce since the bull started running.  In fact, gold appreciated almost 25 percent last year.  Silver did even better, racing up 48 percent in 2020, outperforming US stocks by three times.

It will continue to march much higher with every turn of the Fed’s printing press and every new federal budget.

But eventually, at some time in the not too far-off future, the price of gold (and silver) will go parabolic.  The gold chart will resemble a hockey stick.  It will hit an inflection point and turn straight up. 

That will be the end-game for the dollar in its present incarnation.  It will be game over for unbacked paper or digital government money issued without restraint by anyone, anywhere.  What the authorities will do to attempt to prolong the game or replace it remains to be seen.  But the prices of gold and silver – and other real things – will reflect the valuelessness of the paper money.

This calamity will be world-wide.  There has never been an event like this on a global scale.  When dollar inflation reached double-digits in the late 1970’s it was costly for other countries that held dollar reserves.  The dollar was, as Nixon’s Treasury secretary John Connelly said to foreign finance ministers back in the day, “The dollar is our currency, but it’s your problem.”

But remember, that back then China and Russia were not even in the game.  China was a closed economy, Russia was as well, although less so.  The euro did not even exist back then.  If the dollar was being debauched, there were other currencies that were not.  Although the Swiss franc had gotten into bed with the dollar with the Bretton Woods agreement in 1945, it maintained a statuary tie to gold until 1999.

That is not the case today.  All the major currency nations are printing money, just like the Fed.  This chart from Bloomberg News illustrates how much money the US, Japan, Great Britain, and Europe are printing compared to their GDP.  Over the last year, their assets – financial instruments they purcased with money they conjured out of nothing —  have grown to more than half of their productivity.

When the dollar breaks down, when foreigners quit funding US government debt, no one will find refuge in euros, pounds, or yen.  Or in yuan.

The rush to gold that ensues will be reflected in the hockey stick gold chart.

By then it will be too late for most people to do anything about it.  The window of opportunity that is open today will have closed.

By the way, that day is approaching quickly.  Sometime in the days to come we will write about the signs that inflation has now begun rearing its ugly head.  And that the line between low and nuisance levels of inflation and crippling inflation is a very thin one indeed.

In the meantime, let a Republic Monetary Exchange gold and silver professional advise you about steps to take to protect yourself.

Calling Jeremy Grantham an expert on stock market bubbles is justified by the evidence.  

Wikipedia describes Grantham, whose firm has some $64 billion under management, this way:

[Grantham] is a British investor and co-founder and chief investment strategist of Grantham, Mayo, & van Otterloo (GMO), a Boston-based asset management firm. Grantham is regarded as a highly knowledgeable investor in various stock, bond, and commodity markets, and is particularly noted for his prediction of various bubbles. He has been a vocal critic of various governmental responses to the Global Financial Crisis from 2007 to 2010. Grantham started one of the world’s first index funds in the early 1970s….

Grantham has built much of his investing reputation over his long career by claiming to identify speculative market “bubbles” as they were unfolding. Grantham claims to have mostly avoided investing in Japanese equities and real estate in the late eighties, as well as technology stocks during the Internet bubble in the late nineties.

For our friends and clients with exposure to the stock market during this period driven by unprecedented money-printing and deficit-financed government spending, we offer a few key observations from Grantham’s January 5 client letter “WAITING FOR THE LAST DANCE”:

“The long, long bull market since 2009 has finally matured into a fully-fledged epic bubble. Featuring extreme overvaluation, explosive price increases, frenzied issuance, and hysterically speculative investor behavior, I believe this event will be recorded as one of the great bubbles of financial history, right along with the South Sea bubble, 1929, and 2000.

“These great bubbles are where fortunes are made and lost… every fault of individual human psychology will work toward sucking investors in.

“But this bubble will burst in due time, no matter how hard the Fed tries to support it, with consequent damaging effects on the economy and on portfolios. Make no mistake – for the majority of investors today, this could very well be the most important event of your investing lives….

“The single most dependable feature of the late stages of the great bubbles of history has been really crazy investor behavior, especially on the part of individuals. For the first 10 years of this bull market, which is the longest in history, we lacked such wild speculation. But now we have it. In record amounts…. As a Model 3 owner, my personal favorite Tesla tidbit is that its market cap, now over $600 billion, amounts to over $1.25 million per car sold each year versus $9,000 per car for GM. What has 1929 got to equal that? Any of these tidbits could perhaps be dismissed as isolated cases (trust me: they are not), but big-picture metrics look even worse.”

Grantham’s observation that “this bubble will burst in due time, no matter how hard the Fed tries to support it” reminds us of the old market aphorism that “nobody is bigger than the market.”  That includes the Fed, as the popping of its bubbles again and again attest.  

It there was ever a time to realize gains in the stock market and move them to the safety of gold and silver, now, with the government in complete disarray, with the American people divided in a way not seen in a century, and with monetary and fiscal policy stretched beyond belief, is such a time.

Speak with a Republic Monetary Exchange gold and silver professional today and learn how to protect your wealth, your retirement, and your family with precious metals.

The US Mint reports that sales of its gold and silver coins surged in 2020.  

Despite mint shutdowns and slowdowns in 2020 – and perhaps because of the economic shutdown and the monetary policies that followed – US mint bullion coin sales rose to the highest levels in years.

Sales of American Eagle silver coins jumped to 30,089,500 ounces in 2020.  That is more than double 2019’s total when Silver Eagles sales reached 14,863,500 ounces.

American Eagles gold coin sales experienced an impressive surge in the year gone by as well.  The 2020 total was more than five times higher than the year before.  Total sales of the American Eagle gold series coins — 1 ounce; 1/2 ounce; 1/4 ounces; and 1/10 oz. coins – reached 844,000 ounces.  In 2019 sales totaled only 152,000 ounces, the lowest annual total since the American Eagle coinage began in 1986.

American Buffalo gold coins were introduced in 2006.  2020 Buffalo sales of 242,000 showed an increase of almost four times over the 2019 total of 61,500 ounces.  

With the Coronavirus shutdowns beginning in March, gold mines around the world stopped operations as did refineries in Switzerland.  The San Francisco US Mint closed in February.  Then the US Mint at West Point, a key production facility for US bullion coins, shut down temporarily in April.

Around the world and across the US, just as demand was peaking, many gold and silver dealers found themselves unable to make delivery to their clients at any price.  Some dealers asked buyers wait 8 – 12 weeks to get their hands on real gold and silver.  

Under these conditions, the Wall Street Journal even coined a new term for gold, calling in “unobtanium.”  

But that description did not apply to Republic Monetary Exchange.  Even as the economy went into free-fall, when mines stopped mining and mints stopped minting, we continued to make immediate delivery to our clients.  

Avoid the needless risk of placing and paying for orders elsewhere with dealers that are asking for advance payment and then promising delivery at some uncertain date in the future.  

Republic Monetary Exchange subscribes to best practices to meet your gold and silver needs today, providing immediate delivery.  

Learn more about American Eagle Gold coins from Republic Monetary Exchange HERE, and about American Eagle Silver Coins HERE.

Ten Things That Won’t Happen in 2021!

Below are out predictions for the New Year.  Read all ten 2021 predictions and at the end you’ll discover a little surprise about our list!

10. 
The Federal Reserve won’t stop managing the monetary system to benefit the banks that created it to serve their interests in the first place.

9. 
Foreign central banks won’t increase their dollar holdings, although they will increase their gold holdings.

8. 
Congress won’t reduce federal spending; it won’t stop creating trillion-dollar deficits; and it won’t make a serious attempt to reduce the $27.5 trillion debt.

7.  
The Washington establishment won’t hold most of its members to the same legal standards that it applies to the ordinary people.

6. 
Washington Republicans and Democrats won’t stop trying to divide the people to win elections.  They will, however, concentrate their attention on smaller divisive issues while the fundamental issues of America’s freedom and prosperity go unaddressed.  

5. 
The establishment’s lapdog press won’t bother to report accurately on the fate of the dollar.  Nor will their reporting on gold be accurate.

4. 
The establishment lapdog press won’t blame the nation’s monetary problems on the Federal Reserve and the nation’s money manipulators.  It will blame the people instead.   

3. 
While Washington may commission a study, launch a new bureau, or even appoint a bureaucrat, nothing meaningful will be done about the declining lifespan of the American people. 

2. 
Monetary and fiscal policy won’t stop shrinking the American middle class.

1. 
In a crisis, you won’t see people standing in line to exchange their gold for paper money like dollars.  It’s always the other way around.

Now here is the surprise…. 

These are the exact same predictions we made last year, at the beginning of 2020.  And the year before that, at the beginning of 2019!  

Well, actually, they aren’t exactly the same.  We have to make a change every year to number 8.  We had to change the national debt to $27.5  trillion.  Last year it was $23 trillion.  This proves the point of the prediction, that Washington won’t stop creating trillion-dollar deficits!

Because these predictions have worked out so well, we dusted them off to re-issue them for 2021.  How accurate do you think these predications will be when we look back on them next year?  

In the meantime, all we can say is to own gold, and have a Happy and Prosperous New Year!

Here are a few observations about gold and silver that we have been collecting to share with our friends and clients!

Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary but is dependent on their scarcity, the quantity of labor bestowed in procuring them, and the value of the capital employed in the mines which produce them.

• David Ricardo, British political economist (1772-1823)

A U.S. dollar is an I.O.U. from the Federal Reserve Bank. It’s not backed by gold or silver. It’s a promissory note that doesn’t actually promise anything. 

— P.J. O’Rourke

Ask anyone in Germany what they associate with gold and, more often than not, they will say that it is synonymous with enduring value and economic prosperity. Ask us at the Bundesbank what our gold holdings mean for us and we will tell you that, first and foremost, they make up a very large share of Germany’s reserve assets … [and they] are a major anchor underpinning confidence in the intrinsic value of the Bundesbank’s balance sheet.”

• Jens Wiedmann, President, Bundesbank

I grew up in a purely urban family. We had no relatives in the country. I’m born in 1944. When I was a baby, my mother could only buy food because she still had some gold coins. Without gold, I would have starved. She always told me that. Therefore, this generation already has a certain gold affinity. In extreme times of crisis, this is one of the few things left to be accepted. Gold was the only thing left to the people of the city at that time. Before the silver cutlery was also traded at the farmer.

• Ewald Nowotny, Former European Central Bank governor

The gold standard makes the determination of money’s purchasing power independent of the changing ambitions and doctrines of political parties and pressure groups. This is not a defect of the gold standard; it is its main excellence.

• Ludwig von Mises

With the exception only of the period of the gold standard, practically all governments of history have used their exclusive power to issue money to defraud and plunder the people.

—F. A. Hayek

Gold still represents the ultimate form of payment in the world. Fiat money in extremis is accepted by nobody. Gold is always accepted.

• Alan Greenspan

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves money from the public treasury. From that moment on the majority always votes for the candidates promising the most money from the public treasury, with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world’s great civilizations has been two hundred years. These nations have progressed through the following sequence: from bondage to spiritual faith, from spiritual faith to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency from complacency to apathy, from apathy to dependency, from dependency back to bondage.

– Alexander Tyler, 18th century historian and jurist

And finally, one more chart about 2020:

This time of year, many of our thoughts center on family.    

For wealth protection, from generation to generation, nothing endures like gold.  In fact, someone called gold and silver “the superheroes of wealth preservation.”

Gold is one of the least reactive chemical elements;  it does not tarnish or rust.  It is handy to think of that as a metaphor for the fact the gold’s core value is impervious to corruption by the actions of its issuer.  The value of an ounce of gold is not dependent on whose picture or name is inscribed on it.  Nor does it depend on any government; governments come and go, but the value of gold persists.

If you had your choice of putting some government’s paper money in a box under the Christmas tree, or gold, to pass along to your children and grandchildren, you would be wise to choose gold.  

Gold ownership has traditionally been prized as a means of passing wealth along in families, in discreet, private ways.  

It is the only financial asset that is not someone else’s liability, not dependent on someone else’s promises.  

Gold’s special virtues has been recognized around the world and throughout the centuries.  So honored is gold that the wise men who followed a star made it among their gifts to a child born in a stable more than 2,000 years ago.

So this time of year, while so many of our thoughts center on family, choose to protect your family and all that you’ve worked for.  Find out why gold is the money of the ages, and why it makes a perfect gift for family members and loved ones.  

Speak with an RME Gold specialist right away.

And Merry Christmas from all of us at Republic Monetary Exchange!

We have written repeatedly that we are fast approaching a crisis of not just liquidity, but of national solvency.

Liquidity has to do with somehow – by means wise or foolish – meeting obligations that come due today.

Solvency has to do with ongoing financial viability, about long-term viability of affairs as presently structured.

Bankruptcy is a term used when a court declares an entity insolvent.

While we don’t mind being in a distinct minority saying something if it is true, we are glad to see the Bank for International Settlements (BIS) in Basel, Switzerland has joined us in seeing that today’s risks are not just of liquidity, but of solvency.

To review a few of our prior comments on the subject, here’s one from June 2019 in a piece called The Way the World Works, in which we observed that media figures weren’t bothering to ask candidates vying for the office of President about our financial outlook:

“You would think that with $22 trillion in unpayable national debt (and unknown trillions more in promises the government has made to pay people for things in the future), candidates and news moderators would be deeply concerned about the ways and means of our national solvency and survival.  But not so!”

Note that back then, although only a year and a half ago, the national debt was “only” $22 trillion, $5 trillion less than it is today. 

We commented again that season on solvency in a piece called THE DEBT CEILING AND THE TICKING TIME BOMB:  

“The nation’s solvency takes a back seat to the real issue politicians care about on both sides of the aisle:  REELECTION!

“The net effect of another suspension or of a protracted fight ‘solved’ with new spending initiatives that are unpaid for, will be serious questions about US solvency in financial centers around the world.  Already foreign central banks are moving away from the dollar and to gold.

“New questions about US solvency cannot be comfortably answered.  In fact, the only real answer to how debt that comes due today can possibly be paid is by issuance new debt tomorrow.

“Or by printing more money of no intrinsic value.  

“That is why gold marches up in lockstep with the rising debt ceiling.”  

Earlier this year (New Faces in the Gold Spaces!), we noted that the Fed can meet immediate liquidity issues with money printing.  But that does nothing about solvency:

“More and more people are recognizing that the US is actually facing solvency issues.  For the time being, the Fed has been able to fill the budget gap with money-printing.  But there is a cost to that kind of legal counterfeiting, too.  

“It will show up before long in the value of the dollar and a reluctance by foreign nations to keep funding US debt.”

We have written as well recently of the same liquidity/solvency issues in large corporations, so-called “zombie companies,” that only survive thanks to creditors who are willing to let them increase and roll their debt forward, but that are not able to improve their prospects for survival.

It is a definition that fits the US government.  The Fed provides endless liquidity for now, but there is an end point to such money-printing.  When foreigners are no longer willing to fund our debt at current levels, interest rates will explode and the global dollar system as presently constituted will come to an end.

Now, in conjunction with its latest quarterly report, senior BIS official Claudio Borio announced, “”We are moving from the liquidity to the solvency phase of the crisis.” 

ZeeroHedge offers this translation of Borio’s remarks:  “It’s about to get much worse, only because central banks will ignore all the warnings, they will double down on the same failed policies, pushing leverage to even record-er highs, yields to even record-er lows, and sparking a propagation of zombies the likes of which have never before been seen.”

We can’t answer the question of why governments keep engaging in these Groundhog Day monetary policies generation after generation, or why people never seem to learn.  But we can say this:  As before, the key to protecting yourself in times like these is gold.

They have stepped on the gas!  The pedal is to the metal!  Central banks everywhere are scrambling to introduce their own digital currencies.

Oh, the power they’ll have to corral every financial transaction into major institutions.  To watch everything you do.  To instantly impose policies without debate.  To cram negative interest rates down your throat.  

By the way, negative interest rates don’t mean that you can borrow for less than zero.  They mean that you pay to keep your money in the bank.  And you can have no money that is not in a bank.

That’s what negative interest rates mean.

We have written a lot lately about central bank digital currencies, “the full-tilt crypto boogie,” calling it “an ominous development and one of our leading reasons to own gold and silver and get off the Fed’s confiscation and monetary devaluation grid.”  See more here, and here.

Now an article published by the Mises Institute take a closer look at this war on cash as it is being advanced by the Bank of International Settlements (usually described as “the central bankers’ central bank), and by the European Central Bank.

Kristoffer Mousten Hansen from the Institute for Economic Policy in  Leipzig, Germany writes in “Central Bank Digital Currencies and the War on (Physical) Cash,” that the new digital currencies “may arrive as early as next year.” 

He makes the point that while there is clear consumer demand for inexpensive and convenient digital transactions, “such services are plentifully provided by companies such as Visa, Mastercard, Paypal, banks, and so on and so forth. There is no reason to believe that central banks need to provide this service nor that they could do it better than private companies and banks, and it is simply a mistake to equate demand for such services with demand for a [central bank fiat digital] money.”

Hansen concludes that “helicopter money, restrictions on cash holding, and negative interest rates are all part of the bundle of desirable policies that can only—or most easily—be achieved with digital currencies fully controlled by the issuing central banks.”

“At the end of the day, central bank digital currencies are all about control, not meeting consumer demand,” he says.

The bottom line is this:  central bank digital currencies are not your friend.  They are designed to advantage of the state at the expense of the people.  They necessarily limit human freedom and choice.  As such they will retard economic growth and prosperity.

And they will drive people seeking an alternative to gold and silver.

Solar Demand Figures Large in Goldman Sachs Outlook

Goldman Sachs has renewed its call for silver to reach $30 an ounce in the next few months.  

That target represents a 25 percent near-term gain in the silver price.

Earlier this year Goldman set a price target of $30 for silver.  Silver touched $29.91 on August 7.  With the price having corrected to the $24 range, the investment bank has renewed the call, writing,  “Now, with silver at $24 per ounce, and a few potential upward solar surprises in the coming months, we reopen the trade.” 

Analyst Mikhail Sprogis, a Goldman Sachs vice president explains, “with global infrastructure stimulus tilting towards renewables, and solar in particular, silver stands out in the metals space as the obvious beneficiary. Solar investment accounts for around 18% of silver industrial demand or 10% of silver total demand.”

In a piece about green energy equities outperforming legacy energy equities, ZeroHedge responded Goldman Sachs with a headline that read, “Is Joe Biden About To Send Silver Soaring?”

Over the next three years, Goldman expects industrial demand for silver to climb by somewhere between two percent in its base case, to an impressive nine percent in its best case.

Details:

“Our Equity analysts’ base case is that global solar installations will increase by 50% between 2019 and 2023 as the greenification trend accelerates. Importantly, there are potential upsides even to this ambitious target. Former US Vice President Biden has proposed a plan which involves installing 500 million solar panels in the US alone over the next 5 years. Our Equity analysts estimate that this could boost installation of US capacity from 15 GW per year to 30 GW. This represents a boost of almost 15% to global solar installations. Importantly, our Chinese clean energy team see potential upside to Chinese solar panel installations in the new 5-year plan. In their view, Chinese installation could reach 93 GW per year vs the current figure of 50 GW. This would represent a 40% boost to global installations.”

Goldman acknowledges the investment demand remains in the driver’s seat for silver prices, which in our view will intensify in the Biden administration, along with government indebtedness and reckless monetary policies.  Nevertheless, we some merit in the observation we cited last month, that “silver is the new oil.”

“How did you go bankrupt?” Bill asked.

“Two ways,” Mike said. “Gradually and then suddenly.”

– Ernest Hemingway, The Sun Also Rises.

 The world is awash in debt.  Zombie corporations borrowing just enough to stay alive, but never earning enough to survive without borrowing more.  Entire countries trying to print their way through the next fiscal year.  The US itself issues bonds that cannot ever be redeemed without the issuance of new bonds to take their place.  

At least 20 states have borrowed billions just to pay unemployment claims.  Households and individuals so deeply in debt that a bump in interest rates will wipe them out.  Consider that even before COVID-19, 60 percent of the people had less than $400 in savings.

As we reported recently (World Debt Goes Stratospheric), global debt is expected to reach $277 trillion by the end of this year.

A few additional details from the Wall Street Journal: 

• Companies and governments have issued a record $9.7 trillion of bonds and other debt this year.

• American companies with investment-grade credit ratings have issued more than $1.4 trillion of debt this year, up 54% over the same period in 2019.

• Among riskier borrowers, U.S. junk-bond issuance has soared 70% to $337 billion.

• Emerging government debt has risen nearly 10 percentage points to 61% of GDP this year, its largest one-year increase since the late 1980s.

What is a wise investor to do in this environment of unstable debt?  There is really only one refuge from cascading waves of default:  

Precious metals.

Gold and silver are the only monetary assets that are not someone else’s liability.  They are not dependent on someone else’s solvency, promises to perform, or honesty.  Their value does not depend on the endorsement, propriety, or honesty of any state or institution.  They have no counterparty risk, no risk of rule changes, nonpayment, default, or bankruptcy by individuals, companies, financial exchanges, institutions, and banks – quite apart from being insulated from the risks of the Fed’s fiat dollar as well.

We are in a debt bubble that will end badly.  Use this opportunity to speak with a Republic Monetary Exchange professional about steps to protect yourself and your family from the biggest debt bubble of all time.

We hope that you can count the health and safety of your loved ones as among your greatest blessings of this difficult year.  Our heart goes out to all of those that have encountered this pandemic.

We are grateful that 2020 has been such a good year for gold and silver and helping our friends and clients protect their wealth and profit.  We think next year will be just as profitable, if not more so.  

Among our Thanksgiving traditions, right along with turkey, family, and even football, is a story we like to tell each year, a story of our founding with moral that we hope is able to remain a part of national character, one remembered each Thanksgiving. 

It comes from the history of the Pilgrims, who arrived on the Mayflower and settled at Plymouth in 1620 in pursuit of religious freedom. 

But within five months of landing, half the company had died of sickness and starvation. 

The sponsors of the enterprise had insisted that for the first seven years the colony would have “all things in common.” This communal organization, socialism by another name, exacerbated the settlement’s woes. 

The pilgrim’s governor, William Bradford, wrote that men complained about working for other men’s wives and children without being compensated while the wives thought it a form of slavery “to be commanded to do service for other men, as dressing their meat, washing their clothes, etc.; they deemed it a kind of slavery, neither could many husbands well brook it.” 

Altogether the experience of communal property “was found to breed much confusion and discontent and retard much employment that would have been to their benefit and comfort.”

Eventually it was decided, wrote Bradford, that each family would be assigned its own parcel of land so “that they should set corn every man for his own particular, and in that regard trust to themselves.” 

The success of the new arrangement was predictable. 

After one year Bradford reported,

“This had very good success, for it made all hands very industrious, so as much more corn was planted than otherwise would have been. . . . The women now went willingly into the field, and took their little ones with them to set corn; which before would allege weakness and inability; whom to have compelled would have been thought great tyranny and oppression.”

The Pilgrims had their religious freedom, but prosperity wasn’t part of their experience until they had economic freedom as well.  In experimenting with collectivized economic organization, they discovered what everybody owns, nobody owns. 

It’s a lesson that mankind has had to learn and relearn after many bitter experiences, from the “starving times” of the pilgrims, to the millions of deaths from Stalin’s terror famine in the Ukraine, to many millions more deaths from the collectivized farming  under Mao Tse-tung in China.  

The result of an enforced collective ownership, socialized or what is often called public ownership, is waste, neglect, and overuse.  

What everybody owns, nobody owns. 

Here’s to a free and prosperous America!  And a happy Thanksgiving!

As we near the end of the year we’ve been watching price forecasts for gold in 2021.  It is hard for anyone to overlook the fundamentals that we have been talking about:  unpayable and still climbing national debt and unprecedented Federal Reserve money printing. 

It is clear that these conditions are accelerating, so we expect accelerating bull market prices in 2021.  

Citi analysts now have a call for $2,500 gold next year, with another possible target of $2,700.  We recommend as well referring to our piece How High Silver?in which we wrote about Citi’s call for a silver to reach $40 next year, a 60 percent increase, “for starters,” they say.  

The bank goes on to calls a forecast of $50 a “very realistic target,” and $100 an ounce “possible.”  Bank of America also has a $50 “medium term” forecast for silver.

BofA is equally bullish on gold.  Last April it published a forecast for gold to reach $3,000 over 18 months.

Inflation worries will fuel demand for gold in 2021, according to a recent note from Goldman Sachs.  Goldman sees gold breaking out of its present consolidation range and climbing to new highs of $2,300.

A view of gold’s price future that spoke volumes about the future value of the dollar was offered by a Bloomberg commodities analyst that we reported in a piece we called Debt Out the Wazoo!  That forecast gold to reach $7,000 by 2025.

The world’s major central banks intend to let inflation “run hot.”  And you know that in January, if not before, Congress will pass another deficit-funded stimulus package.

As Bob Dylan sang in Subterranean Homesick Blues, “You don’t need a weatherman to know which way the wind blows.”

And you don’t need to be a bank analyst to see higher precious metals prices in our future.

You may have noticed increasing talk of a confrontation with Iran.  While economic warfare with Iran has been US policy for some time, there have been reports of new White House conversations about a possible strike on the Iranian nuclear site at Natanz.  Often leaks of that sort are simply part of diplomatic maneuvers.  But we have warned of the risk of an accident or incident in the Persian Gulf.  False flag provocations are always possible.  

We are not specifically predicting a skirmish or something more in the coming weeks but will refer you to our 2019 commentary Temperature Rising in the Persian Gulf for a suggestion of what could happen around the Strait of Hormuz and how it would affect precious metal prices.

This is something we are continuing to keep an eye on, and we think investors should as well.

One way to track the growing de-dollarization of the global economy is by the “Strange New Respect” gold keeps getting.

That’s what we called it in a piece over a year ago when we reported that central bank gold buying was setting new records.  The mainstream media were missing it (of course!), but the world’s central bank have clearly been taking gold very seriously.  

The latest news on that front is from Russia, where legislation to allow the country’s ’s $167.6 billion sovereign National Wealth Fund to invest in precious metals is now under consideration.  The fund holds pension assets and revenue from Russia’s oil exports.

Finance Minister Anton Siluanov is already on record supporting the move, observing correctly that gold is more sustainable in the long term than other financial assets.

As we have often observed, central bank gold buying is a megatrend for a reason.  The prognosis for the dollar is negative.

More strange new respect for gold can be found in the major financial institutions and investment figures, especially those that have long eschewed gold, now looking at it more favorably.  Warren Buffett is among them as we have chronicled HERE and HERE, while major banks with new gold recommendations and higher price targets included UBS, Wells Fargo, and Bank of America.   Pension and endowment funds are showing a strange new respect for gold, too.

That is what happens when the State has mismanaged its currency and painted itself into a corner of unpayable debt.  Oh, and on that front we note that the new fiscal year has gotten off on a bad foot.  The deficit for the first month of Fiscal Year 2021, was a record-setter for any October of $284.1 billion.  That’s a deficit more than twice as large as the prior October.

Already our $27 trillion national debt is producing lower investment and growth.  If the debt continues to grow by $2 – 3 trillion a year, it will double by 2030.  The US will be looking at a national debt of $55 – $60 trillion.  We shudder to think what that will mean.

All around the world people who know money best are developing a strange new respect for gold.  For more reasons why they are moving to gold, speak with a Republic Monetary Exchange gold and silver professional.  

Do it now, before the movement turns into a stampede.

We could not have said it better, so we will let him speak for himself.  Doug Noland from Credit Bubble Bulletin has a long record of chronicling the birth of bubbles and the destruction of their popping.  

Here’s his recent take on the times:

“I have never been more concerned. Having watched ‘money’ and Credit run increasingly amuck over recent decades, I have long harbored fears of an inescapable future of calamitous financial, economic, social, political and geopolitical instability.

“That future is now unfolding.”

The establishment press has a long history of turning a blind eye to fiscal crises in development.  But now establishment journal Foreign Policy says, “Start Preparing for the Coming Debt Crisis.”

A couple of snippets:

“The next U.S. administration will likely face a global debt crisis that could dwarf what the world experienced in 2008-2009.”

“A surge in spending to mitigate the health and economic impacts of the pandemic has brought the total public debt in the United States to over 100 percent of GDP—its highest level since 1946 and a hurdle that will create a considerable drag on future economic growth. Other types of debt—household, auto, and student loans, as well as credit card debt—have seen similar surges.”

“Almost 20 percent of U.S. corporations have become zombie companies that are unable to generate enough cash flow to service even the interest on their debt, and only survive thanks to continued loans and bailouts.”

“Central banks’ balance sheets are stretched from the policies they have followed since the 2008 financial crisis and expanded in the course of the pandemic. Piling debt on top of debt seems to have reached a dead end.”

And finally, a few weeks ago we began warning about one of the craziest monetary schemes on the Federal Reserve’s drawing boards.  There’s no name for it, so we just dubbed it what it is:  The Full-Tilt Crypto-Boogie.  It will be some form of the Fed’s own digital-crypto-central-bank-block-chain-wallet-Fed-coin-currency.  

More evidence for it can be found in a passing mention in the Foreign Policy piece, a reference to a new funny money that is even funnier than our present funny money:  “A growing number of economists and policymakers are beginning to talk about the need to shift to a new, possibly digital monetary regime whose contours remain unclear.”

It’s coming! Have gold?

We’re Always Grateful When They Do This

We are heading into the homestretch of 2020.  Soon will be the holidays and then 2021, which looks to be another dynamic year for precious metals.  Through last week gold gained more than 27 percent in 2020.  That is after a strong year in 2019 as well, one in which gold gained more than 18 percent.

Silver’s 2020 performance has been stellar as well, up more than 45 percent through Friday.   

Post-election news that Pfizer, the pharmaceutical giant, has produced a COVID vaccine with a reported 90 effectiveness rate in trials bounced the stock market sharply higher on Monday (11/9), driving Wall Street players to sell gold and other investment vehicles to jump on the stock market train.  

In doing so, they provided an opportunity to buy precious metals at “sale” prices.  In a year in which gold reached all-time highs in virtually every currency in the world, Wall Street provided a welcome bargain in gold.

Such opportunities do not usually last long.  You will remember that the COVID-19 panic in March had Wall Street traders and speculators selling gold to raise margin call cash as the stock market tumbled.  The impact on gold was brief, less than two weeks.  In no time it was higher than when the sell-off began.  

Monday’s gold drop of about $100 was followed by a quick recovery of $22 on Tuesday.  Chartists will note that this is the third time since September that the gold price has tested lows in the $1,850 range, providing good technical evidence of a floor and three months of base-building.

Meanwhile the Lombard Letter writes that surging coin sales make a compelling case for much higher prices:

Year-to-date, until around mid-October 2020, the U.S. Mint sold 678,000 ounces of gold in American Eagle coins. (Source: “Bullion Sales,” U.S. Mint, last accessed October 15, 2020.)

How significant is this? In the entire year of 2019, the U.S. Mint sold just 152,000 ounce of gold in American Eagle coins. In other words: gold demand is running 346% higher this year than last year.

Lombardi describes corroborating high demand at Australia’s Perth Mint.  It is evidence that, it its words, “there’s a gold rush happening at the moment, and it’s getting bigger.”

We recommend you get positioned now for 2021.  This is an opportune moment to speak with a Republic Monetary Exchange gold and silver professional and take steps to add to your existing precious metals holdings.

Gold After the Election

Let’s sample some informed opinions about what will happen once the election is (more or less) settled:

According to the Royal Bank of Canada, once the dust settles, gold will resume its march higher.  

According to The Union Journal, George Gero, the managing director of RBC Wealth Management, believes traders will begin looking to “stimulus legislation, inflationary prices [and] large debts,  so gold can resume the upward trend towards $2,000.”

The Swiss-based investment banking powerhouse Credit Suisse, says, “Big picture, we continue to look for $2300.”

The bank’s strategists observe that “gold extends its consolidation from our $2075 target hit in August and we maintain our core view this is a temporary and corrective pause in the broader uptrend. Indeed, price action is beginning to increasingly look like a bullish ‘wedge’ continuation pattern, adding weight to our view.” 

In a CNBC interview, James Rasteh, CIO of Coast Capital, said that US fiscal and monetary policies will remain much the same no matter who claims final victory.  

This is a view we have expressed many times ourselves, most recently two weeks ago when we took a look Behind the Curtain where the Great and Powerful Monetary Oz twists the dials that set our economic course, push buttons that boom and bust the economy, and work the levers to determine the value of our money.

“We would be printing trillions of dollars more and all of that ultimately has extraordinarily positive repercussions for gold,” said Rasteh, pointing to a sizeable stimulus program without regard to the election outcome.”

Despite the ongoing counting, gold is bullish no matter which candidate wins

Let’s look at a historical perspective from the World Gold Council.  Juan Carlos Artigas, the Executive Director and Head of Research points out that gold goes up no matter which party controls the White House [emphasis added].  

“Looking back, gold’s performance has not significantly differed based on the party controlling the White House. Since 1971, gold returns were 11 percent on average per year during Democratic presidencies and 10 percent during Republican ones. Similarly, gold returns were only slightly higher in the year following a challenger party’s victory relative to an incumbent party’s victory (7.9 percent versus 6.5 percent respectively).”

We recommend that you keep your wealth in real money that cannot be corrupted by politicians and central banks.  And we recommend that you make the move now, while you can.

It’s a good thing we have two eyes.  For good and sufficient reasons most people have been keeping a close watch on domestic affairs.  It’s a good thing to do, especially in the political season.

But we have also been keeping an eye of global affairs where something important is happening.  Most of the media misses it because they do not understand how important it is.  But it affects everything, the value of our money, the cost of living, and our long-term prosperity.  In other words it affects the American Dream.  

It is the most important financial megatrend of our time.

America’s creditor base is decaying.  

Here is the latest.  As US debt has mushroomed, China has been a major creditor.  In the fall of 2013 its holdings of US Treasury debt reached $1.3o5 trillion.  

Now, it is shedding its holding of US government debt.  It’s down to $1.06 trillion.  

Ten years ago, Russia held $180 in Treasury debt.  But as we reported in May, “[Russia’s] dollar holdings have fallen so low they are reported down in the asterisks in US Treasury listings, below the holdings of countries like Iraq and Vietnam.”

Of course you know that in the both the case of China and Russia, de-dollarization goes hand in hand with a determined move to fortify their bank reserves with gold.  

In a commentary on May 20, we wrote that the primary impact of this move to gold is threefold:

• Central bank gold purchases are a harbinger of growing “de-dollarization,” the waning role for the dollar as the world’s reserve currency.  As such they also signal a long-term decay in the dollar’s purchasing power.
• The addition of gold to central bank reserves makes those nations less susceptible to US  foreign policy hegemony.  It is no secret that the rest of the world, including long-time US allies, are bristling at what they see as the heavy hand of US trade restrictions and sanctions that directly impact their economies.
• The sheer quantity of central bank buying power has an unmistakable impact on gold’s trajectory.  Furthermore, gold in central bank reserves is gold in strong hands and is less likely to be sold.

Meanwhile, in a report on China’s waning dollar holdings, CNBC cites an analyst saying, ““The key question then is: who will finance the heavy issuance associated with very large budget deficit.”

We know the answer to that.  US debt will have to be financed by Federal Reserve money printing.

The Left and Right Agree About Only One Thing: Printing More Money!

Today’s commentary is drawn from observations by hedge funder David Einhorn of Greenlight Capital.

In a rather dramatic announcement, Einhorn says that we have seen the top of the stock market.  It has been a bubble, one drivne by technology stocks, and that bubble has burst, he says.

You may have heard the story about Joe Kennedy who decided it was time to get out of the market when he got a stock tip from a shoeshine boy.  Einhorn shares a similar anecdote.  He says he recently received a job application from a 13-year-old who wrote, “I’m young, but good at investments.”

Here’s a link to a story describing some of Einhorn’s more substantive reasons for calling a top in the market.

We’re not surprised by his identification of a market top.  We put out our own warning two weeks ago, describing the stock market and the social order as equally wobbly:

“But it’s not just stock markets that are wobbly.  The social situation in this country is wobbly as a well, thanks to the Fed’s cronyism.   The November election will very likely bring more of our national instability to the fore no matter who wins.”

So while we find Einhorn’s argument about the stock market persuasive, it is his other comments – mostly overlooked – that we deem even more important

Between the pandemic, the social divide, and civil violence, Einhorn writes, “This may rank among the most perilous times, absent war, in modern American history.”

“It isn’t difficult to envision this tempest exploding after the election, no matter which side wins,” he says.  “According to Politico, 44 percent of Republicans and 41 percent of Democrats believe there would be at least ‘a little’ justification for violence if the other party’s nominee wins the election. A poll by Rasmussen Reports found that 34 percent of likely voters believe a civil war is likely in the next five years. While this is probably too pessimistic, it likely reflects a rising tail risk.”

As the poet Yeats wrote, “Things fall apart; the center cannot hold.”  

Einhorn agrees.  “The only common ground between the two parties seems to be money-printing. Over $3.3 trillion has been printed year-to-date, which represents nearly 22 percent of all U.S. dollars in existence at the end of 2019.”

And with that, Einhorn concludes, “Unsurprisingly, gold is outperforming. Investors who have argued against gold for decades are now buying some.”

Yeats’ poem continued: “Mere anarchy is loosed upon the world; The blood-

dimmed tide is loosed.”

We think this is an exceptionally important time to speak with one of Republic Monetary Exchange’s gold and silver specialists and get some sound, actionable advise on protecting yourself in these times with gold and silver. 

We promised you last week that we would keep an eye on the Federal Reserve and let you know what it is up to.  That is because there is always a plan afoot to manipulate the currency and destroy its value.  Today we want to warn you about the latest.  

There is no name for it, so we will just call it The Full-Tilt Crypto-Boogie.

The stories of government money printing are legion.  Real-life stories about all the printing presses, the ink, and the paper that have been used to destroy currencies.  

About 50 years ago Milton Friedman talked about the Fed distributing freshly printed money from helicopters to the unwashed masses below.

Not long ago, Fed chairman Ben Bernanke re-popularized the term to explain that when the Fed is serious about devaluing the dollar, that is how it can be done.  

By just dropping dollars from the air.  

But that is so yesterday!  

We will probably keep using the term “printing money” to describe currency inflation because it evokes a clear image of the actual policy, even though we know perfectly well that in our digital age, it is way behind the times.

Even “helicopter money” is hopelessly outdated because the Fed has new ways of doing things on its drawing boards. 

A month ago we described a plan under consideration at the Fed of something called “recession insurance bonds.”  The Fed would deposit these in people’s accounts in advance, then, when the Fed decided, it would flip of a switch to activate them.  

Another scheme calls for every American to have a bank account at the Fed, allowing it to make instant deposits (and withdrawals, although they aren’t really talking about that part!) at any time and place of its choosing.

What is the point of these schemes?  What’s wrong with them making midnight deposits in our accounts?

Since there is no such thing as a free lunch, we must look more closely for the reasons for these free-money policies.  First, they will demand that all Americans be herded and corralled into keeping all their money institutionalized.  It is designed in part to help the State surveille your every move, so it means the end of cash, too. This will help the Fed implement a negative interest rate regime.  After all, most people will never be willing to pay the bank to hold their money.  So, they must not have any choice in the matter.  

These monetary schemes will allow the Fed’s cronies to conduct currency wars to their benefit and at the expense of the people.  Oh, and since its “just monetary policy,” it is an attempt to evade Congress and the people’s representatives.

These schemes are also designed to allow the authorities to instantly transmit to every account in the land, and automatically implement, policy changes like tax initiatives and rate changes.

And finally, the Fed must create a lot of inflation to devalue $27 trillion in debt.  Piddly little inflation rates of two and three percent are not up to the job.  It will take much more than that.

So now the Fed seems to be settling on a favorite plan to create a lot more inflation.  

It’s The Full-Tilt Crypto-Boogie.

It’s the Fed’s own digital-crypto-central-bank-block-chain-wallet-Fed-coin-currency.  You can read more about it here at the website ZeroHedge.

We will be writing more about The Full-Tilt Crypto-Boogie in the future.  But for now, it’s about the best damn reason that we have ever seen to buy more gold and silver!

We think gold and silver will go up if Donald Trump is re-elected president.

We think gold and silver will go up if Joe Biden is elected president.

I’m sure you’d like us to explain since we have a two-party system and candidates that differ on the issues and on how the government should be run.  

How could the same results follow the election of either man?

We think it is time to realize that the monetary policies in this country do not flow out of the White House.  

Nor do they come from Congress.

The monetary policies of the United States, the decisions that boom and bust the economy, that determine the future value of the US dollar, are made by a group of mostly nameless, faceless bureaucrats.  Functionaries that no one voted for, no one elected, and few people can name.

We think it is fine to be focused on the election.  We think it is important, too.

But you can never – never – take your attention off The Great and Powerful Oz operating behind the curtain.  That is where the dials are twisted that set our economic course.  That is where the buttons that are pushed boom and bust the economy.  That is where the levers are pulled that determine the value of our money.

It is quite clear that these people prefer to operate in the dark.  At the pinnacle of his career, Alan Greenspan, the longest-serving Fed chairman in history once told an audience, “If I’ve made myself too clear, you must have misunderstood me.”  A remark like that is just what we have come to expect in this age of deceit and confusion.

This is the Fed that desperately fought to keep you from learning what exactly they were up to with their dollar portfolio during the mortgage meltdown.  It took years of legal action to finally discover which cronies got Fed lifelines in a $1.2 trillion dollar operation.

And legendary are the Fed’s efforts to fight off being audited.

Last month current chairman Jerome Powell admitted to “crossing red lines” in its policy actions, but said, “We’ll figure it out later.”

Not a lot of foresight there.

So, we’re just saying that we’re interested in the election, too.  And we think it matters.

But while nobody was paying much attention earlier this year, the Fed printed up more than $3 trillion dollars.  Out of thin air.  

That money printing drove gold to an all time high this year.  

Not only were we watching, we told you what was happening.  We want you to know that while we’re all watching the election shenanigans, we’ll also be keeping an eye on the operations behind the curtain.  

We’ll let you know what The Great and Powerful Oz is doing every step of the way.  And help you protect yourself, your family, and your wealth.

Mercifully, the US government accounting year, Fiscal Year 2020, ended a few weeks ago.  It was one for the books.

The record books.

We’ll get to the numbers in a moment.  But we must tell you that in some ways this a repeat of a commentary we posted two years ago, with the ending of FY2018.  And we could have run it again last year, at the end of FY2019.  But we don’t like to repeat ourselves that often.

The problem is that there are a lot of things fishy about the way the government operates.  But nothing is fishier than government accounting.

That’s a problem for us all, because government accounting helps determine what people consider the prospects for the US dollar to be.

So, with the ending of FY2020, the financial news outlets have been filled with stories about the US budget deficit.  They report the deficit $3.1 trillion.  That’s nothing to sneeze at, but it is way short of reality.  

Here’s the way the Wall Street Journal reported the news:

“WASHINGTON—The U.S. budget deficit tripled to a record $3.1 trillion in the fiscal year that ended Sept. 30…. 

“As a share of economic output, the budget gap in fiscal year 2020 hit roughly 16.1%, the largest since 1945, the Treasury Department said Friday, when the country was financing massive military operations to help end World War II.

“Federal debt totaled 102% of gross domestic product, the first time it has exceeded the size of the economy for the full fiscal year in more than 70 years, according to estimates from the Committee for a Responsible Federal Budget.”

Okay.  $3.1 trillion.  That’s big.  It’s a triple from last year.  But it’s not right.

Here’s what really happened.  At the end of FY2019, the gross federal debt was $22.798 trillion.  At the end of FY2020 the gross federal debt was $27.026 trillion.  

That means the debt actually rose by $4.228 trillion.  

There’s a big difference between the $3.1 trillion deficit the government news release and the media report, and the $4.2 trillion I am describing.  The difference is $1.1 trillion.  And that’s real money!

Who’s right?  If the picture of the nation’s finances the government provides is correct, you should go your merry way.  

But if the picture I provide is correct, you will want to make sure you are substantially protected with precious metals.

Let me show you how to find out for yourself who is telling you the truth.  The US Treasury maintains a site that reports the federal debt “to the penny” each business day.  Here is the link.

Call up the national debt at the end of September this year, FY2020.  It was $27.026 trillion.  Now, look up the national debt one year earlier, at the end of September 2019.  You will see that FY2019 finished with a national debt of $22.798 trillion.

The difference is the increase in the national debt in a year.  It represents a deficit, a gap between what the government took in and what it spent.  

It is not $3.1 trillion billion.  It is more than $4.2 trillion.

Even the $27.026 trillion national debt figure – as mind-boggling as it is – is another product of government accounting.  As we wrote about the practice two years ago, an honest measure of its indebtedness should include promises the government has made to pay for things.  That’s how we reckon debts in the real world.  

Among the promises the government has made that people rely upon are things like Social Security and Medicare.  These unfunded liabilities are debts of the country, no less than any other government promises to pay.  

Accordingly, the real national debt should be measured in the hundreds of trillions of dollars!

Government accounting is also what has allowed the Federal Reserve to destroy 97 percent of the dollar’s purchasing power, even at it is charged with maintaining price stability.

If private businesses operated with the flim-flammery of government accounting, people would be locked up in jail.

There is really only one broad-spectrum protection against government accounting and the destructive practices in enables.  

It is gold.

And a Wobbly Social Order!

We have made the point many times that the US stock market is floating on the back of a loose money regime, money the Federal Reserve has been stove-piping to Wall Street.

Here is a 10-year chart of the S&P500 stock index.

Most of the left half of the chart shows the effect of Quantitative Easing money printing and the lift it provided the stock market.  

On the right-hand side in the area that reflects this year, 2020, you can see the sharp break in the market with the arrival of the pandemic shutdown. It crashed stocks by 35 percent seemingly overnight.

Since then, in a few short months, the Federal Reserve created some $3 trillion dollars out of thin air to drive stocks back up.

It has succeeded.  But at a price.

We want to show you another chart, one that puts these lofty stock heights in perspective.  This recent chart shows the total market capitalization of US stocks, the market value of stocks today, as a percent of total US productivity, or Gross Domestic Product (GDP).

Warren Buffett calls this ratio of market cap to GDP “probably the best single measure of where valuations stand at any given moment.”

Think about that.  The best indicator of stock valuations is at stratospheric heights compared to the actual productivity of the economy.  And we know that it is held aloft by Fed money printing.  

It’s okay to be cynical about all this.  Just the other day, Mary Daly, the head of the San Francisco Fed defended the Fed’s tender, loving care for Wall Street by saying it is all being done for the little people.  Speaking at a University of California, Irvine event, Daly said, “I am not willing to trade millions of jobs for people who need a ladder rung up in order to keep the stock market from going up for a few who have those holdings.” 

Oh?  But if the gusher of Fed liquidity for the past ten years is all being done for the little people, why does the wealth gap keep widening?

The answer is clear.  The wealthiest people, as she acknowledges (“the few who have those holdings”), own most of the stocks.  Monetary policies designed to lift stocks make the wealthy wealthier.  They widen the gap.  And they make the stock market vulnerable since it is held aloft by a monetary gimmick and not by real fundamental valuations.

But it’s not just stock markets that are wobbly.  The social situation in this country is wobbly as a well, thanks to the Fed’s cronyism.   The November election will very likely bring more of our national instability to the fore no matter who wins.

If you are looking for a safe haven from a wobbly stock market and during what could be one of the most divisive periods in US history since the Civil War, we would suggest a well-thought-out portfolio of gold and silver.

It’s all unfolding like a bad dream.  

I mean our financial and monetary future.

Maybe it is more like a “B” movie, one that is totally predictable.

Nations globally have spent $12 trillion they do not have on “stimulus” measures this year.  The US is more than $3 trillion of that.

But it is never enough.  US Federal Reserve chairman Jerome Powell wants more deficit spending.  At the International Monetary Fund annual meeting this week, Christine Lagarde, the head of the European Central Bank, is calling for more deficit spending too.

They all read from the same tired script.  We have seen it all before.

The theory that has guided US and global fiscal and monetary policy for almost a century, “Keynesian economics,” calls for deficit spending by governments during slowdowns.  Then, according to the theory, governments would run surpluses during recoveries, and pay off the debt.

It was balderdash to begin with, but even those that bought it must acknowledge that in practice the authorities ran deficits in both slowdowns and recoveries.

Stated differently, the US should not have had $23 trillion in debt when the pandemic hit.  Especially since we were more than ten years into our post-housing bust recovery, the longest recovery in our history.  

While the fiscal authorities have run the debt to the moon, the central bankers have flooded the world with digital “paper” money.  Here’s a chart from Bloomberg that shows what they have done since 2008.

A Bloomberg News story describes Lagarde and other central bankers now pushing for more deficit spending. 

“A parade of Federal Reserve officials led by Chair Jerome Powell lined up last week to make the same argument with regard to the U.S., where talks on the next dose of pandemic stimulus have been deadlocked for months in Congress. Fed officials said their own tools, such as another round of bond-buying, won’t be as effective as government spending.

“The message from the most powerful central banks is increasingly clear: there are limits to what monetary policy can do to help in the short run. Fiscal authorities -– who can borrow at rock-bottom interest rates and possess tools better-suited to deliver a rapid and targeted boost — will have to finish the job.”

We find the last phrase, “finish the job,” ironic.  The money printers are destroying the dollar, while the deficit spending is destroying US solvency.

Now we will watch the show unfold.  Those that have seen it before will watch from the sidelines, having protected their wealth with gold and silver.