Purchasing Power

Gold is one of the few investments that every investor should have in their portfolio. We are now at the dangerous end-game period of a very bold but very reckless & disappointing experiment with the world's fiat (unbacked) currencies. If this experiment fails -- and we observe it's in the process of failing -- gold will provide one of the best forms of wealth insurance. But like all insurance products, it only works if you buy it before you need to rely on it.

Of the many economic policies that are accepted as true yet are absolute nonsense, perhaps none is more achingly nonsensical than the notion that weakening a nation's currency will magically make that nation prosperous. No empire has ever prospered by weakening its currency. Reducing the purchasing power of one's money is the road to ruin, not prosperity.

To help Main Street, the Fed must stop incentivizing speculation over investment and end policies that have shifted wealth and income to the top of the wealth pyramid. Main Street's woes are largely structural: the high cost of regulations, the soaring cost of healthcare insurance, the artificial-scarcity costs imposed by cartels enforced by the federal government and the pressures generated by globalization and automation. The Fed can't solve those problems, but it can certainly stop enriching the already-super-wealthy at the expense of the rest of us.

Whether or not the Fed actually manages to raise rates in the real world is less important than maintaining USD hegemony. No empire has ever prospered or endured by weakening its currency.

Again, the globalists at the BIS and the IMF require a diminished U.S. dollar, greatly reduced U.S. living standards and a much smaller U.S. geopolitical footprint before they can establish and finalize a single publicly accepted global elitist oligarchy. If you cannot understand why it seems that the Federal Reserve and U.S. government appear hell-bent on self-destruction, then perhaps you should consider the facts and motivations at hand. Then, you’ll realize it is THEIR JOB to destroy America, not save America. When you are finally willing to accept this reality, every disastrous development since the inception of the Fed a century ago, as well as all that is about to happen in the next few years, makes perfect sense. As the U.S. destabilizes, we are not escaping the clutches of the Federal Reserve system, only trading out one totalitarian management model for another.

“Do not believe in anything simply because you have heard it. Do not believe in anything simply because it is spoken and rumored by many. Do not believe in anything because it is found written in your religious books. Do not believe in anything merely on the authority of your teachers and elders.” - Buddha

If rising prices are good for the economy, how come everyone was so unhappy in Germany's Weimar Republic in 1923, or in Zimbabwe fifteen years ago? Surely, as inflation accelerates the happiness level should rise...

The game of enabling more debt by lowering interest rates and loosening lending standards is coming to an end. Debt is not a sustainable substitute for income, and households are increasingly waking up to this realization. Say good-bye to Christmas, America, and debt-based spending in general--except, of course, for the federal government, which can always borrow another couple trillion dollars on the backs of our grandchildren.

Why Now?

With the fundamental and economic backdrop becoming much more hostile toward investors in the intermediate term, understanding the value of cash as a "hedge" against loss becomes much more important. As John Hussman recently noted: "The overall economic and financial landscape, then, is one where obscene valuations imply zero or negative S&P 500 total returns for more than a decade — an outcome that is largely baked-in-the-cake regardless of shorter term economic or speculative factors. Presently, market internals remain unfavorable as well. Coming off of recent overvalued, overbought, overbullish extremes, this has historically opened a clear vulnerability of the market to air-pockets, free-falls and crashes."

The traditional view of the impact of low oil prices seems to be, "It is just another cycle." Or, "The cure for low prices is low prices." We are doubtful that either of these views is right.

"The global dollar standard, that is now the longest-lived of these artificial monetary systems, has developed a bunch of stress cracks and is in the process of imploding right now. There is going to be before the end of this decade, most likely, another emergency meeting of a bunch of finance ministers and economists to try and hash out another world monetary system. It is just history repeating, and it is a natural consequence of a man-made, artificial manipulation of the free market."

All great monetary fiascos are forged upon a foundation of misperceptions and flawed premises. There’s always an underlying disturbance in money and credit masked by supposed new understandings, technologies, capabilities and superior financial apparatus. The notion back in 2006 and 2007 that the world was at the brink of a major crisis was considered absolute wackoism. Incredibly – and well worth contemplating these days - virtually no one saw the deep structural impairment associated with the protracted Bubble in “Wall Street Finance.” An even more momentous monetary fiasco has been perpetrated since the 2008 crisis, constructed upon a foundation of even more outlandish misperceptions and flawed premises.

Dear Mr. President, your country faces a stagnating economy... The truth is it is too late for our politicians to act, because the speculative peak that precedes the crisis is already upon us.

The sums in play are so staggering (an estimated $11 trillion in emerging market debts denominated in other currencies) that even the Fed won't be able to stop the meltdown.