It's The Fed

As we enter into the last month of 2021, I believe that many who were hoping for a return to “normal” after 2020 are a bit disappointed. While the economy has opened up a bit there are still a myriad of problems that have been created that will likely not be resolved any time soon.

While many will blame the virus, I believe the real blame lies with the central banks. I also believe that all of the political turmoil and theatre are all meant to distract us from the real culprits.

While closing pipelines by the Biden administration does not help, the real cause of the inflation that we see in our oil, gas and natural gas prices is the loss of purchasing power of our currency. Currently, according to the Wall Street Journal, US gasoline prices have climbed about 50% in a year with the average price in 2020 being $2.27 to $3.40 per gallon as we speak.

The fact that we “printed” 30% of all “money” in existence in the last 12 months wouldn’t have anything to do with it right?

Even Jerome Powell (Fed Chairman) has now admitted that inflation is not, as he said at first- temporary- or what he said next- transitory BUT is likely here to stay. The sad part is that he has to admit it because he is at risk of looking like a fool if he doesn’t. I believe that inflation will surprise many to the upside in 2022.

The numbers are so bad that even all of the made-up numbers and propaganda are not fooling enough people anymore. That chasm between reality and the Potemkin village set up by those “in charge” is so great that almost anyone can see the reality that we are fading fast.

By “printing money” up out of nowhere the central banks have allowed Wall Street (mainly the major banks that own the Fed and their buddies at Blackrock, Blackstone and the like) to buy up entire industries and now they are buying our homes- virtually pricing out anyone who does not have a home or assets from getting one.

In the old days it was prudent (there is a word you don’t hear much anymore) to not spend more than 30% of your family’s income on housing. Because of the manipulation of rates and money “printing” this has become a pipe dream for many. The reason is that, according to US Federal Reserve data, the median price of all US homes rose to $353,900.00. Based upon the 30% math you would need over $144,000.00* to comfortably afford the average house. The US median income is $69,178.00 (Clever Real Estate). *Pre-tax

Of course, Blackrock, Blackstone and many others are out there buying up homes and communities to rent back to those who get displaced when their cost of living goes up so much that they can’t service their debt and they are forced to sell or flee.

I saw an excellent article by Egon von Greyerz on King World News. In it, he used a quote from Ayn Rand “So you think that money is the root of all evil. Have you ever asked what is the root of all money”?

His answer resonated with me- “Evil is the root of all fiat money”.

I believe that this can be demonstrated when, with a click of a keyboard, someone can conjure up trillions of “money” that passes for wages that everyone else has to toil for. This not only makes our labor worth far less but it also raises prices that the producers pay because those doing the “printing” are also buying before the average Joe or Mary and driving the price higher.

Personally, I believe that there is NEVER something for nothing. Someone always pays. Those paying now are anyone who has a regular job and is being paid with paper or a computer blip that was created out of nowhere and has no intrinsic value besides the full faith and credit of the most indebted nation in the history of the world.

I have asked many times – what is the value of an “asset” that can be created in unlimited amounts at virtually no cost? I also ask- what is the VALUE of a promise (to repay) that cannot be kept with the currency maintaining anywhere near its current value?

This is a classic PONZI scheme where new “money” is being created out of nowhere to pay interest on debt, new debt is issued to pay off old debt and “money” is being “printed” to pay current bills as well.

Anyone who thinks this can go on forever is certainly no student of history.

This also leads to many feeling left out and hopeless which gives rise to the violence and lawlessness that we see taking over our nation.  

I think it is a good time to ask “Is my house built on a solid foundation so that when the coming storm hits I am able to keep the house standing or is it built on a foundation of sand? If the storm comes, am I, and is my portfolio in a position to survive?

Remember that paper assets can, and many times do go to ZERO and there is no recovery from ZERO.

Since all of our “values” are determined and measured by an asset that has little to no intrinsic value what are those “values” actually worth?

It is unfortunate for many that they will learn the hard way that things that seem too good to be true- most of the time are and all illusions eventually end. The get-rich quick schemes of today will likely leave carnage behind in the not-too distant future.

Even pension plans are engaging in margin now because they can’t meet their mandates without taking extra risk. That is great while things are climbing but will grease the slide on the way down.

I find it VERY telling that even those that can conjure up trillions in currency units with a few clicks are out there buying up gold and other hard assets- while artificially manipulating the prices lower for their own benefit of course. Personally, I am watching what they do and I am following in their footsteps. I am buying all dips in the metals (gold and silver along with the miners) believing that reality is well on its way to arriving.

I have said to many that nothing is “safe” in the traditional sense of the word so we need to have our assets spread out as best we can.

Be Prepared!

Any opinions are those of Mike Savage and not necessarily of those of RJFS or Raymond James. Expressions of opinion are as of this date and are subject to change without notice. The information in this report does not purport to be a complete description of securities, markets or developments referred to in this material. The information has been obtained from sources deemed to be reliable but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.

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Precious Metals, including gold, are subject to special risks including but not limited to: price may be subject to wide fluctuation, the market is relatively limited, the sources are concentrated in countries that have the potential for instability and the market is unregulated.

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