Beware! Stagflation Rears Its Ugly Head & It's The Fed's Fault

The so-called "greatest economy ever" is anything but. With each passing day, the dreaded "Stagflation" comes closer into view. 

Rising prices coupled with a recession is the worst of both worlds for the powers-that-shouldn't-be at The Fed. 

Central planning is always doomed to failure. Economic reality always strikes with a vengeance.

- Source, Ron Paul

The Fed of St Louis Opposes The Gold Standard… For Environmental Reasons?

In a recent blog by the St. Louis Fed entitled “Here’s Why the US No Longer Follows A Gold Standard”, the author lays out 3 reasons with gold.

There are significant problems with tying currency to the gold supply:
It doesn’t guarantee financial or economic stability.
It’s costly and environmentally damaging to mine.
The supply of gold is not fixed.

“The U.S. mines a lot of gold, but we’re not the biggest producer,” Wheelock said. “The bigger suppliers of gold would have more control over our monetary policy, and there’s no reason to have it because we can get the advantages of the gold standard and avoid the disadvantages without being on a gold standard.”

Yes, but FIAT currency like the US dollar allows uncontrolled spending by the Federal government and endless devaluation of US consumer purchasing power. Why is that NOT a problem?

Since the creation of The Federal Reserve System in 1913, the purchasing power of the US dollar for consumers has been demolished while gold is increasing as consumer purchasing protection (on average).

The supply of gold is not fixed? No kidding. As of 2017, China, Australia and Russia produced more gold than the US.

Environmental concerns? Yes, but will China, Australia and Russia stop production of gold for environmental reasons? I think not.

True, gold prices can be quite volatile. But on the other hand, government spending cannot be contained. Hence the belief in MMT (modern monetary theory). Where government spending, debt and deficits don’t matter. Until they do!

I would like the ability to exchange a $10 bill for $10 of gold, even with volatility. And gold volatility is at its lowest level since 2006.

Fiat currency? That’s the way The Fed and Congress like it!

The 1928 $10 bill was replaced with .. no gold!

- Source, Confounded Interest

Trade Wars: The Truth About Tariffs

Join Mike Maloney as he examines the latest moves in the US/China trade war, and visits some compelling arguments from the Foundation for Economic Education.

To quote their article by Mark J Perry: "It’s a scientifically and mathematically provable fact that all tariffs, at any time and in any country, will harm economic growth, eliminate net jobs, destroy prosperity, and lower the standard of living of the protectionist country because tariffs are guaranteed by the ironclad laws of economics to generate costs to consumers that outweigh the benefits to producers, i.e. tariffs will always impose deadweight losses on the protectionist country (see diagram below, and “An economic analysis of protectionism clearly shows that Trump’s tariffs would make us poorer, not greater“). 

That is, the reality that tariffs always inflict great economic damage and leave society worse off is not a debatable outcome, rather it’s a provable fact, like the law of gravity."

- Source, Gold Silver

Will the Next FED Board Member be a Gold Bug? Could Balance Finally be Restored?

In 1910, Senate Republican leader Nelson Aldrich and executives representing the banks of J.P. Morgan, Rockefeller, and Kuhn, Loeb & Co., secluded themselves for ten days on Jekyll Island, Georgia.

This was a secretive meeting in which no one at the time knew much about, nor knew what was discussed.

The secret would take three years to manifest itself, after which the Federal Reserve Act was passed in 1913, then three more years for the secret to become public, when journalist Bertie Charles Forbes in 1916 wrote an article about the "hunting trip".

From the year the Federal Reserve Act was passed, until this modern day, the United States has been run by a largely unaccountable body of banking elite executives, wielding ungodly powers that have shaped our economic history.

From that day onward, the United States and the West as a whole have systematically devolved further and further into a fiat based system, that cares little about accountability, or financial responsibility, preferring to simply print more and more fiat dollars to help keep this corrupt system afloat.

This financial moral bankruptcy really began to accelerate in 1933 on June 5th when President Roosevelt signed HJR 192 into law, demanding that all US citizens turn in their gold and gold certificates, disabling the citizens ability to redeem dollars for gold.

As the years went by, the Federal Reserve continued to pressure the US government from behind the scenes, moving the country further and further away from the founding fathers gold standard vision.

In 1971, it was officially time to severe all sense of sanity and all ties with the gold standard.

On August 15, 1971, President Nixon announced that the US dollar would no longer be convertible into gold bullion for international settlement and that the gold standard was officially dead.

Fast forward to today, and you will see a purely fiat based dollar system, in which digital dollars are created in untold numbers, injected into the system at a rate that would even have the founders of the Federal Reserve shaking their heads.

Now we hear statements such as "barbarous relic" from modern Federal Reserve board members when referring to honest money such as gold and silver bullion. Ridicule and disrespect for the noble metal is not only common, but expected from any "sane" economist.

Fortunately, this may be about to change.

It is being speculated that at least one of the two empty Federal Reserve Board member seats might be filled by an open gold bug.

Economist Judy Shelton is rumored to be President Trumps next pick for the Federal Reserve Board.

Judy Shelton is a friend of the precious metals community, as she is an advocate for the return of the gold standard and honest money policies.

Bloomberg reports;

"The White House is considering conservative economist Judy Shelton to fill one of the two vacancies on the Federal Reserve Board of Governors that President Donald Trump has struggled to fill.

Shelton has been contacted by the White House regarding the position, according to two people familiar with the matter who described the outreach on condition of anonymity."

Judy Shelton is currently considered a close economic adviser to President Trump and has penned articles such as those seen in the Wall St Journal, titled "The Case for Monetary Regime Change", in which she tries to address the issues in our horribly flawed fiat based system;

"Money is meant to serve as a reliable unit of account and store of value across borders and through time. It’s entirely reasonable to ask whether this might be better assured by linking the supply of money and credit to gold or some other reference point as opposed to relying on the judgment of a dozen or so monetary officials meeting eight times a year to set interest rates. A linked system could allow currency convertibility by individuals (as under a gold standard) or foreign central banks (as under Bretton Woods). Either way, it could redress inflationary pressures."

Sadly, even if nominated and appointed to the position, it is very unlikely that she alone will be able to make the radical changes that are needed to restore financial sanity and balance.

However, it undoubtedly would be a step in the right direction and for now, that's the best we can ask for.

- Source, as first seen on the Sprott Money Blog

Rob Kirby: Bitcoin is the New Gold? Or is it?

With equity markets topping and staggering, the flight to safety appears to be into cryptos, while gold & silver are collared near 5 year lows... 

Why? Rob Kirby, proprietary analyst and founder of Kirby Analytics, returns to Reluctant Preppers to give us an earful of his sage perspective on the global elite's power plays, and what most likely comes next!​

- Source, Reluctant Preppers

Mark Taylor: Justice is Pouring Down on Earth

Mark Taylor, author of the popular book called “The Trump Prophecies,” predicted there would be “military tribunals” the day after Trump was elected to the Presidency. 

Taylor says, “I don’t know the timing of this, but I sense we are on the cusp of a lot of big stuff happening because of the FISA report coming out. Justice is pouring down on the earth. This is why I am warning about the false flag stuff, these guys are panicking, they are going to do anything and everything they can to change the narrative and keep the focus off of them.” 

Taylor also asks the question, “Are there indictments for the media? I think absolutely yes, and it’s part of the tearing down process. I think you are going to see some of these people go to prison for what they have done.”

- Source, USA Watchdog

Market Mayhem: Are the Trade Wars Really To Blame?

A Market in Denial of Reality...

Anyone else seeing something fishy about these late day/week rallies? Yeah, me too...

- Source, Silver Fortune

Tariffs Scare Equities, Gold & Silver VS US Dollar

Tariffs scare the equities markets as the Trade War talks begin to escalate again. We look at the the Federal Reserve's announcement to leave rates once again unchanged. 

The Trump administration continues to pressure Powell for a rate cut, as Federal Reserve governors struggle to identify a pathway forward. 

We look at the purchasing power of gold & silver and how that purchasing power is preserved over time as the US Dollar continues to devalue. 

- Source, Golden Rule Radio

Investors Flee as the Latest Volley in the US, China Trade Wars Lands Home

Up, down, up down. 

The markets have been trading wildly over the last few days, as panic is setting in across both the United States and Chinese stock markets.

The trade wars that truly never ended, but only temporary receded, are not only back on, but accelerating once again.

The United States government has stated that the Chinese government has not held true on their last round of negotiations and have failed to keep their promises.

This prompted the United States Secretary of the Treasury, Steven Mnuchin to lash out and state that further tariffs would be placed on Chinese goods entering into the United States, beginning Friday.

Robert Lighthizer, the current United States Trade Representative had the following to say;

“We felt we were on track to get somewhere. Over the course of last week we have seen an erosion of commitments by China,” Lighthizer said, adding that significant issues remain unresolved, including whether tariffs will remain in place.

Markets, which briefly recovered, crashed hard on this news, with the Dow dropping 450 points and falling below its 50 day moving average, while the VIX has spiked back above 20, indicating that investors are nervous.

However, it was not just the US markets that suffered under this recent news, not at all.

Chinese equities and the yuan also tumbled lower on this latest round of trade wars, causing their markets to suffer its largest one day drop in three years, followed by another vicious move lower the next day.

This has prompted Chinese officials to reach out in a conciliatory tone, hoping to calm down the markets and those within the US administration who are less than pleased that they have not held up "their end of the bargain".

People's Daily China released the following statement;

"Mutual respect, equality, and mutual benefit are the premise and basis for reaching an agreement, China's Foreign Ministry said on Tuesday at a regular press conference, adding that tariffs will not solve any problem."

Unfortunately for the Chinese economy, this news couldn't of come at a worse time as the European Central Bank just lowered its growth forecast for the European Union, citing continued uncertainty surrounding BREXIT as the cause.

This places Chinese officials between a rock and a hard place, as the Chinese economy is much more dependent on the success of the Euro zone and US economies, than the latter are on theirs.

This isn't your typical jawboning of the past, as the current US administration has shown more than once that they are willing to throw caution to the wind and negotiate hard, even if it risks damaging their own economy.

This has caused investors to flee to the safety of Treasuries once again, while foolishly ignoring the safety that only precious metals can offer in a time such as this.

Whether or not the rhetoric will continue to accelerate from this point on is anyone's guess, but with the VIX exploding higher, it appears that the markets don't believe that this round of pain is going to be settled anytime soon.

Expect increased volatility and hostilities at least in the short term, as the trade wars continue to escalate and heat up. Buckle up, this ride is going to get a whole lot bumpier, before it settles down again.

- Source, Sprott Money Blog

Ron Paul: A Nuclear War Over Venezuela?

Ron Paul discusses the latest escalations over Venezuela and just how dangerous they are now becoming.

Could there possibly be a nuclear war? Has the world gone mad?

- Video Source, Ron Paul

The World is Changing Before Our Eyes

Join Mike Maloney and Patrick Byrne as they conclude their latest conversation about free markets, free people and sound money.

- Source, Gold Silver

Dangerous Derivatives And Why Our Banks Are Hiding Them

I discuss the risks to our banks from the poorly understood derivatives sector with Robbie Barwick from the CEC. It's one BIG problem!

- Source, Walk the World

A Bloated Auto Sector Begins to Collapse Under its Own Weight

In what is being taken as another sign of an incoming recession, auto sales across the board are being reported as down and down significantly.

Often used as a strong indicator of a healthy consumer economy, declining auto sales are an early warning sign for economist and businesses hoping to forecast our unpredictable economic future.

US auto sales crashed by 6.1% throughout the month of April 2019 to 16.4 million units sold.

This is the biggest drop since May 2011 and the lowest amount of sales throughout a month in over five years.

This is not only true within the United States, but is in fact a similar story that is unfolding all across the globe. Pointing to a much wider problem within the industry.

However, I believe that there is more to this story than first meets the eye.

Although declining auto sales are indeed a bad sign for the economy in general, what is being missed by many is the fact that these declining auto sales directly align with rapidly rising average car prices.

The average car price in the United States is expected to hit $33,319 by the end of the first quarter, a $1000 increase over the same time last year.

This comes on the back of years of rapidly rising car prices, while the average income of consumers has been relatively stagnant.

So how are manufacturers doing this? How are they demanding higher and higher prices and why in the world would anyone pay these outrageous prices for a new vehicle?

The reason for this is similar to the 2008 crisis, as lenders are already forgetting the follies of their recent past.

People are leveraging higher and higher as lenders extend the average length of their loans, while at the same time reducing their standards.

In the not too distant past, car loans were a maximum of five years. Now, that number has increased from six years, to a stunning seven years!

Depending on where you live this means that your car could be a hunk of junk by the end of your term, while you are still paying the large monthly payments that you began your loan cycle with.

This stretching out of the length of the loan does not result in lower monthly payments for you the consumer, no, not at all.

All this allows is for dealerships to charge the same monthly payment that you were accustomed to during the five year term, but for seven years instead.

This is akin to a slow boil inflation, such as keeping a bag of chips the same dimensions, while at the same time reducing its contents and it is now beginning to backfire on those who orchestrated it, as people are taking notice and voting with their feet.

Still, even though people are waking up to the shyst that was pulled on them, this does not mean that serious ramifications may not result because of this.

If we do enter into a serious recession, something that I do see coming over the next few years, then we may witness massive defaults on loans that people are simply unwilling to pay and would rather walk away from.

Car loans are not as sacred as home loans. People are much more willing to simply throw their hands up in the air in disgust and let the Repo man take their car, especially if it means they get to protect their home and other assets.

This could cause a rapidly spreading contagion among the auto lenders who have over-leveraged themselves with these horrible loans, threatening to bring the entire banking sector to its knees just as we witnessed throughout the 2008 crisis, once again increasing the need for a precious metals "insurance policy".

Regardless of the outcome, I highly suspect that we are going to see a swing back towards correction as auto manufacturers are forced to lower their prices, which is going to be a tough pill to swallow for them indeed.

- Source, Sprott Money Blog

Gregory Mannarino: Gold and Silver Are the Greatest Trades on Earth

Market analyst and professional trader Gregory Mannarino goes on to say, “This is where we need to be if we understand there is an inverse bubble in gold and silver. 

We need to be on the right side of the trade. Bet against the debt, and become your own central bank.

This is what people need to do: buy hard assets, like gold and like silver. A house is a hard asset, but it is massively overvalued. The real estate market is in a bubble worse than 2008. 

That’s going to correct too. Interest rate suppression has forced cash into assets it shouldn’t have gone into. 

I think we started this entire conversation off with the distortions that exist today have eclipsed every single distortion that has ever existed in financial markets in history. This is very unique.

Physical gold, and more specifically physical silver, are the greatest trades on earth. They are the most undervalued and suppressed assets on earth. They are real wealth, and they have represented real wealth for thousands of years. 

No politician and no Federal Reserve Chairperson is going to tell me different.

No amount of rigging will be able to stop the explosive move that gold and silver will make at some point.”

- Source, USA Watchdog