(Chart source, goldprice.org)
Never before have we witnessed such a global phenomenon, in which so much fiat money was simply created out of thin air and injected into the system, whether it be through businesses being bailed out, or by directly placing it in consumers hands.
As COVID-19 continues to spread across the world, with countries such as the United States, Italy and the United Kingdom being hit particularly hard at the moment, Government officials have little to no choice in the matter, unless they wish to see the virus run out of control, killing possibly millions in the process.
As can be understood, the latter is simply not a scenario that they are willing to see unfold and who can blame them? Would you want to be remembered in the history books as the leader who sacrificed millions of your citizens lives?
Unfortunately, the harsh reality of the matter is that the decision to sacrifice the economy over peoples lives is not without consequences, as millions of people are simply falling through the cracks, suffering financial hardship due to forced closures and regulations that they have to abide by.
This is particularly true for small to medium sized businesses, many of whom are simply being eviscerated due to government actions taken in the hopes of stopping the spread of COVID-19.
Many of these businesses have been forced to shutter their doors, knowing that they are unlikely to ever reopen them again, as they watch their finances waste away, due to a lack of sufficient income.
There are many other economic consequences, with one in particular that I believe is going to have dire ramifications in the coming years, even though the general population seemingly is blissfully unaware of it.
Helicopter Money Goes Global
With each passing day, another government around the globe announces another stimulus, bailout, injection, whatever you want to call it program, in which billions to trillions of dollars are being added to the system, in an attempt to help keep the economy churning along as best as it can.
Many of these programs are akin to sticking your finger in a dam, however, the amount of fiat money simply being created out of thin air cannot be ignored and thus will not be ignored.
(Image Source, Pixabay)
Take for example the bazooka fiat money shot, just fired by the Federal Reserve, who have stated that they are going to do whatever it takes to keep the economy moving, announcing that they will provide an additional $2.3 trillion in loans to support the economy.
As per the Fed's most recent press release;
"Our country's highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus," said Federal Reserve Board Chair Jerome H. Powell.
"The Fed's role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible."
(Chart source, Bloomberg)
This apparently was the straw that broke the camels back, finally causing the USD to drop lower, as investors finally came to their senses, realizing just how historic this fiat money printing experiment truly is.
Before this announcement, many other bailout programs had been issued by the Federal Reserve, however, the US Dollar Index continued to hold strong.
What makes this move truly shocking is the fact that similar scenarios are being repeated all across the world, such as in the United Kingdom, where the Bank of England has stated they will directly finance the UK government, a move that is akin to letting the genie out of the bottle and of which it may possibly never be put back in.
This is a massive move, and of which the Bank of England is the first Central Bank to do so, however, I suspect others may soon be forced to join their ranks, as they continue to promise ever increasing amounts of fiat money to their citizens, with no real means of doing so, other than simply creating the money out of thin air.
Meanwhile, the Canadian government has tipped over into socialism, choosing to engage in numerous bailout programs, that will directly support its citizens by sending them large sums of money, for many months, if they have found themselves out of work due to the COVID-19 crisis.
The Great Fiat Reckoning
As I've stated many time before, I do not envy the positions our government officials have been placed in and I can understand exactly why they are doing what they doing, even if I do not agree with each and every action.
However, what you, as an individual need to understand is the fact that the consequences of printing this much money, of debasing your currencies in such a voracious manner are very real and are only going to truly manifest themselves in the coming years.
Fiat currencies are being debased like never before and the printing presses are working in overdrive, injecting money into the system, hoping to keep our fragile economies afloat.
Will they be successful? This is yet unknown, as nothing like this has ever been attempted before.
Regardless, there is one thing that I am certain of. One thing that has stood the test of time, over and over again in these times of crisis, in these times of debasement. Precious metals.
Precious metals, most notably, physical gold and silver bullion are going to move higher.
They are going to continue to be sought after for the protection that only they can offer in a time of crisis, as they inevitably account and adjust to this drastic increase in the fiat money supply, the likes of which we have never before seen.
Keep stacking, keep safe.
- Source, Nathan McDonald via the Sprott Money Blog
