First off, I just want to thank you for the outpouring of support following Friday’s article, “Truth – and Passion – at a Premium.” Hands down, in more than a decade of writing free missives – and certainly, my 3½ years at Miles Franklin, it was the most universally positive feedback I’ve received – including “special guest” responses from fellow freedom fighters Chris Duane and Brother John F.
Clearly, the Cartel’s recent, heinous machinations – not just in Precious Metals, but across the entire spectrum of so-called financial “markets” – have elicited as much angst, anger and frustration across the real money community as any before; and no, I don’t think it’s a coincidence that Friday’s comical COMEX-opening slam – immediately following horrific PMI Manufacturing, construction spending, and motor vehicle sales – occurred on the four-year anniversary of the May 1, 2011 “Sunday Night Paper Silver Massacre.” Nor, for that matter, the Thursday’s COMEX-opening smash following abysmal personal income and spending data, and Wednesday’s clockwork post-FOMC raid, despite the Fed being as unequivocally dovish – and “unexpectedly” so – as possible. Let alone, as the FOMC statement was published simultaneously with one of the ugliest GDP reports in years.
Throw in the fact that simultaneously, the “Greek Tragedy” is rapidly moving toward its final act; China’s economy is collapsing so rapidly – per the 77% year-over-year shipyard order plunge announced Friday – that the PBOC floated a QE “trial balloon”; and despite the “bullishness” of Thursday’s “island of lies” jobless claims plunge – which, as I have noted countless times, has correlated perfectly with the plunging labor participation rate – the dollar just completed its biggest monthly decline in four years. And thus, in response to a specific newsletter writer that recently predicted gold would decline because the dollar was on the verge of a major rally, I yet again must point out that the only factor that currently matters is the Cartel’s machinations – which ultimately, will fail spectacularly, no matter whether the dollar is rising, falling, or flat.
In fact, TPTB’s market manipulation has become so pervasive – and mind-boggling – it’s becoming painful to turn on my screen each morning. To wit, the “oil PPT” is pushing oil prices higher – and inflating the shale dotcom bubble further – as oil fundamentals collapse; whilst the “copper PPT” is supporting “Dr. Death” amidst equally dire copper fundamentals. And of course, whilst the gold Cartel attacks Precious Metals prices every second of every day, the “President’s Working Group on Financial Markets” unwaveringly supports the “Dow Jones Propaganda Average” with “dead ringer”, “hail mary,” and countless other blatantly transparent algorithms – yielding record equity valuations amidst the worst economic data since the 2008 financial crisis. Not to mention, flat out declines in corporate revenues and earnings. Heck, the Atlanta Fed’s real-time GDP “Now-Cast” – which predicted the first quarter’s 1Q growth rate of 0.2% to a tee, now forecasts 2Q growth of a way below consensus 0.8%. Of course, the one market “they” are losing control of – in my view, due to accelerated Chinese selling – is Treasury bonds, where rates have been rising despite the Fed all but screaming “ZIRP to Infinity.”
Fortunately, the walls are finally starting to close around the monsters perpetrating this economic and inflationary hell on the world – as with each passing day, destructive Keynesian monetary policy is being further denigrated, en route to the decisive “death of Fed (and other Central bank) credibility.” To wit, in last weekend’s MUST HEAR audioblog, I couldn’t have hit the title on the head better than “Earth to Janet, No One is Listening” – as just this weekend, her damning comments from a December 2008 FOMC meeting enabled the whole world to realize her true feelings about the inability of money printing to solve financial and economic problems.
“As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.”
And don’t forget the most inept Central bank on the planet – the Swiss National Bank – who in my view, took that infamous title from the Bank of Japan when it convinced the Swiss population to vote “no” on the “Save our Swiss Gold” referendum under the guise of its need to maintain the Franc/Euro peg – only to have it blow up in its face within weeks, causing massive financial losses and a permanent loss of face. To wit, we learned this week that not only does the SNB still hold massive foreign currency holdings – most likely, still dominated by the dying Euro; but in lieu of purchasing the time-honored safety and insurance of gold, they have become one of the world’s largest taxpayer funded “hedge funds” – buying up more than $100 billion of global equities, at all-time high valuations. No, nothing could possibly go wrong here.
Those horrors aside, it’s time for me to discuss – or better put, “rant” – about a topic that disgusts me as much as market manipulation itself. Which, of course, is the canard-of “deflation”; which not only cannot occur in a fiat currency regime, but is decidedly not doing so today – particularly in the lives of the seven billion people that don’t use the world’s “reserve currency” (the average currency has plunged 40% since the Fed commenced “Operation Twist”, QE2, and QE3 in 2011). Not that the Miles Franklin Blog hasn’t discussed this topic ad nauseum for years, but the topic recently resurfaced – like a cancerous tumor – when the “deflation boogeyman,” Harry Dent, claimed gold would plunge due to this mythical phenomenon.
This weekend, my Mom came to visit from New York. Whilst here, we had several conversations – and at times, disputes – about the cost of living. Following these discussions – with someone decidedly not amongst the financial community – my view of Americans as “frogs in a boiling pot” of simmering inflation couldn’t be stronger. Truly, the average person – certainly in the States, and likely many other nations – has no idea why the cost of living continues to surge; and certainly, no understanding of the virulent, irreversible forces of money printing.
Over the past year, I have written endlessly of the countless items rising in price – some more than others, some faster than others – which is exactly why real household income has been declining for four decades. Which, by the way, even my non-financial mom understood well. However, she was literally dumbfounded when I told her the litany of “need versus want” prices at or near record prices – including food staples like milk, beef, pork, chicken, shrimp, eggs, cheese, and many fruits and vegetables; shelter costs, including both house prices and rents; utilities; tuition; and even water. Not to mention, all types of insurance – in large part the direct result of ZIRP policy (and litigiousness), which forces insurance companies to raise premiums to offset the impact of lower interest income. Not to mention, inflation in the form of relentless tax increases – such as the all-time high level of U.S. property and sales tax revenues; fee increases everywhere from airlines (baggage fees, no more free food); to car registrations; athletic league costs; and essentially all bank transactions, to name a few I can personally identify with. Throw in “creeping” premiums on everything from gym memberships; to ADT security; cable TV; and internet usage, to name a few, and we’re taking some serious cost of living increases. Heck, even as the Fed has kept rates for TBTF banks at essentially zero for seven years, average credit card APR’s have hit a 17-year high of 15%! And I won’t even go into the cost explosion in areas where the “1%” that receive the bulk of the Fed’s largesse reside – like New York and Washington, DC, for example; which is exactly why people are flocking en masse to states (like Colorado) with lower costs of living, and fleeing from such high cost states.
That said, she couldn’t be more aware of the behaviors Americans are cumulatively taking to offset the inflationary impact of the end of income caused by permanent ZIRP – and soon to be NIRP – policy. Such as, for example, the frantic search for credit cards paying an extra half-percent of cash rewards (I recommend Chase Sapphire, Capital One Quiksilver, and Citibank Double Cash); explosive traffic growth at “dollar stores” like Family Dollar and Dollar Tree (although shoppers need to realize product “shrinkage” causes many dollar store items to be rip-offs); thrift stores like TJ Maxx, Home Goods, and Ross; and transactions on Craig’s List. Heck, this weekend was my neighborhood’s annual garage sale – and my god, I have never seen such activity – and planning – in eight years of living here!
As I’ve discussed for years – and particularly, recent years – “all economic data are lies.” However, no lie is more pervasive – although “unemployment” and “GDP” are certainly in the ballpark – than the “sub 2%” inflation the relentlessly rejiggered CPI purports, care of “substitution”, “hedonistic adjustments,” and countless other statistical gimmicks. Consequently, the Fed is able to eternally print money, under the guise that its 2% target is never reached – as if they wouldn’t just raise the bar if it ever got there, as they did when they eliminated the 6.5% “unemployment rate” threshold.
In fact, it’s outright insulting that the BEA (Bureau of Economic Analysis) claimed first quarter deflation of 0.1% – which was clearly done simply to keep the real GDP rate positive. And no, falling gasoline prices – which have since rocketed higher – did not cause the cost of living to decline; particularly in an historically bad economy, where said taxes, fees, and “premium creep” have become mainstream corporate and municipal “profit enhancement tools.” As you can see below, aside the bottom of the 2008 crisis, the only time the GDP deflator has been negative was a brief period in 1949. As for the “deflation” the Fed is so terrified of, take a gander at the (massively suppressed) CPI itself; which not only has relentlessly risen since the Federal Reserve was (deceivingly) created in 1913, but exploded since the gold standard was abandoned in 1971.
In the big picture, the only things as certain as death and taxes are ZIRP and QE to infinity in the terminal stage of a fiat currency regime; as well as exploding gold and silver demand – and care of two decades of price suppression, collapsing PM supply.
What a good, all encompassing article Andy. Thank you for the ‘unvarnished’ truth.
The really “wild card” rearing it’s ugly head now, is the attack on physical currency cash. If the TBTF’s and the government have their way and outlaw the holding of physical currency, then we lose the last remaining tool which enables wealth to be held away from their grubbing hands.
It will also give TPTB the excuse to attack the holding and ownership of physical precious metals, using the “Barberous Relic” line of propaganda. At that point, the entire population will be nothing more than a tribe of slaves, with their newly issued EBT cards for everyone. With the warning of, ‘comply or have your card cancelled’.
They will try, but here’s my answer to all such “what if” questions…
/priceless-precious-metals-vs-worthless-dollars
a
It appears that the planned “cashless society” is more than a “what if” scenario. When connecting all the dots, it adds up to a “when” not “if”.
http://www.zerohedge.com/news/2015-05-04/why-powers-be-are-pushing-cashless-society
Absolutely.
I was a little shocked to read on Zero Hedge (Major U.S. Retailers Are Closing More Than 6,000 Stores)that Dollar Tree/Family Dollar is set to close 340 stores this year.
That number was only exceeded by Office Depot/Office Max at 400 by 2016.
They are merging, as are Office Depot/Office Max. So those closures are more due to M&A than pure retail weakness. Of course, the mergers themselves are due largely due to overall retail weakness.
People need to detach the part of their brain that cannot see what the world – and the dollar – would look like in this scenario, and ask themselves again, “WOULD YOU RATHER HOLD PRICELESS PRECIOUS METALS OR WORTHLESS DOLLARS?”
Andy when I read these words you wrote to following thought comes to mind.
The day is quickly approaching when the masses will realize that they have been bamboozzled again.
History has told us hundreds of times and many over the last 100 years that FIAT always eventually looses value or fails.
Why did we not ask ourselves over the years why are governments trying so hard to tarnish the shine of Precious Metals…
What is the reason…..
Why did the World removed itself from backing cash with Gold…..
Is it because we are lazy, stupid, or just determined to allow history to continue repeating itself.
It is astounding how effective the programming of minds against the Gold Standard and precious metals has been.
The World today.
Take a virtual trip around the world and look at the riots breaking out almost daily.
Just did a search on the internet and found reports of 8 riots within last 24 hrs.
http://www.euronews.com/tag/clashes-and-riots/
Is this the next growth industry…Private Firms hired to crush protests.
What is our future…Chaos coming to your home town.
andy
I can easily dismiss Dent’s deflation prediction but Stockman is predicting deflation and keeping funds in dollars. What gives? thx.
I have never heard Stockman so much as mention gold, or even “the dollar.”
I assure you, he is not speaking like Dent.
And either way, what more about my comments – and Bill H.’s – don’t convince you of the myths of deflation?
Don’t worry so much about what people say – even so-called “good guys” (and remember, before his newfound epiphany, he was a government official and venture banker).
My advice, read his economic analysis, avoid his market “advice.”
a
Andy – another excellent article, thanks for the truth! The one thing that I don’t get is “WHY”, why don’t people get it? which leaves me to question not only myself but others like yourself.
Is it us are we being over protective? It all reads plainly enough that a small child should get it.
So “WHY” are so many not getting the fact that a very Huge world event is knocking at the door?
The problems of the world came up at a BBQ on the weekend and when I mentioned what was coming and the how’s and the Why’s, everyone laughed and said I was like the Spectre of Death from the Monty Python Movie!
Human nature, my friend, human nature.
Fretting about things you can’t do anything about is not something the human brain likes to do.
At least if you have the means to protect yourself, you have a fighting chance to survive this battle against instinct.
Andy,
What really frightens me is the unfettered attitude of local, county,state and federal govt’s cost-of-living adjustments. My father (over 50 years ago)use to say to me that govt’s will do anything to stay in business and that includes taking everything you own. With the demise of the two party system at all levels (try running for any office that has budgeting attached to it) the patronage and pension system is amazingly as strong as ever. Of course the effect you see as a subject of the realm is inflation in the ‘need’ category which only gives you the option of leaving the state or country. So you can cut off your ‘want’ list of cable (garbage anyway),security services, cut deals with local guys for services, use craigslist, purchase from local farmers etc…etc…etc.. but in the end real estate taxes, sales taxes, transaction ‘fees’, utility bills (check those puppies for fees and taxes), regulated health care, regulated home owner and regulated car insurance will continue to eat the average person alive. Then when the 30% Great Pumpkin reset occurs as the world reenters the gold standard, you will see the ‘need’ versus ‘want’ paradigm permanently establishing the serfdom class.
Brilliant analysis!
Andy, I love you brother, BUT, you just baffled the s#%! outta me with. (I recommend Chase Sapphire, Capital One Quiksilver, and Citibank Double Cash) Made my head spin around the very rare triple twist.
Spending on credit cards with a 1/2% additional cash back is as much a canard as deflation. Hard truth is what is required. STOP SPENDING MONEY YOU DON’T HAVE.
Yes Andy, You are from the rare breed who pay off their monthly balance each and every month, however, the vast majority of Americans view space on their credit cards as money in the bank.
If you are of the rare breed that pays off their credit cards then the first thing that becomes obvious is you don’t need them.
Stefan,
You’re kidding, right? Yes, I have immediately paid off every monthly balance I’ve had, in full, from the first credit I received in 1988.
Yes, I am fortunate to have been able to do so, but that is not the point. The fact is, America has become a de facto cashless society; as the convenience of credit cards – not to mention the benefits, like AMEX’s fraud protection – makes cash essentially useless.
NO ONE has spoken of the evils of debt more than me, and all I am doing here is saying that if you happen to use credit cards like cash, these cards enable you to generate some badly needed income.
I didn’t think it was necessary to state the obvious; i.e., that I don’t condone spending money you don’t have.
Geez.
“makes cash essentially useless.”
Until the bank runs start & everyone needs their cash, because credit has ended.
During an ice storm 3 years ago, we had no power for 1-2 weeks, in which the stores would only take cash, no credit.
That worst case scenario is entirely possible. Let’s hope it doesn’t happen.
a
Relax Bossman, But the obvious is important. I also keep my balance at $0 however, I did come to realize, my wife and I, do not need those cards. We maintain an American Express, that’s all. From the bank, we utilize their Debit card. I will admit it took some additional discipline, but, you know, it just feels better not contributing anything to the debt based system. And I like the idea that the banks and credit card companies consider us to be deadbeats. Stop, using credit and you can be a deadbeat too. It’s Fun!!! I think a major problem is what I wrote earlier. Folks who have room on their cards view it as cash in the bank. That attitude breaks my heart as it is a bankers wet dream, and they want as many people as possible to think that way. One last note is the BS line of killing off your credit cards will negatively hurt your credit score. I can testify that, that is 100% baloney. So I agree with you generally 100% and learn a lot from you. Relax Brother! All is well.
All good.
a
Once again the sharp knife of Andy’s real world logic and observations cuts through all the deflation boogeyman hype. Anybody who shops for any kind of goods that are necessities instead of frivolities knows that inflation is raging and painful. The dollar may be going up in relation to other toilet paper currencies, but it continues to decline in an absolute sense relative to real stuff people actually need. What form of monster (banker) is it that has no compassion whatsoever for the millions of retirees who are getting destroyed by inflation because ZIRP deprives them of interest income? A little more of the “deflation” which is claimed to be occurring, and we will all be eating cat food — if we can even afford that! And there are actually people who think paper assets are a better bet than PM’s? Have they been lobotomized?
Amen!
great stuff Andy, keep up the good work.
I get more people reading you and Bill each week.
I doubt very much Dr Lewis of Silver Seek web site is guilty of Plagiarism but his latest article is very very very similar to yours !
http://www.silverseek.com/commentary/deflation-and-soaring-cost-living-14378
LOL, he was just re-producing MY article.
a
God Bless you and Bill. Keep up the good fight. Your impact is well beyond what you can see or know. In fact just yesterday my pastor who is developing a program in preparation for the Shemitah this year thanked me for opening his eyes to the “truth” on things. You and Bill are the guys that got me thinking a few years ago and the 100+ people I’ve spoken to on silver and financial propaganda I’ve referenced you both.
Much appreciated, that’s what keeps us going.
a
I’m glad you told of the conversation with your mother. My wife realizes inflation, but is a frog, thinking our lives wil go on in this wonderland forever! I no longer talk about preparing as she feels I’m getting unstable. Try to keep your blood pressure down, because we need your writings. Getting worked up will not pursuade new people to wake up!
Yes, I learned long ago to avoid speaking to /family-friends-and-colleagues about these topics.
Thankfully, I have this blog to vent on!
a