2,500 years ago, the Greek philosopher Heraclitus wisely espoused, “the only thing that is constant is change.” Which, in the world of investing, could not be truer – particularly today, as the pace of technological innovation accelerates at an unprecedented pace. The problem is, that while technology is generally speaking a good thing, not all technology is utilized for favorable purposes; in many cases, in stark contrast to the best interest of the world’s “99%.” To that end, the foundation of today’s technologically exploding world – its monetary system – is still based on an archaic, fraudulent fiat Ponzi scheme that is rotting the world’s finances and economy from within, for the benefit of a handful of politicians, bankers, lobbyists and billionaires.
Frankly, industrial technology is starting to resemble the world of Star Trek, whilst monetary “technology” is closer to the Flintstones. And now that “fintech,” or financial technology, has enabled bankers to maniacally control the prices of “currencies”; as well as the “markets” they trade in; and, of course, the “barometers” of progress mankind uses to “check” monetary abuse, like gold and silver – the wealth disparity between the “99%” and “1%” has exploded to politically, geopolitically, and socially untenable levels. Not to mention, global economic activity has been decimated by oversupply; whilst dramatically increasing the cost of living, and creating the largest, parabolically-rising debt edifice in history. This is why, for all the excitement about new technology, the world is not yet able to truly advance; and why, given the exploding pace of technological growth and information dissemination, the historic “reset” of the monetary system required to enable advancement must occur sooner rather than later – in the process, catalyzing one of the greatest wealth transformations in global history.
The way I see it, the biggest losers will be the equally archaic stock and bond markets; perhaps not in nominal terms, as Central banks desperately print money to maintain the rapidly dying illusion that “all’s well”; but certainly, in real terms. More importantly, I believe the very concepts of stocks and bonds are slowly being phased out, given how detrimental they have become to the global economy; and particularly, the world’s “99%.” I mean, when one considers just how much fraud goes into the process of issuing “securities” – from rigged accounting, regulatory agencies, and financial markets; to the insider trading benefiting the “1%”; to the debt piled on, at parabolically rising rates, to “buy back” said “equity” – again, benefiting the “1%”; to their monetization by Central banks – in some cases, like the Japanese and Swiss, blatantly so – again, benefiting the “1%”; it’s difficult to believe that in the age of Artificial Intelligence, Driverless Cars, and Crypto-currency, a handful of unelected bureaucrats and their bankster cronies can remain in charge of printing “money” and administering “markets.” Which I ASSURE you, won’t remain the norm much longer.
As for bonds, everything I just said about stocks goes double. As despite relentless propaganda – now, more than ever, given the satanic “partnership” between the “evil Troika” of Washington, Wall Street, and the Mainstream Media – the world’s biggest scourge, in both Heraclitus’ time and today – is DEBT. And now that Fintech has figured out methods – like off-balance sheet derivatives – to “leverage” debt at ratios putting Lehman Brothers to shame, the level of global debt has reached levels undreamt of as recently as the turn of this century – to the tune of roughly $320 trillion on balance sheet, and at least as much “off balance sheet.” To wit, whilst NYSE margin debt of $539 billion is itself at an unfathomably large record-high, “shadow margin lending” – i.e., “off balance sheet” – may be at least as large. Heck, the entire Chinese economy is based on shadow lending, “managed” by the equally anachronistic, and unwaveringly failing, Communist manifesto. Which is why China, the anticipated “leader” of the 21st Century, must experience a dramatic, and globally destructive, economic and monetary crash before it can truly advance. And why, wisely so, its government, and citizens, are stockpiling gold at a record rate – both “on” and “off” balance sheet. Not to mention, China in many ways represents the center of the Bitcoin universe – with a government that understands crypto-currency more than perhaps any other.
To that end, as highlighted in yesterday’s “Precious Metals and Bitcoin – Twin Destroyers of the Fiat Regime, Part III,” Fintech innovation in the monetary space is advancing at an unprecedented rate. Heck, yesterday’s Bitcoin “hard fork” may well prove to be a powerful, and extremely unexpected, dagger in the powers that be’s’ diseased fiat Ponzi scheme; in that it may well have separated Bitcoin into two powerful entities; one, focused principally on storing value – and the other, facilitating unprecedented transactional speed. A few months ago, at the height of the “scaling debate,” I suggested this very thing, but was scoffed at for believing such blasphemy had merit. However, in a world where literally thousands of transaction types occur each day, it’s difficult to ascertain how one currency can handle them all. And frankly, the most important transaction of all, wealth storage, works best when it has a medium of its own.
This is why GOLD’s principal “use case” (and with it, it’s “baby brother” silver) – wealth storage – has been bastardized throughout history, diluted by government-abused “gold standards” due to a lack of viable transactional alternatives. And why, when crypto-currency overwhelms the fiat monetary regime, it (they) will not only be liberated from the maniacal suppression that has pushed prices to their lowest-ever inflation adjusted levels; whilst simultaneously, destroying the mining industry’s ability to produce them; but finally, after thousands of years, they will be relegated to said principal use case – wealth storage – which for centuries, has been diluted by futile, universally destructive government efforts to manage the monetary system.
And for those that say, “but crypto-currency will take over that use case, too” – I’ll simply say “plus ça change, plus c’est la même chose”; i.e., the more things change, the more they stay the same. As, per last week’s “co-existence of scarcity assets,” the amount of fiat currency – and debt default – to be “insured” against is unfathomably large, compared to the minuscule size of the available-for-sale float of the handful of scarce, wealth-storing asset classes. To that end, if you are fortunate enough to be able to hold an ounce of gold in your hand – realizing its weight, luster, brilliance, and the amount of blood, sweat, and tears that went into finding, producing, and circulating it – I ASSURE you, you’ll understand why Precious Metals’ financial system role isn’t going anywhere, no matter how rapidly “Fintech” advances.
I could easily end this article here. However, I kid you not, my original working title was “gail force economic headwinds, Precious Metal tailwinds,” so I feel compelled to discuss the reasons why. I had no idea I’d go off on the aforementioned, extremely important, big picture tangent. However, the fact remains that the global economy – and monetary system – is rapidly collapsing; to the point that the final hyperinflationary push, that forever destroys fiat currency in lieu of said “new world” of Fintech, has never been closer.
On a day when the Australian Central bank followed those of the U.S., Europe, and Japan (last week) in warning of the “dangers” of a strengthening currency; just one day before “whisper” rumors suggest the Bank of England will do the same; oil prices plunged based on OPEC’s production again hitting a new all-time high in July (with U.S. shale perhaps a month or two behind), as “deflation” fears – rigged stock market notwithstanding – continued to take center stage. To wit, Jim Rickards’ tweet yesterday, regarding why the Fed is “done raising rates this year.” Which, I might add, the money markets decidedly agree with – and myself, per last week’s (maniacal Cartel suppression efforts notwithstanding) “most Precious Metals bullish I’ve ever been.”
Yesterday alone, June personal income “growth” came in at ZERO, versus the expectation of +0.4%. This while “revisions” to the prior three years magically “erased” $120 billion of previously reported “income.” Meanwhile, June construction spending “growth” came in at NEGATIVE 1.3%, compared to expectations of +0.5%, taking it to its lowest level in a year, and lowest year-over-year “growth” in six years. And as for the unfolding “Carmageddon” – I’m simply going to present yesterday’s latest bloodbath figures, with “no further comment”; other than, to highlight just how badly America’s “Big Three” are doing; and thus, why our “King of Debt” President; who claims the “too strong” dollar is “killing” us; will shortly be appointing in even lower “interest rate person” than Janet Yellen to the role of Printer-in-Chief come February. Let alone, as the other pink elephants in the room – surging auto, credit card, and student loan delinquencies – start to significantly strain an insolvent banking system unwaveringly reliant on record low interest rates to survive.
In other words, the “perfect monetary storm” is heading our way, at a time when the exploding Fintech revolution threatens the powers that be’s’ dying, archaic, Fiat Ponzi-based system more than ever – which just happens to be the basis for my must read December 2016 article, “why Bitcoin will make gold and silver go up.” Simply put, amidst the dawning of a new monetary age, the stark lack of “scarcity assets” – in a world where history is not easily forgotten – will enable gold and silver’s “immutability and timelessness” to shine through; particularly, when the heinous, world-destroying Cartel suppressing their prices is inevitably, spectacularly destroyed.