According to this chart, the Fed’s favorite “inflation barometer” – the “five-year forward five-year inflation expectations index” – has fallen to its lowest level since the 2008 financial crisis; you know, when oil was $40/bbl. and no one bought anything, as a cumulative “deer in headlights” syndrome engulfed the world. Quite amazing , considering U.S. stocks – which theoretically, should be the worst performing assets during deflation – are at (nominal) all-time highs; as well as high-end real estate, rare art and other “1%” assets. Then again, when Central banks are not only monetizing bonds – pushing rates to all-time lows – but stocks as well, it’s not so difficult to understand. Hence, the broadest “chasm of destruction” – between economic reality and rigged financial markets – in history.
Unfortunately, wages – both nominal and real – haven’t kept up; nor have “99%” homes, personal savings, capital investment, or any of the things that required to sustain economies specifically, and society in general. Which wouldn’t be so bad, if “need versus want” items” – like food, for instance – weren’t so highly correlated to money printing. To wit, last week’s comment from Tilman Fertitta, the billionaire chairman of Landry’s Restaurants, which owns national restaurant chains operating in 35 states.
(I just had dinner with Ben Bernanke), who said ‘there’ no inflation.’ Well go buy something, whether at the grocery store, the drug store, the broom and mop store, and there is inflation everywhere. I have many types of businesses, so I buy everything from labor, to mops, to food, shrimp, and steak – and everything is more expensive. We are raising prices: that’s why right now you pay more for an airline ticket, a hotel room, a pot of coffee. There is huge inflation going on right now.
–Zero Hedge, November 13, 2014
Unfortunately, the Fed’s favorite “inflation barometer” doesn’t gauge this; or, for that matter, the inflation I experience in my own “business” – i.e., the neighborhood HOA I have been President of for the past five years. To wit, we will be ratifying our 2015 budget this week – and yet again, are forced to raise dues to meet the inexorable increase in operating costs. We have resisted this trend as best we could but have been forced to raise dues by 10%; and frankly, we probably should raise them by 15%, but will likely do so in stages for “political reasons.”
Sadly, such cost pressures are across-the-board – including management fees, insurance, social committee, landscaping, electricity, water and waste removal. And oh yeah, for the first time since I moved in seven years ago, the neighborhood has abandoned homes requiring maintenance and legal expense; not to mention, the associated reduction in dues collection and increased demand on the board’s time. And thus, two glaring examples of the inflation reality – from a small town HOA to a big city restaurateur; which unfortunately, will only worsen dramatically, as the Fed responds to said “multi-year low inflation” with unfettered money printing. Not to mention, the expanding currency wars engulfing the planet as the ultimate “race to debase” accelerates.
True, commodity prices are crashing as the global economy collapses into the abyss. However, money printing Ponzi scheme only support the “1%,” yielding nothing but the “need versus want” inflation for everyone else. This is why government approval ratings have never been lower, despite the so-called “recovery” suggested by rising stock prices. At least, those included in PPT-supported indices like the “Dow Jones Propaganda Average,” and borrowing at Fed-subsidized rates to repurchase stock. Hence, our belief that the global economy, for all intents and purposes, is amidst another “2008, with one temporary difference.”
To that end, we are “happy” to notice that with each passing day, the “propaganda leg” of the “evil tripod” of money printing, market manipulation and propaganda creeps closer to its deathbed. In other words, the aforementioned economic reality is overcoming the façade of Central bank supported equity markets; and subsequently, the world is experiencing a “splintering” unlike any before it.
It started with rebellion at the polls (see, U.S. elections 2014) – but that pesky word “war” is permeating all aspects of global society, both internally and externally; no more so than the aforementioned “currency wars,” as exemplified by Japan’s “Abenomics II” announcement last week. Not to mention, this morning’s delay of Japan’s planned 2015 sales tax increase, which was supposed to pay for Abenomics. Heck, Japan is not only actively buying bonds and stocks but issuing “free” gift cards to the public, in the height of money printing, currency destroying frenzy. Consequentially, the Yen is in freefall, and the entire world considering retaliatory currency debasement schemes – again, to the benefit of the “1%” at the expense of all else.
Said “splintering,” like money printing itself is as contagious as Ebola; as bankers, politicians, and sundry hangers-on seek to protect their interests. To that end, watching Greenspan attempt to whitewash his legacy as the Sith Lord of Money Printing – by extolling gold and denigrating QE, no less – was not even conceivable a few years ago. Not to be upstaged, just yesterday the “godfather of Abenomics” repeated the Maestro’s performance, in calling his brain-child a “Ponzi game, which may well yield a Japanese taxpayer revolt.” In other words, the rats are racing from the sinking ship positioning themselves for survival when said “temporary exception” departs.
The accelerating “secession movements” we discussed two months ago – and initially predicted three years ago – are another form of splintering; from Scotland, to Catalonia, to Venice, Italy. And don’t forget pending secessions from the cancerous monetary regime, which next week’s Swiss referendum could rapidly catalyze on a global basis. Which brings me back to yesterday’s incredible comment from ECB board member Yves Marche (of Luxembourg), that “the ECB could purchase other assets such as gold, shares, and ETFs to fulfill its promise of adopting further unconventional measures to counter a longer period of low inflation.”
Why am I bringing this up two straight days? Because, frankly, no statement exemplifies such “splintering,” on so many levels. For one, it flies in the face of the ECB itself, as rising gold prices will clearly serve as a blaring “inflation siren” to the public, making it nearly impossible to execute additional QE schemes. Additionally, it implicitly admits gold is a valuable asset, serving as a “slap in the face” to the Swiss National Bank in its moment of greatest propaganda need – as we discussed yesterday. And last but not least, it affronts the ECB’s most important “partner in crime,” the Federal Reserve, which openly despises gold and will do anything to denigrate it. Keep in mind, European banks have benefitted more from the Fed’s off-balance sheet “swaps” and “on-balance sheet” ZIRP than any other entities on the planet. And thus, it’s not too difficult to see the rapidly spreading rift, as the dollar/Euro currency war accelerates. Not to mention, the pound, Swiss Franc and all other currencies affected by Fed policy.
Even within the ECB itself, we are seeing massive splintering of its most powerful member, Germany; which is resisting Draghi’s “whatever it takes” QE plans tooth and nail. Without it, the PIIGS (and others) will instantaneously implode – taking with them, by the way, a German banking system with enormous PIIGS exposure. However, if Draghi gets his way, Germany may well experience a reincarnation of the 1920s Weimar Republic. In other words, the ultimate “Hobson’s Choice.” And Germany is not just revolting against ECB QE, but extending economic ties with the burgeoning Sino-Russian economic axis; as like the rats on Titanic, it knows full well that the economic future will not be dominated by relics like England, France and Spain but BRICS like China, Russia and India.
Speaking of India, how about this year’s expulsion of the anti-gold “Congress Party,” following a year of unprecedented black market PM activity on the heels of prohibitive tariffs enacted to support India’s dying fiat currency regime? It’s only a matter of time before the other BRICS act likewise, given their currencies have plunged, on average, by nearly 60% in the past three years, yielding dramatic inflation increases for the 42% of the world’s population residing there. Of course, the Chinese could significantly improve the BRICS’ lot by removing its destructive dollar peg; but to successfully do so – that is, without an instantaneous economic shock wave – the PBOC would need to simultaneously announce its true massive gold holdings. Hmmm.
As the global fiat Ponzi scheme fulfills its irreversible destiny of widespread poverty, inflation and unrest, the world will experience political, economic and social turmoil unprecedented in history. The “splintering” of TPTB’s delicate smoke and mirrors game is expanding at an alarming pace; and eventually, will explode in a horrific blaze of glory. Frankly, I cannot see how anyone cannot consider financial protection right now – particularly as history’s most reliable economic insurance has been suppressed to “bargain sub-basement” levels.
To that end, Miles Franklin has been selling (and buying) precious metals for 25 years – with an A+ Better Business Bureau, and not a single registered complaint since opening its doors in 1990. All we ask is an opportunity to earn your business – which I assure you, we will if given the chance!