It’s Friday morning, just before the B(F)LS, or Bureau of (Fraudulent) Labor Statistics publishes the second quarter GDP report. Incredibly, despite hard economic data consistently worse than the previous two quarters – which, at 1.7% (doubly seasonally adjusted and all), sported the lowest two quarter rate since the 2008-09 Financial crisis – “expectations” are for a 2.6% increase. I mean, how do all those zero and negative retail sales, industrial production, construction activity, factory orders, and durable goods orders translate into “2.6%” growth?
Heck, even in Europe, whose economic stagnation has become legendary, GDP growth rates have been stuck below 1% for years on end, despite the publication of higher “soft” data PMI readings than the U.S. In other words, just as the U.S. government leads the world in surreptitious financial market trading, derivatives creation, and paper Precious Metal suppression, they do so in economic data as well. And yes, I know the Chinese continue to report 6.5%-7.0% GDP “growth” despite an obviously collapsing economy. But heck, at least their numbers are so far from reality, they aren’t actually taken seriously.
Irrespective, in an America on the verge of political (see: death of Obamacare repeal), economic (see: upcoming debt ceiling debate), and geopolitical (see – new Russian sanctions) chaos, the BLS may well attempt to prolong the illusion of the soon-to-be-second-longest “expansion” of the 147 in America’s 241-year history. Which, if one were ignoring the rigged stock markets, could easily be mistaken for the second coming of the Great Depression. This, one week after Janet Yellen’s wildly dovish, “ding dong, the Fed – and with it, the Precious Metals ‘bear market’ – is dead” speech in front of Congress, and two days after the Fed’s follow-up, uber-dovish policy statement. In which, they not only downgraded their expectations of “inflation,” but altered the timing of their mythical, never-to-happen balance sheet “exit strategy” from “sometime this year” to LOL, “relatively soon.”
In other words, to commence today’s “Catch-22” discussion, if GDP growth is “better than expected,” the Fed will look like fools – particularly because there’s no doubt they are privy to the GDP numbers before their release. Heck the Fed’s own “GDP Now” forecast is for 2.6% growth. Conversely, if “worse than expected,” the dollar will plunge further, causing the “inflation” they so badly want to explode. Which, if truth be told, already occurred in the week since Whirlybird Janet’s speech, given how the dollar has since plunged to a 13-month low. Which in turn, would force the Fed to re-start hints of rate hikes, just one week after rate hike odds for September plunged to ZERO – and just 42% for December. Talk about destroying what’s left of one’s credibility! This, from the institution responsible for printing the world’s “reserve currency.”
And by the way, for anyone that still doesn’t’ get just how thin the line has gotten between the economic reality of said Depression, and the fraudulently fostered illusion of prosperity from rigged financial markets, I’m going to continue driving into your head that at some point soon, the world will be “on” to the most blatant rigging scheme in history – paper Precious Metals. To wit, here’s what I showed you last week, of the previous six days of silver trading…
…here’s what I showed you Wednesday, of Monday and Tuesday’s “trading”…
And here’s what occurred yesterday; when every imaginable manipulative tool was utilized – from DLITG, or “don’t let it turn green”; to “Cartel Rule #1 – i.e., “thou shalt not allow PMs to surge whilst stocks plunge”; to the 10:00 AM EST “key attack time #1.” TRUST me, it won’t end well for the Cartel – now that physical supply is set to plunge for years to come, care of the mining industry destruction caused by two decades of price suppression. Which is exactly why – amongst other things – I boldly stated yesterday, this is the “most PM-bullish I’ve ever been.”
And how about that? GDP came in right at “expectations” of 2.6% – but only because the “price deflator” utilized to gauge inflation was cut from last quarter’s 1.9% to 1.0% this quarter? I mean, REALLY? Are they SERIOUS? Are they REALLY trying to tell us inflation was cut in half this quarter, when rents hit an all-time high, and housing prices had their highest quarterly gain since…drum roll please…the third quarter of 2007, at the top of the biggest real-estate bubble (until now) in U.S. history? Apparently, the market doesn’t believe it – given that its initial reaction has been to buy gold and aggressively sell the dollar.
Which brings me back to the Fed’s “vicious, self-created Catch-22” – and why it can only read to exploding safe-haven asset demand. Or as I have “re-branded” them in today’s inexorably hyperinflationary environment, “scarcity assets.” Yes, the Catch-22 of sacrificing a nation’s future for the benefit of the “1%” running it now; i.e., the modus operandi of each of history’s 1,000 or so failed fiat Ponzi schemes. Print money now to “save” the economy and “prolong” the status quo – and manipulate markets to “leverage” the effect; but ultimately, destroy not just the currency, but the nation-state printing it. And if you happen to be the “reserve currency” issuer, the world at large.
You see, if the Fed wants to continue purporting “all’s well,” they risk pushing interest rates higher – and consequently, destroying history’s largest debt edifice at one fell swoop. Of course, there are limits to how high rates can be “allowed” to go, for this very reason. Which is why I was dead-on in my January 2014 call that 3.0% was the top – using the benchmark 10-year Treasury yield as a proxy; as well as, thus far, my January 2017 call that 2.5% had become the “new top.” And why, if the “bond vigilantes”’ inevitable return doesn’t occur first, I will likely be penning “2.0%, ‘Nuff Said” in the not-to-distant future.
Of course, by speaking “dovishly” – as the Fed did this week – the result is a plunging dollar; in this case, not just against other fiat toilet paper, but real items like commodities; which, since the Fed’s speech, have been on fire. This, in turn, increases the “99%’s” cost of living; which, if translated into the GDP report, causes real “growth” to plunge. And of course, yields increased debt requirements – atop what last quarter became the biggest household and government debt edifice in history.
Conversely, if they speak “hawkishly” – as they have all year, despite plunging economic data – they not only risk destroying what’s left of their “credibility”; but causing rates to rise anew – in turn, killing economic activity; and the dollar exchange rate, causing exports to plunge. In other words, a lose-lose for the Fed, and America; and a win-win for unprecedentedly suppressed, historically undervalued Precious Metals. That said, generally speaking, I am not just referring to Precious Metals, but any “scarce” asset investors consider to be a reliable store of value. Gold and silver – and to a lesser extent, platinum – certainly fit that bill, as they have for thousands of years. And arguably, Bitcoin, the “twin destroyer of the fiat regime,” may do so, too.
To that end, long-term readers know that no one is more bullish on Bitcoin than myself. However, one must understand that the risks involved in owning it are not unsubstantial. The fact that one of the world’s largest Bitcoin exchanges, BTC-e, was shut down this week – likely, with similar investor-destroying effect as Mt. Gox – demonstrates just how risky the market can be. Particularly, as unlike Precious Metals, it is not currently possible for the average investor to buy and sell in large quantities at once. Throw in impending “regulation” attempts – as this week’s SEC statement that Ethereum DAO tokens were securities; and one can see that if you do not know what you’re doing, it can be very dangerous to attempt. As trust me, when the government truly wants to attack, the first thing they’ll do is shut down exchanges like Coinbase. This is why it’s so important to store crypto assets offline; however, this poses an additional set of risks – particularly to those afraid of non-mainstream storage alternatives. In the big picture, there are only a handful of true “scarcity assets” out there – and as I wrote yesterday, this tiny amount will have no problem co-existing in the future, hyper-inflated world. Just be sure you know what you are getting into, and be willing to handle the risks each asset class offers.
To that end, let me just finish by celebrating the upcoming end of LIBOR; i.e., the “headquarters” of the modern day, recently destroyed “London Interest Rate Pool.” One day soon, I ASSURE you, the “New York Gold Pool” – “headquartered” at the COMEX – will die, too. At which point, if you don’t already have your Precious Metals, it will already be too late.