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"US Spends 90% More Than It Collects In First 7 Months Of Fiscal 2021"
https://www.zerohedge.com/markets/us-spends-90-more-it-collects-first-7-months-fiscal-2021
Yes, the price of PMs is highly manipulated, however there are only so many tools in the box. I suspect in time they will run out of levers and PM prices will begin to reach fair value - however the journey is likely to be pretty bumpy!
I will keep a core holding of the usual suspects (FRES, CEY, HOC etc) but have enough on the sidelines to buy if there is a significant retrace/panic.
Forgot to say - see how the gold price is controlled. The powers that be control the price, they make it what they want it to be.
A reminder of how close we came to the dominoes falling ower -
Quote from Eddie George, Governor Bank of England in 1999, when Gordon Brown dropped 400 tonnes of Gold, 50% of the BoE’s gold on the market:
“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K.”
Dr Jamain, post of the day!
Yes Noel, a row of dominoes indeed. They will fall because that is the plan.
It's really simple:
1) a massive increase in fiat currency chasing a limited amount of goods, this supply of goods having been suppressed because of the pandemic response slowing the money velocity.
2) As things open up the velocity increases and the hidden inflationary pressures start to show.
3) The Green New Deal/Agenda 2030/Great Reset will inhibit new wealth creation/consumption - we cannot produce our way out of it and end up with inflation, unemployment, state dependency, UBI and centralising of wealth and power.
4) CBDC rides to the rescue with a rigged debt forgiveness package - the middle class are impoverished and captured.
I believe that PMs are one of the best hedges against this scenario.
Make no mistake. I don't deny that inflation will set in. I am one of the earliest on this BB to highlight it. I am just saying you need to distinguish the term hyperinflation (50% monthly increase). This can only happen with a collapse in currency which is usually triggered by default, sudden collapse in gov income, or mass destruction of industry or all three. I can't see it happening for those countries mentioned. Argentina, Venezuela yes but UK, US, EU no.
Inflation could sustain 4-5 which is deep down, actually what the government wants. GDP growth accompanied by moderate inflation which means the debt pile gets rapidly smaller without them having to do anything. This is stealth financial repression. If you have cash, 5 years later, it is worth 50% less! Places to be are property, gold, commodities, stocks. Maybe bitcoin but this is prone to speculation and government control.
Ultimately, gold is king.
what about minimum living wage will the gov put that up? i bet not!
Thanks Dr Jamain. I see Greg says we haven't seen inflation like this as far back as he can remember.
I do. I remember, in the early 1970s getting pay rises of 15%, 20% and possibly even 25% a year (I think I once got 25%), but prices went up even faster. We got the rise and felt well off - for a few weeks, before prices caught up.
Our financial system is like rows of dominoes. One push and they all fall down, and there are many things that could be the trigger, see this about housing -
"As Flammable-Cladding Crisis Crushes Prices at Low End of UK Housing Market, Bank of England Frets about Contagion, Banks"
https://wolfstreet.com/2021/04/30/bank-of-england-frets-about-banks-as-flammable-cladding-crisis-crushes-prices-at-low-end-of-housing-market/
And then there are derivatives. Even Warren Buffet called them weapons of mass financial destruction.
The Weimar USA in pictures -
https://demonocracy.info/infographics/usa/us_debt/us_debt.html
Greg Mannarino's view:
https://www.youtube.com/watch?v=BXZ6zKUy22A
FED balance sheet - this is a measure of the inflationary pressures that are under the surface:
https://www.federalreserve.gov/monetarypolicy/bst_recenttrends.htm
You simply reign in the spending and our/US budget deficit isn't that big on a year to year basis.
carvegyber
The US is a very divided nation right now and politically "reign in the spending" isnt exactly ever a Democrat solution ..and generally Presidents just spend to gain popularity and votes ...with the resulting budget deficits getting higher year on year.... to the point where a Trillion Dollars now seems like pocket money :-)
Interesting discussion but I agree that Hyper-inflation in the US is unlikely....I think at this point the issue is political....in the sense that the Republicans and Conservatives are using the "hyper-inflation" rhetoric to get Biden and the FED to get a grip and keep their eye on the ball....the notion that a move too far to the left with money printing etc...will be a disaster
This along with the sky high Infrastructure proposal Biden has added too... and the current budget deficit
" The federal government ran a deficit of $3.1 trillion in fiscal year 2020, more than triple the deficit for fiscal year 2019. This year's deficit amounted to 15.2% of GDP, the greatest deficit as a share of the economy since 1945."
The markets are putting Biden on watch IMO .... telling him so..and watching his next move ..
Gold and Silver are part of any hedge solution but probably not the only hedge in town though
carvegyber - there is very wise saying - never say never.
carvegyber - I would like to point out that wrote my last posting before I read your comment about arguing. We must have both been typing at the same time. I wasn't arguing, just debating.
It is worth adding that currency spiral downwards when there is defaults and because our debts are in £s, we are able to service the debts. Same with US or EU, but most other countries borrow in USD.
carvegyber - in my haste I might have hit the wrong tone with my posts. No one knows what is coming, so please take my comments as just opinion and I'm not trying to insist that I am am right or know for certain what lies ahead. May the debate remain civil and polite.
Noel, why are you even arguing with me on that point? UK, EU or US is highly unlikely to print their money into worthlessness are they? The collapse in GDP has been shown to be temporary and not structural unlike Zim or Weimar. We haven't got to print ever more currency to service another foreign debt so we are insulated from currency spirals. Just need to stop printing and the currency devaluation would stop. You have to bear in mind, hyperinflation is inflation of 50% or more a month.
It is a very long piece - too big to post, but I did post the link , see below.
"Weimar was caused by war and the subsequent reparation denominated in foreign currency hence the loss of faith in the underlying currency. Zimbabwe was caused by collapse in agricultural exports denominated in USD" - so you are telling us that hyperinflation can have different causes - true, but the common factor was that they both printed their currency into worthlessness. See what that car reviewer says about the money printing that went on last year.
noel, didn't read it sorry. Mind posting it?
"FRES holders here will not be fully protected but will fare better than most" - I hope so BTB, but if things get very bad, then I fear state theft of the mines - nationalisation with or possibly without compensation - but I hope I am wrong about that.
carvegyber - are you saying that you disagree with Alasdair Macleod's analysis or didn't you read it?
BTB, Weimar was caused by war and the subsequent reparation denominated in foreign currency hence the loss of faith in the underlying currency. Zimbabwe was caused by collapse in agricultural exports denominated in USD.
UK or US hasn't got bill that is in another currency so there is very unlikely hyperinflation would happen because you need a sudden collapse in government income to set that off. You simply reign in the spending and our/US budget deficit isn't that big on a year to year basis.
Historically, when inflation rears its head, it does so VERY suddenly. Reminds me of the quote about bankruptcy (I forget who said it...might've been Oliver Reed):-
How did you go bankrupt?
Well, two ways actually. Very slowly.....then all of a sudden.
Inflation is the same. FRES holders here will not be fully protected but will fare better than most. That's why I (& I imagine many others here) am a holder.