WHAT TO DO WITH ONE’S “MONEY”
by Andy Hoffman, Miles Franklin
Tick tock…Tick tock. With each passing day, the grotesque deformations of global economic activity, financial markets, and the political process that history’s largest fiat Ponzi scheme have wrought grow larger; to that point that the so-called “chinks in the armor” could not be move obvious, nor the “holes in the dike” more numerous. In other words, the entire financial world has become a giant, unsustainable bubble in its final stages of inflation (and in some cases, the early stages of deflation); to the point that so little of what we witness resembles reality, few have even a clue what’s occurring – and fewer still, the means to protect themselves from what’s coming.
For instance, I last week wrote of how propaganda has become so ludicrous, TPTB are actually claiming their greatest fear is “deflation,” despite the cost of living of every person on the planet not just rising, but soaring. Or, for that matter, that one of the ugliest GDP reports in memory intimates “recovery”; or that an equally ugly – and comically transparent – employment report is not only “encouraging,” but suggests a “Goldilocks” economy. Which, by Wall Street’s bastardized definition, means ‘not cold enough for stock prices to decline,’ and ‘not hot enough for the Fed to raise rates.’
To that end, yesterday’s article describes how if indeed this is a “Goldilocks” economy, her porridge is fatally poisoned; which ultimately, will yield not only her own death, but that of the three bears. And LOL, I guess I’m not the only person nauseated by Friday’s post-NFP rigging, equity goosing commentary; per the title of another article I read this weekend, titled “Goldilocks unemployment – A disgusting bowl of porridge.” Which, by the way, was loudly validated by Federal Reserve’s own “Labor Market Conditions Index” this morning – which dramatically contradicted Friday’s “Goldilocks” NFP report by plunging from March’s -0.3 to -1.9 in April – against, gee whiz, “expectations” of a surge to +3.0. I.e., its biggest monthly plunge in three years.
Back to the aforementioned “disgusting porridge” article, the author also refers to what America – and the world at large – is experiencing as “stealth-flation”; i.e., the unrelenting erosion of fiat currency purchasing power that makes it harder and harder to financially survive. In other words, nearly all aspects of the inexorable, worldwide decline in job opportunities, living standards, financial security, and social stability are in some way, shape, or form occurring “stealthily” – care of the maniacal attempts to mask these ugly, irreversible trends with market manipulation.
To wit, Saturday’s news that the Chinese economic implosion, which paints a painfully obvious picture of the world’s horrific economic situation – significantly worsened in April, per a 6% export decline, and 15% import collapse. Meanwhile, Chinese real estate prices continue to weaken – with a whopping $364 billion of property loans (from the top four lenders alone) having been issued since…drum roll please…the 2008 financial crises; backed not by financial collateral, but the increasingly worthless buildings they financed themselves! Throw in the trillions of potentially defaulting Chinese municipal bonds, and you can see why the PBOC put out a QE “trial balloon” last week; or why yesterday (Sunday), they cut rates for the third time in six months – taking its benchmark one-year deposit rate to a record low 2.25%, dangerously close to the “zero bound” level it will soon engage in “to infinity.”
That is, until the horrific financial, economic, political, and social ramifications of the soon-to-be devalued Yuan force the PBOC to disclose the amount of China’s massive gold holdings. That said, the economy-killing, inflation-exploding impact of such money printing schemes – particularly when coupled with Central banks’ new found love of open market equity purchases – for the time being has enabled them to successfully put “lipstick” on the pig the global economy is. Let alone, when the clueless MSM aids them with moronic commentary like Reuters’ this morning, claiming “Asian shares rose Monday, as investors cheered China’s latest cut to interest rates to bolster its flagging economy – and as Wall Street rallied after a robust headline reading of U.S. employment.” By the way, note how Reuters didn’t say a “robust reading of U.S. employment” – but tellingly, a “robust headline reading of U.S. employment.” In other words, even they know the only “positive” aspect of the NFP report was the “headline” lies of 223,000 April jobs created, and – LOL – a seven-year low “unemployment rate.”
Meanwhile, we are just one day from a potential Greek default – as this weekend’s meetings produced NOTHING but angry rhetoric, ahead of Tuesday’s €770 million payment due to the IMF; which, as it turns out, spent the weekend publicly preparing for a Greek default. And what did the MSM focus on, with Europe on the cusp of a potentially unprecedented daisy chain of sovereign, municipal, and corporate debt defaults? I kid you not, the Associated Press’s description of the upcoming week’s issues – posted, of course, as Yahoo! Finance’s top story – was “Greece back as a headache for improving Eurozone economy!”
Yes, because 1Q GDP growth is expected to be a pathetic 0.5% – a horrifying result for a continent drowning in debt; let alone, as its dramatically understated deflator significantly overstates actual GDP – we are told that the potential default of hundreds of billions, if not trillions of Euros of loans, is not a material concern. And better yet, said headache is “back” – as if the Greek crisis somehow disappeared, and reappeared this weekend. Make no mistake, an ugly “Grexit” is guaranteed in the coming months; as even if somehow the troika lends Greece its €770 million tomorrow – against the wishes of all parties involved; there’s not a chance a third bailout package – which must occur by mid-June if Greek is to avoid large scale default – will be approved; by the Eurozone, the Greek government, or its predominantly “anti-austerity” population. And thus, to those willing to ignore the looming collapse of an insolvent system supported entirely by Central bank “liquidity” and government market “support” – with such potentially Earth-shattering events on the near-term horizon – all we say is ignore reality at your own risk.
Or, for that matter, the fact that market rigging has caused such gargantuan chasms between economic reality and underlying fundamentals, something is bound to “give” sooner rather than later. Such as, for example, the massive, expanding deficit between physical gold supply and demand caused by four years of relentless paper shorting; yielding a measly 407,000 ounces of registered (available for purchase) gold on the COMEX – i.e, the world’s largest gold exchange – worth a measly $483 million. Yes, $483 million, or the amount the Fed printed every four hours throughout the 22 months of “QE3.” Or, for that matter, 0.07% of the $700 billion “TARP” payments handed by taxpayers to the criminal banks that permanently destroyed America in 2008.
OK, now that you’re built up to a frenzy of frustration and rage, let’s take the discussion into a calmer – but equally terrifying – direction. Which is, not just the economic discussion of “money” the Miles Franklin Blog has long discoursed of; but more simply, the question of what to do with it, no matter what form it’s held in. Of course, only gold and silver meet the definitional parameters of money; i.e, they are not only divisible and fungible, but verifiable (as to the actual amount outstanding) and scarce; serving as not only universal mediums of exchange, but long-term stores of value. But again, we don’t intend to give an economic lesson here; but instead, to ask what you believe is the safest, most profitable way to invest your savings – be it in real money like gold and silver; fiat currency like dollars or Euros; or worse yet, digital currencies like Bitcoin – which frankly, is lower on the “money scale” than even fiat toilet paper.
For generations, Americans have been taught that “dollars” are the ultimate form of money – and banks, the ultimate bastion of safety. Of course, dollars no longer pay interest; and when incorporating the myriad, often stealthy bank fees, we have already moved into the realm – from a practical standpoint – of “NIRP,” or Negative Interest Rate Policy. Which, by the way, is already an actual, official policy in Europe. Moreover, Central bank inflation is so virulent, said “dollars” are rapidly depreciating simply by sitting idly in banks; let alone, what is occurring to the average global currency, down more than 40% against the dollar in the past four years alone. And then there’s the fact that without the aforementioned Central bank liquidity, the entire insolvent banking system would freeze up anew – either requiring new, printing press taxpayer funded bailouts; or, better yet, bail-ins. Yes, this is what awaits those leaving their “money” in depreciating fiat currencies; sitting in insolvent banks; in need of bailouts from equally insolvent nations, or bail-ins from unsuspecting depositors.
Alternatively, one can put their money in the objectively most overvalued stock and bond markets in history; amidst objectively, the worst economic fundamentals of our lifetimes. And this is not just the case here in the States, but worldwide care of the maniacal money printing and market intervention provided by nearly all Central banks. And by the way, if you choose to invest overseas – in stocks, bonds, or whatnot, you take the additional risk that the fiat toilet paper your investment is denominated in will collapse irrespective of asset prices, offsetting any capital gains you may have made. And then there’s real estate; in some markets – like Spain and Italy – still falling; in others, like China, at the beginning of a massive bubble burst; and in others, like the U.S., in desperate straits in all but “1%” homes supported by the aforementioned flow of Central bank liquidity. Not to mention, real estate has extremely high carrying costs, and amongst the least liquidity of all asset classes.
Which brings us back to gold and silver – which not only possess none of the aforementioned risks, but have historically benefited from each and every one. Central banks can’t fabricate – i.e., dilute – Precious Metals; nor can they “bail them in.” And comically, the eternal propagandist argument that gold and silver are not good investments because they don’t pay interest no longer holds water – as earning nothing trumps negative interest rates every time. Let alone, when inflation is further depreciating the value of said negative interest bearing accounts.
In the big picture, only you can decide the best way to save – and protect – your assets. Sadly, government intervention has driven nearly all asset classes to record high valuations, in dramatic contrast with the fundamentals underlying them. Meanwhile, fiat currencies have become equally overvalued – amidst an environment of not only relentless Central bank dilution, but dramatically escalating confiscation risks. And then there’s Precious Metals; which, countless manipulation attempts notwithstanding, have managed to maintain their purchasing power (and then some) throughout thousands of years of history. Which, by the way, due to the very same government interventions, are trading at their lowest ever valuations – compared to both the amount of fiat currency outstanding; and the actual costs of exploration, development, and production. I know what choice I have made. As for the rest of the world, where do you see value?