Dollar Dangers!!

Buy Gold Buy SilverWhat is happening out there in the fiat world? I woke up this morning and the DJIA was  still over 26,000!  With the looming government shut down, supposedly scheduled for this Friday at midnight, should our elected saviors decide that they can’t agree on what they think is what’s best for the us plebes, the markets could go in any direction.

The question we have to ask is what got us here to this fiat breaking point.

Yes, I agree with you, it has indeed been decades of poor fiscal management (“poor” is putting it very nicely). I think the one of the worst and most obvious causes (among many), since 2012, is the $4+ trillion that has been injected in to the system by the Federal Reserve. The “Quantitative Easing”. This $4+ trillion was not for you and me, but for the already wealthy businesses and banks to ensure that they keep all of their wealth when the bow breaks.

I hate thinking about this, but I can’t help it…$4 trillion is an absurd amount of anything. Here’s little cartoon graphic to give you an idea:

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It’s still very, very difficult to comprehend a trillion of anything, much less 4.3 trillion, and forget 20+ trillion (the size of our debt). The fact that we have $20+ TRILLION debt is absurd!! It’s literally an unbelievable amount and many say that the $20+ trillion we are told about is just the tip of the iceberg.

For another reference, to scale, that guy in the graphic is six feet tall, those $100 bills are pallets stacked two high with $100,000,000 in $100 bills, stretching approximately the size of an entire NFL football field, end zones included! Here’s a fun one, a trillion seconds is roughly 31,688 years. That’s 1 trillions.  $20,000,000,000,000 stacked in $100 bills would reach roughly 12,000 miles high!! The international space station is around 250 miles high. Let that sink in.  Get the idea?

Think we’ll ever get out of debt? HA!! Nope. Think the world knows this, of course. This is why the inevitable is a major change in how the global financial systems work and reset of the dollar (or whatever the replacement will be called). Period.

Why do you think no one seems to care that we are $20+ trillion in debt? The government collects record amounts in taxes yet still runs a deficit most every quarter, adding hundreds of billions (closer to a trillion) the debt each of the last few years.

Why do you think that no one cares the Feds balance sheet grew to over $4 trillion since 2012? How do you think the stock market is kissing 26,000? It’s only paper (or digital numbers). It doesn’t mean anything to them.

So the Fed pukes out this $4+ trillion coupled with low and zero percent interest rates, which was the death of the dollar, in my opinion, and we are on financial artificial life support, at best.  Seriously, think about it, heck, just think about the stock market. The stock market has had a record crushing bull run while the companies moving the markets reports sub-par financials (profits/earnings, etc…). It’s a farce, a facade.  According to MSNBC, only 54% of working Americans have any type of stock exposure at all (pensions, 401K, IRAs, individual stock holdings, etc…), which is DOWN from 62% prior to 2008’s great recession!

Remember that back in 2009 the DJIA was in the 6500’s! Yes, 6500’s. So you mean to tell me stock ownership from the working class has fallen approximately 12 percentage points in nine years, but the stock market has skyrocketed nearly 20,000 points?!

Yeap, it sure has. Thanks to the Fed giving the big boys a massive portion of the $4+ trillion to buy their own stocks (corporate buybacks). See how it works? Now let’s give these same companies a major tax break and see what happens.

Before you jump on me about bashing the tax break or praise me for bashing the tax breaks, I am doing neither. Not yet. I am simply mentioning it.  I will ask you this, again, did you see any of that $4+ trillion?

I don’t mean to jump off topic here (yeah, I know, it really wouldn’t be one of my posts if I didn’t – do I even have topic at this point?).  According to the New York Times,  the United Nations stated that it would take about $30 billion to feed the world’s starving population. There’s more to it of course, talking in generalities, think what $4+ trillion could do/could have done?  Things that make you go “hmmmm??”

Here’s another, an article from the HuffingtonPost states that it would cost a around $20,000,000,000 ($20 Billion) to build public housing and offer job training for the the number of homeless we have in America.  What about the VA hospitals, lack of Veteran care, elderly care, the list is indeed endless of the “things” that $4 trillion could have fix, eradicated, enhanced, etc…and etc…but instead it went where?

It’s nearly $1 million on average (depending on where the president plays) each time the president plays a round of golf (far more if you add in travel, lodging etc…,I’m talking a day on the course). Obama played 333 rounds in his presidency, Trump has already logged 93 by November 2017, according to GolfNewsNet.com.  Obama spent over $110,000,000 on vacation travels alone in eight years, Trump has crossed over $10,000,000 already, just in vacation travel, not including rounds of golf, lodging, meals, just the plane and transport amounts.  I am not saying that the president, no matter who it is shouldn’t have vacations, I am just making a cheap point.  Add in all the waste every single day by all those “leaders”  in Washington, then add in local and state waste (state indebtedness is another serious issue!) and it’ll make you sick.

Could it be that it isn’t as simple as taking a mere $30 Billion from the $4+ trillion to feed the world’s hungry and to create farms and gardens to help sustain the impoverished areas?  I have to believe that if ibuy gold buy silvert was that simple someone around this world would have done it by now surely.  Jeff Bezos, Warren Buffett, Bill Gates, Mark Zuckerberg, and many others on the Forbes richest list could make a massive difference in this world and still have more than enough money for their next five generations (or more) to never have to lift a finger. Why don’t they? I have my opinion on that, however, I’ve gone off topic a bit too far…I am on my elliptical bike right now in the back corner of the store (many of you have seen it), my mind wonders while my body is peddling in place.

Back to reality…

After all this time the Fed and other central banks are starting to pretend that they are interested in keeping the ship afloat for a bit longer by “tightening” their lose policies. They have stopped the QE (at least the pumping and dumping money in to the system under the name QE, they have other means), they have increased interest rates (which has had an nearly an opposite effect than they predicted) and they have claimed to be decreasing their balance sheets. This means that they will be taking how ever much of the $4+ trillion they created out of thin air back out of…well, where ever they can take it from.  We aren’t talking a lot of, potentially $10 billion every so often. Do that math and figure out how long it’d take to get that $4 trillion back taking $10 billion a month (which they aren’t doing – it’s just fun math).

Many thought that gold and silver would suffer with all this freebasing cash out there and gold did in fact hit record highs just a few months prior to the first round of QE happening. Once QE hit gold, silver, oil and other commodities fell and continued to fall – today we sit at $1327 gold, $17.05 silver, $63.68 oil (Thursday, January 18,2018)

Here’s where it got a bit strange. No one really expected gold to hold up with over $4 trillion fresh dollars put out in the mix, but guess what? Gold not only held but gained and has been one of the best performing investments each since the last couple of years of QE. Gold has been the safest form of insurance for sure.  You can’t deny that.

Think about this often too, if pumping that insane amount of cash out of thin air dropped gold, but then gold kept performing positively, what do you think gold and silver will do if the Fed starts sucking that cash out of the market?  I’m guessing we’ll see some even bigger gains, heading toward those record numbers again.

Let’s talk a little more about the dollar.

In a sane world one would think that all these “tightening” processes would give people more faith in the dollar, thus, increasing the dollars value. Wrong.

We are seeing the dollar fall unlike we have seen since circa 2003. How can anyone seriously have faith in something that is $20+ trillion in debt? Granted it’s the US government that’s in debt, but we are in dollar debt, of course – the US dollar is the US.

We have recently been seeing the major buyers of our US treasury bonds (AKA: US Debt) cut back on their purchases, threatening to halt buying the bonds all together.

China, who is the largest holder of our debt, has made it clear that they are not happy with the US still being the world’s reserve currency. China is so adamantly against it that have been hard at work to create and alternative “reserve currency” many believe (myself included) will have some form of precious metal backing.

We know that China, along with Russia and Saudi Arabia are setting up bilateral trade agreements cutting out the dollar. We know they are and have been doing this already, when it’s made official it’ll be a bad day for the dollar and by association the US.  Why? Simple, why would countries need/want to hold on dollars to trade with non-US trade partners if there are bilateral terms between them? They wouldn’t. This means that they would dump the dollar, which means we’d see and tidal wave drowning the US in dollars.  That could/would trigger some serious inflation!

It’s a “damned if you do, damned if you don’t” situation for the Fed and the dollar.  The Fed could jump interest rates up faster and in larger increments to try to keep the dollar index up. This would hurt our fabulous stock market and other financial markets. Or they don’t and the dollar’s index takes a huge hit. Both are bad for the US, both are good for gold. One of these options will happen. The question is how long will the world allow the Fed to continue to stall?

There is no good way out for the Fed or the dollar, period, end of story.

The Fed has to be very careful as a painful outcome is inevitable for everyone who has a dollar, sadly it’ll be far more painful for you and me, not the Fed or the big corps. Everyone will be effected, just how bad it gets depends on the Fed’s next set of moves and how the BRICS (and others) react to it.

Unfortunately this is only the beginning of the dollars turmoil. We haven’t seen anything yet! Want to know who else will take a massive hit when the Feds pull the plug? The Trump administration. Trump has already taken credit for the stock markets record run. I think the Fed has been waiting for this administration to get settled before they start to burst this bubble, then who will take the blame? Trump and the Republican and the “deplorables” who voted him in. You can rest assured it will not be the banks or the Fed, who started this mess taking any heat, it’ll be Trump. Just wait and see.

The Fed hinted in their December meeting minutes that they plan in hastening the rate hikes, Janet Yellen’s replacement, Jerome Powell will follow suit with the rate hikes. It’s coming.

While we have no idea where all these pieces will fall, however, we do know that there is one, and only one form of protection from whatever happens. Owning physical gold and silver. It truly is that simple.

Gold has gained over the course of the rate increases, the more rate increases, the bigger gains gold and silver will see. More bilateral trade agreements, higher gold. Less buying of our treasuries, higher gold. China backs a new trade currency or the Bank of International Settlements and the lot decide to create a new reserve currency (if different from China’s), gold goes up.  The odds are greatly staked against the dollar and we did it to ourselves.

You better have financial  insurance! Physical gold and silver is your safety net.

I do believe we’ll see some dips in gold and silver‘s prices as we go, I’ll repeat myself here yet again, any drop in metal prices right now should be treated as a buying opportunity.  Please, treat this with the seriousness it deserves. Literally millions of Americans stand to lose pensions, 401ks, annuities, their savings…possibly everything to no fault of their own. We’ve seen it before, we’ll see it again, only this time the stakes are trillions and trillions and trillions higher!

Be smart.

 

 

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