Category Archives: Money

Is Gold the Last Freedom Train? By T.W. Thiltgen

Posted on February 3, 2023 | Leave a comment

It is the last freedom train, and it’s not too late to get on board. From T.W. Thiltgen at schiffgold.com:

Most people believe the Federal Reserve stabilizes the economy and our money. In reality, the central bank incentivized debt and destroys wealth. Is there a way to sidestep the destructive forces of central banking and fiat money?

T.W. Thiltgen believes there is a freedom train we can escape on — gold.

The following guest post was written by T.W. Thiltgen. The opinions expressed are his and don’t necessarily reflect those of Peter Schiff or SchiffGold.

I pose this question to you so that you can begin to consider that there is currently a macroeconomic problem that is more important than all other problems this country faces. That macro condition is the relentless destruction of capital throughout the world and the US in particular.

Merriam-Webster Dictionary defines capital as “accumulated possessions to bring in income.”

For our purposes here, I will just call it SAVINGS.

In economics, one of the important identities is S=I or Savings = Investment.

You cannot invest if you have not saved, and you will be able to invest less if your savings fall. This may seem obvious but bear with me.

Your savings can be destroyed by other than your own bad investment decisions. Negative real interest rates (interest rates adjusted for inflation) are the central driver in the destruction of capital for at least the last 14 years from the start of the 2008-2009 collapse.

By keeping interest rates below the rate of inflation, the Federal Reserve has destroyed saving on an unimaginable scale. Even today, US Treasury interest rates are still 3% points below the rate of inflation. And that’s using the government’s numbers. The real inflation rate using the methodology of the 1980s would put today’s inflation rate near 15%. Either of these numbers is disastrous, but taking the average of the number between 7% and 15% or 11 ½ % means that the value (purchasing power) of your savings is being destroyed in a very short number of years. Even if inflation falls back to 3 – 4%, your real inflation-adjusted saving will decline at a rate that will ultimately lower your standard of living.

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Gold And The Shrinking Trust Horizon, by John Rubino

Posted on February 1, 2023 | Leave a comment

Gold has never told a lie. From John Rubino at rubino.substack.com:

Last week I posted an article on the implosion of the official vaccine narrative. That’s a controversial topic so not surprisingly it generated some heat on both sides. And a few readers expressed the wish that I’d stay in my lane (precious metals investing) and avoid venturing into unrelated and less well understood territory.

But believe it or not, the public health establishment losing its credibility is related to precious metals, via something called the trust horizon. It works like this: When things are good and the people in charge of big systems seem to be running them well, we’re content to trust the experts. We keep most of our money in banks, brokerage houses, and crypto wallets that exist for us only as websites. We buy produce that’s grown in a different hemisphere and shipped via boats, trains, and trucks to corporate chain grocery stores. We vaccinate ourselves and our kids according to the schedules set by the NIH or the CDC. We pop pills on our doctor’s orders without doing any research. We eat processed foods on the assumption that the FDA keeps them free of dangerous additives. And we believe what we see on cable news.

In other words, our trust horizon, defined as the distance from ourselves at which we’ll believe what we’re told, is global. We assume everything everywhere is working for our benefit and we’re thus willing to put our welfare in those distant hands.

But let some big systems fail to take proper care of us and we pull back, finding people and institutions closer to home that we can see and judge first-hand. We move our money out of distant banks and brokers and into local credit unions whose managers live down the street. We start buying groceries from farmers markets or directly from local farmers. Instead of popping whatever pill is standard for our ailments we look into “food as medicine” and other lifestyle remedies like exercise, supplements, and meditation. We homeschool our kids and join gun clubs. We buy homesteads and start raising chickens.

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Russia’s intentions are clarifying, by Alasdair Macleod

Posted on January 27, 2023 | 1 comment

The Russians have a not-so-secret weapon that would devastate the U.S.: back the ruble with gold. From Alasdair Macleod at goldmoney.com:

We have confirmation from the highest sources that Russia and the Shanghai Cooperation Organisation (SCO) are considering using gold for pan-Asian trade settlements, fully replacing dollars and euros.

In an article written for Vedomosti, a Moscow-based Russian newspaper published on 27 December, Sergey Glazyev, a prominent economic adviser to Vladimir Putin who is heading up the Eurasian Economic Union committee charged with devising a replacement for dollars in trade settlements sent a very clear signal to that effect. It appears he will drop earlier plans to design a new commodity-linked trade currency because it has been superseded.

Furthermore, increasing numbers of nations have joined or have applied to join the SCO as dialog members, including Saudi Arabia and other important Gulf Cooperation Organisation members. The economic benefits of discounted energy, China’s investment capital, and sound money are the ingredients for a new, Asia-wide industrial revolution, while the economies of the western alliance sink under rising prices, rising interest rates, collapsing financial markets, and collapsing currencies.

While it will mark the end of the road for the western alliance and its fiat currencies, Putin must be careful not to take the blame. Now that the alliance is racking up tanks and other equipment for the Ukrainians, they are actively promoting a new battle, with NATO getting almost directly involved. It is that action which will drive up commodity prices, undermine western financial markets, undermine government finances, and ultimately collapse their currencies. 

Putin is likely to use NATO’s impetuous action in defence of Ukraine as cover for securing Russia’s future as an Asian superstate, which will be the west’s undoing.

Introduction

We forget, perhaps, that from 1 March 1950 the Soviet rouble was on a gold standard at 4 roubles 45 kopecks for 1 gram of pure gold until 1961, when Khrushchev devalued it and refixed it to the dollar. Stalin had been a signatory to the Bretton Woods agreement but refused to join it and make the rouble subservient to the dollar as its intermediary for a gold standard.

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Posted in Banking, Currencies, Debt, Economics, Economy, Energy, Eurasian Axis, Geopolitics, Governments, History, Money

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Say’s law and macroeconomic ignorance, by Alasdair Macleod

Posted on January 20, 2023 | Leave a comment

Marx and Keynes both ignored French economist Jean-Baptiste Say, and their economic theories are both fatally flawed because of it. From Alasdair Macleod at goldmoney.com:

Probably the greatest error in modern economics was the abandonment of Say’s law, otherwise known as the law of the markets. In a nutshell, it demonstrated that through the division of labour, production is firmly linked to consumption, and the former is tied to the latter through the medium of money and credit.

While there are variations in production outputs of individual goods, in free markets there can never be a general glut. It was this that Keynes had to disprove in order to create a role for the state, intervening to make up for the supposed deficiencies of free markets. While reasoned analysis shows that Keynes failed to disprove Say’s law, he managed to convince the mainstream establishment that he had actually succeeded.

This article traces the history of Say’s law, from Jean-Baptiste Say’s original work on the subject to the present day. It shows how Keynes bent the truth about free markets, that an understanding of Say’s law explains why state intervention fails, and why prices will continue to rise in the imminent economic recession.

Introduction

Back in the 1930s, forward looking economists trying to justify an economic role for the state had a hurdle in classical economics to mount: the self-evident truth in what was described as Say’s law. Otherwise known as the law of the markets, Say’s law pointed out that we turn up at the factory or office to do a day’s work, so that we can afford all the things other people produce that make life tolerable, and even pleasurable.

It refers to the writings of Jean-Baptist Say, a French economist who in his A Treatise of Political Economy, originally published in 1803, described the relationship between production, consumption, and the role of the division of labour in how humans organise themselves economically-speaking. It was a remarkable achievement, defining the science of economics and the roles of money and credit in great detail, when the science was yet young.

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Global South: Gold-backed currencies to replace the US dollar, by Pepe Escobar

Posted on January 20, 2023 | Leave a comment

Keep in mind that a currency isn’t “gold-backed” unless it’s exchangeable for gold from the issuer. We’re still a long way from that. From Pepe Escobar at thecradle.co:

The adoption of commodity-backed currencies by the Global South could upend the US dollar’s dominance and level the playing field in international trade.

https://media.thecradle.co/wp-content/uploads/2023/01/the-power-of-BRICS-3.jpg

Photo Credit: The Cradle
Let’s start with three interconnected multipolar-driven facts.

First: One of the key take aways from the World Economic Forum annual shindig in Davos, Switzerland is when Saudi Finance Minister Mohammed al-Jadaan, on a panel on “Saudi Arabia’s Transformation,” made it clear that Riyadh “will consider trading in currencies other than the US dollar.”

So is the petroyuan finally at hand? Possibly, but Al-Jadaan wisely opted for careful hedging: “We enjoy a very strategic relationship with China and we enjoy that same strategic relationship with other nations including the US and we want to develop that with Europe and other countries.”

Second: The Central Banks of Iran and Russia are studying the adoption of a “stable coin” for foreign trade settlements, replacing the US dollar, the ruble and the rial. The crypto crowd is already up in arms, mulling the pros and cons of a gold-backed central bank digital currency (CBDC) for trade that will be in fact impervious to the weaponized US dollar.

A gold-backed digital currency

The really attractive issue here is that this gold-backed digital currency would be particularly effective in the Special Economic Zone (SEZ) of Astrakhan, in the Caspian Sea.

Astrakhan is the key Russian port participating in the International North South Transportation Corridor (INTSC), with Russia processing cargo travelling across Iran in merchant ships all the way to West Asia, Africa, the Indian Ocean and South Asia.

The success of the INSTC – progressively tied to a gold-backed CBDC – will largely hinge on whether scores of Asian, West Asian and African nations refuse to apply US-dictated sanctions on both Russia and Iran.

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Japan Is Perhaps the Most Important Risk in the World, an Interview with Jim Grant and Christoph Gisiger

Posted on January 18, 2023 | Leave a comment

The Japanese bond market is a financial time bomb whose fuse has been lit. From Christoph Gisiger and Jim Grant at themarket.ch:

Speculation is mounting that the Bank of Japan is losing control of the bond market. Jim Grant, editor of «Grant’s Interest Rate Observer», believes this could trigger a shock to the global financial system. He also explains why he expects further surges in inflation and why gold should be part of your portfolio.

The news caught markets off guard: On December 20th, the Bank of Japan surprisingly extended the target range for the yield on ten-year government bonds to plus/minus 0.5%. A move that not a single economist had expected.

This week, the Bank of Japan could announce a major policy shift amid rising government bond yields and a strengthening yen. Although barely a month has passed since the BoJ’s last meeting, the bond market is already testing the new upper limit of the yield curve control regime.

«To us, Japanese interest rate policy resembles the Berlin Wall of the late Cold War era, a stale anachronism that must sooner or later fall,» says Jim Grant. For the editor of the iconic investment bulletin «Grants’ Interest Rate Observer,» recent developments in Japan pose an underestimated risk to global financial markets. Not least because virtually no one is talking about it.

In an in-depth interview with The Market NZZ, which has been slightly edited for clarity, Mr. Grant explains what it means for financial markets if the Bank of Japan is forced to scrap its yield curve control policy. But first, he says why he doesn’t believe inflation will end soon, why bonds may be at the start of a long bear market, and why he believes gold is the best choice as a store of value.

«If the past is prologue and if the great bond bull market is over, then on form, we are looking at what could be a very prolonged and perhaps gradual move higher in interest rates»: Jim Grant.

«If the past is prologue and if the great bond bull market is over, then on form, we are looking at what could be a very prolonged and perhaps gradual move higher in interest rates»: Jim Grant.

What do you observe when you look at the financial world today?

Well, it’s always the same, and – here’s the catch – it’s always a little different. The trick is to identify the unique or unusual feature of a familiar cycle. In this regard, it helps to know a little bit of financial history, and to just that extent it helps to be a little old. But what is not helpful is to mistake the past for a certain roadmap to the future.

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Don’t Trust the Government with Your Privacy, Property or Your Freedoms, by John and Nisha Whitehead

Posted on January 12, 2023 | Leave a comment

Don’t trust any government with anything of value . From John and Nisha Whitehead at rutherford.org:

How do you trust a government that continuously sidesteps the Constitution and undermines our rights? You can’t.

When you consider all the ways “we the people” are being bullied, beaten, bamboozled, targeted, tracked, repressed, robbed, impoverished, imprisoned and killed by the government, one can only conclude that you shouldn’t trust the government with your privacy, your property, your life, or your freedoms.

Consider for yourself.

Don’t trust the government with your privacy, digital or otherwise. In the two decades since 9/11, the military-security industrial complex has operated under a permanent state of emergency that, in turn, has given rise to a digital prison that grows more confining and inescapable by the day. Wall-to wall surveillance, monitored by AI software and fed to a growing network of fusion centers, render the twin concepts of privacy and anonymity almost void. By conspiring with corporations, the Department of Homeland Security “fueled a massive influx of money into surveillance and policing in our cities, under a banner of emergency response and counterterrorism.” For instance, all across the country, police are installing Flock Safety license plate readers as part of a public-private partnership program between police and the surveillance industry. These cameras, which upload data in real time to fusion crime centers, signal a turning point in the transition from a police state to a police-driven surveillance state.

Don’t trust the government with your property. In yet another effort to legitimize warrantless searches, police are employing “hit-and-hold” tactics in which police enter a home, carry out an initial sweep of the property, handcuff the occupants, then wait for official search warrants to be secured and applied retroactively. In the meantime, police have managed to bypass the Fourth Amendment. The rationale, to prevent possible destruction of evidence, is the same one used to deadly effect with no-knock raids. If government agents can invade your home, break down your doors, kill your dog, damage your furnishings and terrorize your family, your property is no longer private and secure—it belongs to the government. Hard-working Americans are having their bank accounts, homes, cars electronics and cash seized by police under the assumption that they have allegedly been associated with some criminal scheme.

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3 Things Most People Don’t Know About Gold, Bitcoin, and Money, by Nick Giambruno

Posted on January 12, 2023 | Leave a comment

In the coming collapse, Bitcoin may be a better way to transact and preserve wealth than gold. Or it may not, but it’s a good idea to learn as much as possible about both. From Nick Gaimbruno at internationalman.com:

Bitcoin has been likened to the platypus… which sounds like an odd comparison.

The platypus is a strange duck-billed mammal with webbed feet and a furry body like a beaver. It has characteristics of birds, mammals, and reptiles. Females lay eggs but also nurse their young with milk. Males produce a potent venom.

When Europeans discovered the platypus in Australia in 1798, they wrote letters to folks at home to describe this bizarre new animal. People thought the platypus was a joke or a hoax—because it didn’t fit into the classification of animals at that time.

But it was a real animal.

People just didn’t understand it because it was a new thing that didn’t fit into the established paradigms.

Bitcoin is much the same. It doesn’t fit into the framework of traditional financial analysis metrics.

There is no P/E (price-to-earnings) ratio because Bitcoin has no earnings.

There is no P/B (price-to-book) ratio because Bitcoin has no book value.

Bitcoin has no CEO, no marketing department, and no employees.

Bitcoin is an entirely new asset people are adopting as money because of its superior monetary properties, namely its resistance to inflation.

The monetization of a new global money is genuinely unlike anything anyone alive has ever seen before. There is nothing else comparable.

Like the platypus, Bitcoin is an entirely new animal. That’s why Bitcoin confuses many people, including prominent investment professionals.

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The Truth About Gold and Silver, by Jeffrey Tucker

Posted on January 2, 2023 | Leave a comment

Gold and silver are real money; everything else is credit. Gold and silver are not debt obligations (see Real Money, SLL). From Jeffrey Tucker at dailyreckoning.com:

The Truth About Gold and Silver

In the midst of all this incredible political and economic chaos, I was tasked with packing up my mother’s things to prepare for her move to assisted living. It’s a gravely emotional experience for anyone, as I’m sure you know.

I adore that woman. It’s hard to see her get old. Also, that house contained 100 years or more of family history. All this stuff takes up space. With everyone on the move, it’s hard to find a good home for things anymore. We had to make some hard choices.

Anyway, along the way, I opened a small safe and found a lockbox, and opened it. It was my father’s collection of coins. What was in there hadn’t been seen by anyone for perhaps 25 years (he died rather young).

It was startling and amazing to see. It was like finding buried treasure. There were coins from all over the world, gold, and silver. I’m not sure that I knew that he was a collector.

There were all the usual gold and silver bullion coins from all lands, all worth the price of their metal content. All are vastly up in value from when he bought them. There were also hundreds of silver dimes. And there were plenty of numismatics too and because I don’t know my way around this world, I’ll let the experts determine their value.

Good as Gold

I won’t tell you the total value for reasons of privacy but I will say that he made a very good investment. Stocks are fun and swing this way and that but these coins are stable, true, and always faithful. Dad knew that. He was right.

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History Lesson: Trust Gold Rather than Sovereigns, by Matthew Piepenburg

Posted on December 22, 2022 | Leave a comment

Gold never started a war or did any of the other heinous things that governments have done. From Matthew Piepenburg at goldswitzerland.com:

Below, we consider a blender of history, simple math, sober facts and comical arrogance to better understand gold’s loyalty in a time of disloyal financial stewardship.

Hubris Comes Before the Fall

History (whether on battle fields or sports fields) is riddled with tragi-comical examples of human blundering (and hubris) in the face of otherwise obvious and self-inflicted risk—you know: The final swagger just before imminent defeat.

Remember “Mission accomplished”?

Like well-dressed officers steaming the Titanic at full speed ahead despite repeated ice warnings, the arrogant yet misguided faith our central planners/bankers have in their “unsinkable” financial (i.e., Keynesian) models and verbal platitudes is astonishing.

If the financial model, for example, says “raise rates to fight inflation,” then the model must be right—especially given the credentials of our elite “model followers,” all collectively swimming within an echo-chamber of model-making, yes-saying, self-selecting and PhD-affirming back-slappers from MIT to Stanford, U-Chicago to Harvard Yard.

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