People have a mistaken notion that the debt creation of the past decade is THE problem. It is not, COMPARED with what’s coming next. In other words, the issuance of bonds alone isn’t the challenge the world will be facing, but how these currency units get spent into circulation is!
Money velocity has been stagnant for the past decade; people are simply not spending like before. But, here are a couple of ways this is changing:
- Real Estate: more people rent these days, so there have been fewer homes built than ever before (also due to the crisis). Banks have not been lending to millennials and that’s about to change, for one. Secondly, family formation in the past decade has been flat, so in this decade (2020-2029) millennials, who are hitting their mid-30’s, will tie the knot and have children.
This will cause a boom in real estate, which will be a mild factor, driving inflation pressure.
- Entitlement Spending: Most people misunderstand this topic, but it means that money velocity is about to go nuts, since the government will pay record amounts to retirees, who will go and immediately spend it.
No one is really SAVING his Social Security check.
Still, these two aren’t the real cause of what I believe will be the greatest inflationary shock this world has ever seen.
Governments devaluing their currency is!
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It is NOT a coincidence that gold accounts for more than 60% of central bank balance sheet reserves. When people wake up to the fact that fiat currencies are going to lose 30%-40% in ONE DECADE, it will be too late for them.
Silver is the best hedge because of the ratio between it and gold. Nothing could be more attractive than silver as a long-term currency devaluation hedge.
Economic data is all pointing towards a global slowdown, but Trump is betting on the supposition that America’s woes will be either short-lived or hit them after the elections are over.
He is doing something that major companies do in business, which is to cannibalize themselves. They know that their competition is potentially weaker than they are, so they can weather storms better. Here’s an example: the biggest laundromat in town sees a number of other ones opening up, so they slash their prices hard, knowing they can withstand a long period of losses, which their newcomer adversaries can’t.
Trump knows that tariffs now hurt Americans as well, but he also understands that China is FEELING THE PAIN more than the U.S. does.
America’s economy is much more diverse and shock-resistant than people give it credit for.
What I can’t say favorably about America is that it is the most dangerous debtor nation in history and I would not rule out a situation where the FED takes rates back to zero.
It has already begun buying bonds again – QE4 has quietly started, without an official announcement!
In this decade, silver can save for retirement, your purchasing power and maybe even your life, if the situation doesn’t go according to plan.
September is packed with critical events: debt ceiling, FED interest rate decision, Treasury record debt issuance, and a precious metals bull market.
It’s going to be epic.
Research Partner, PortfolioWealthGlobal.com
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Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
This work is based on SEC filings, current events, interviews, corporate press releases and what we’ve learned as financial journalists. It may contain errors and you shouldn’t make any investment decision based solely on what you read here. It’s your money and your responsibility. The information herein is not intended to be personal legal or investment advice and may not be appropriate or applicable for all readers. If personal advice is needed, the services of a qualified legal, investment or tax professional should be sought.
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