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All fiat currencies are no more than floating abstractions of value. Society has put its faith in fiat currency issued by governments. These government-issued currencies are not backed by a physical commodity, such as gold or silver, but rather by the promises from the government that issued it. A difficult question investors today face is determining which assets will appreciate most thus rising in value and which form to hold their wealth.The value of fiat money is derived from supply and demand and the stability of the government that issues it. Over the years many promises have been made that simply cannot or will not be honored. History and many real-life examples exist that indicate that promises are easier to make than keep.

It is very possible in the near future we may see a strong bifurcation of the financial system. The Hard Asset Inflation / Paper Asset Deflation Theory laid out below is based on the idea that as wealthy individuals begin to realize the fragility of the current financial system they will shift their investment preferences to items of substance.

This repositioning of wealth in assets could occur rather rapidly during a period of inflation. If such a revamping of how the wealthy invest takes place it could drastically add to any inflationary trends. In short, some investments would fall like a stone while others soar. Imagine real estate doubling in value while pensions are cut and stocks falter. This dovetails with my theory t he Fed should be ecstatic so many people have been willing to invest in intangible assets because it has helped to minimize inflation.

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The Vulnerabilities Of A High-Tech Society

July 16, 2023

The Vulnerabilities Of A High-Tech Society

In the title of this piece, I use the term, “high tech” however this is about the vulnerabilities of any advanced civilization. Such societies tend to be specialized with their members dependent on services and jobs being carried out by others in the community to provide the basic necessities they need. If people were suddenly faced with losing the things they need to survive it is easy to envision a situation where survival of the fittest became the mantra of the day and things would rapidly become quite dicey.High-tech societies are particularly vulnerable to collapse due to their population being dependent on both the system and others to provide the basic items they need to survive in everyday life. Electricity, food, water, sewer systems, phone and computer connections, transportation, and healthcare fall into this category. Just about everything else we have come to expect and experience as we go through our day depends on technology.

Life has become more complex as we transferred the task we did in the past to machines, and this could come back to haunt us. Our growing dependence on computers and devices such as smartphones and computers has dumbed down society. This has compromised the skills we need to endure and survive. We have reached the point where many people can not do simple math or read a map.

A video by City Prepping reveals just how difficult it would be to survive following a massive disaster where no help or aid comes forth. Imagine being forced to exist for months on your own. The video points out many people will die if such a situation would arise. Would you know what to do? Even if you do, many of the things that would help you and your family survive are easier said and done.

…click on the above link to read the rest…

You Are Not Alone, Anger Is Building Across The World!

May 20, 2023

You Are Not Alone, Anger Is Building Across The World!

You are not alone if you are tired of watching your government grow increasingly oppressive and corrupt. Many people across the world share your pain. People continue to voice their anger and discontent, however, this is something the media often chooses not to report for it is owned by those same forces which are attempting to enslave us. Those on the left referred to the right as fascist or Nazi while those on the right refer to the left as communist.This tends to overlook the fact that both groups are rooted in wanting to expand control. The truth is that the angst and growing anger many people feel is kept under control by a mass media with a very strong agenda. Mass media has perfected the art of dividing us and at the same time keeping us in the dark. The greatest risk we face may be that Artificial Intelligence (AI) is coming at us fast and furious. Once it is here getting information will become almost impossible.

As of late, several times a day I find a song from the musical Les Miserables flowing through my mind. It is named, “The Song Of Angry Men” and screams enough is enough. Of course, in the video, the people seem very happy until the soldiers start killing them. This “killing thing” is of course what happens in totalitarian regimes. Sadly, the world has far too many totalitarian regimes and is moving in the direction of creating more. Yes, they can take away your freedom.

There are simply too many things happening for the bulk of society to stay focused on any one issue. Whether we are talking about corruption in Ukraine and how American money is being diverted or squandered rather than spent on what we see as necessary projects…

…click on the above link to read the rest…

The Global Financial System Is A Rube Goldberg Machine

January 4, 2023

The Global Financial System Is A Rube Goldberg Machine

Much Of The Economy Is Like This Machine

More than one economist, big wig CEO, and Fed watcher has alleged the problems haunting the financial system have very deep roots. These people often contend governments and central banks have not fully rectified the problems causing the great financial crisis of 2008. Instead, they have merely papered over our failures by printing money and flooding the system with liquidity.

Let’s just cut to the chase. Overall, the global financial system is not a well-designed efficient machine. Instead, it is a cobbled-together mess all glued together in a haphazard way to get the job done. To make matters worse, this system is greased by the greed of those who benefit from stealing a little from here and there. In the real world, things are usually not intentionally designed to be complicated but the reality is that they just are.

This means that more often than we would like to admit, systems thrown together with various parts or pieced together haphazardly are prone to be unreliable. When we try to explain events in terms of cause and effect the bigger picture has a way of getting lost. Often hidden away is the risk that results when complex poorly built systems become codependent upon other poorly built systems. Bestselling author Nassim Taleb who wrote, “The Black Swan” detailed in his book how when something is highly complicated highly improbable and unpredictable events can and do occur.

While pondering the conundrum that has become our current economy, I stumbled upon an analogy. Simply put, the global economy is like a Rube Goldberg machine. These are “goal-oriented” contraptions built in a ridiculously complicated way to perform what would normally be a simple task…

…click on the above link to read the rest…

Fed Chairman Paul Volcker’s Thoughts On Goverance

August 1, 2022

Fed Chairman Paul Volcker’s Thoughts On Goverance

For many people, former Fed Chairman Paul Volcker’s relevance today is rooted in how he broke the back of surging inflation in 1980. He is widely credited with employing the harsh policies that ended the high levels of inflation seen in the United States during the 1970s and early 1980s. back then few people realized his brave and bold move would shape the economic system for decades.
Paul Volcker served two terms as the 12th Chair of the Federal Reserve from 1979 to 1987. He was nominated to the position by President Jimmy Carter and renominated by President Ronald Reagan. Paul Volcker died on December 8, 2019. Before his death, Volcker participated in an interview with Ray Dalio. I recently stumbled upon this video from February 2019 on YouTube. (https://www.youtube.com/watch?v=mMN17uBzCw4)

Paul Volcker was a firm believer in good governance and felt it is a key factor in keeping the nation healthy. Even back in early 2019, Volcker was unhappy with the efficiency of government management. Since then it could be argued the government has performed even more poorly. He voiced concern over how it seems today that working in government has become a revolving door where people go into a job just long enough to make contacts they can exploit when they return to the private sector.

If Volcker were alive today, it is likely he would be appalled at the current state of affairs considering the role he felt government should play in our lives. One similarity the late 70s and early 80s have in common with today is that many special situations exist that scream huge risk ahead. When we look closely at current trends, it is difficult to ignore the numbers simply do not work going forward.…click on the above link to read the rest of the article…

Turning The Wealth Pyramid Upside Down

March 11, 2022

Turning The Wealth Pyramid Upside Down

When we look at upside down wealth pyramid at the left, I have a big problem with the picture it promotes. It is clearly based on someone’s opinion of what investments are safe. The one thing it does well is to scream that some investments have a high degree of risk and it is best not to put all our eggs in the same basket.

Another issue is how a 401 or pension will fare during hard times or if we do see a huge number of defaults. Consider this an indication that placing your wealth into paper promises means it has the potential to vanish or be converted into something to would never agree to. Again, the devil is in the small print or the fact “they” can change the rules at any time.

While a great deal of speculation has been showered upon us concerning inflation turning to deflation, we will not know the true direction of things until they occur. One thing to keep in mind is that government employs a tremendous number of people that will never accept a cut in pay. This will put a solid net under falling prices. Combined with the refusal of many workers to consider working for anything near minimum wage helps push away the notion of deflation. In fact today, my local paper announced the City Council in Fort Wayne, Indiana just approved retroactive COVID-19 hazard bonuses for all city workers.

It is important to move towards forecasting based on probability rather than predictions. Keep in mind a great deal of how we deal with the options before us is centered on how we position ourselves…

…click on the above link to read the rest of the article…

Inflation Lowered By Investment In “Intangible Goods”

February 16, 2022

Inflation Lowered By Investment In “Intangible Goods”

Inflation ahead will be contained in certain sectors of the economy. How much inflation we see is still up in the air. From a Main Street perspective, people and businesses are saying that inflation is here to stay and is not a short-lived or transient issue. Still, it is also important to remember that as supply and demand have taught us, what goes up can and often does come down. I contend and envision most of the inflation that takes place will be in hard assets and it will be the result of people losing faith in fiat currencies.When money is created or printed it has to go somewhere, and it has been fueling the “everything bubble.” While feeding the “wealth effect” and inequality, a bubble is not necessarily inflationary. All this can be a difficult concept to grasp. The important point to remember is that everything is relevant and values and prices change. Up until now, much of the newly created money has not resulted in massive inflation. This is because it has been diverted from goods everyone needs to live and into intangible assets not included in the consumer price index.

The way people view fiat currencies way be about to change in a big way, they are generally a poor place to store wealth. To be clear, I view the dollar as the best of the four fiat currencies, however, I expect all of them to come under more pressure in the near future with the yen and euro being the biggest losers. The amount of interest in cryptocurrencies and other inflation hedges is an indication many investors are losing faith in the central banks and fiat currencies. The result may be a monetary crisis and chaos that shifts people into tangibles and a self-feeding inflation loop.

…click on the above link to read the rest of the article…

Is Powell Again Pulling Strings From “The Shadows”?

January 17, 2022

Is Powell Again Pulling Strings From “The Shadows”?

Recently, we have seen stocks rally while the dollar falls. Some of us are wondering why the dollar is falling at the same time currency traders are busy penciling in as many as four interest rate increases. The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was down 0.1% on Thursday hitting a two-month low. This drop leaves the dollar with a loss of 1.2% since the start of the new year.A more aggressive tightening of monetary policy and “hawkish” central bank intent on slowing inflation is generally seen as supportive to a currency. Is it possible Powell dropped the dollar to kick the stock market back up? I contend this is what is happening. Such a move has been used in the past. In volatile markets, like we have today ruled at times by emotions, the fear of missing out, and a slew of traders trained to buy the dip, it doesn’t take much to turn an ugly selling streak into a buying panic.

The combination of a sudden drop in the dollar just as the Fed starts talking about tapering and raising rates is difficult to understand. With most seasoned investors allergic to risk, logic would tend to make them view the coming Fed action as a strong headwind to markets going higher. At the same time, higher interest rates and less expansion of the Fed’s balance sheet generally moves the dollar higher.

While it could be argued the falling dollar simply reflects the coming recession into which the Fed is tightening, again I point to Powell as the great enabler…

…click on the above link to read the rest of the article…

Arguing The Un-Consensus On Today’s Macro & Inflation

January 7, 2022

Arguing The Un-Consensus On Today’s Macro & Inflation

In a YouTube video Mike Green, Chief Strategist at Simplify Asset Management, attacks the idea of hyperinflation and inflation. He is not alone in pushing back on the idea inflation is about to run rampant. Despite the price rises we have been seeing, many economists claim that while inflation is likely to remain elevated for the near future we are now seeing projections it will peak in the first half of this year.During an amazing, almost two-hour video interview, Green shares his macro view of the economy, inflation, markets, and the dynamics of today’s equity and fixed income markets. In the video titled; The Un-Consensus on Today’s Macro & Inflation, Green claims the base effects driving inflation are becoming more challenging and will not allow for it to remain elevated. He also shares his view of how stock markets have become less efficient and more ‘inelastic’ due to the proliferation of passive index investing, and where that might lead.

While price is said to be located at the intersection of supply and demand, manipulation and interventions have muddied this picture. Green keys in on the fact that price shocks and distortions have a way of working through the system, when prices rise in the capitalist system, we generally see an increase in the supply of that commodity or service. He also points to the strong role demographics play in the economy. It is important to remember while price hikes can appear inflationary they are not a big issue if they last only a short time. The price of gas from 2000 until today is an example of how wildly prices can swing. In short, if prices do not stay elevated or continue to climb, they do not add to inflation.

We Have Witnessed Wild Price Swings In Gas Prices Over The Years

…click on the above link to read the rest of the article…

The Coming Retirement Crisis Will Affect Everyone

January 3, 2022

The Coming Retirement Crisis Will Affect Everyone

We are on the cusp of a retirement crisis that will affect everyone. Far too many promises have been made and the demographics we face do not bode well for a bright future. The answer that some people tout is we should have more children or open the borders. This is based on the idea we need more workers and ignores many other factors feeding into this issue. There is simply no way “more children” or workers can ever pay enough into the system to fulfill the promises that have been made.The competition for programs from the government to support the needs of different generations is about to explode as young and old Americans reach out for more help. Much of our problems stem from a slew of bad policies either driven by stupidity, corruption, or an unwillingness to accept the reality you can postpone a reckoning for only so long. Investors and the public at large suffer from a “recency bias of hope” that tends to blind them from unpleasant long-term realities.

The coming together of surging investment risk, an interrupted business cycle, and demographics are coming together to form the perfect storm. To clarify, much of the wealth in America is held in the hands of the baby boomers that have just or are about to retire, and over the years, many have moved into risky investment in search of yield. It has been years since we have had a major recession so sooner or later, it is logical one will arrive. Last, but not least, we are now seeing demographics play a larger role in the economy as boomers downsize (sell assets) and cut spending.

…click on the above link to read the rest of the article…

Inflation In 2021 Far Different From What We Had In 1979

December 23, 2021

Inflation In 2021 Far Different From What We Had In 1979

The inflation of today is a starkly different creature than what we faced in 1979. The world is massively different and presenting us with a strain of inflation that will most likely be stronger and more difficult to combat without major disruptions to our economy. This article is an attempt to highlight the differences and why today the position we find ourselves in is much more precarious.New data released by the Bureau of Labor Statistics showed price inflation in November rose to the highest in forty years. Allianz Chief Economic Advisor Mohamed El-Erian warned the Federal Reserve is losing credibility by not tapering its balance sheet to rein in inflation. Appearing on CBS’ “Face the Nation” he stated the most significant miscalculation in decades is the Fed’s inability to characterize inflation correctly. It was only on November 30th that Fed Chair Jerome Powell finally retired the term “transitory” and opted to label inflation as persistent.

President Biden responded to rising inflation has been to call upon Congress to pass his Build Back Better plan. Biden claims this will lower how much families pay for health care, prescription drugs, child care, and more.” In reality, of course, the passage of BBB would increase inflationary pressure throughout the economy and only transfer these soaring costs from the individual to the government.

The idea the economy of 2021 is strong enough to allow a rapid and huge surge in interest rates such as those imposed upon America in 1981 is false. During America’s prior bout with inflation 40 years ago the economy was able to withstand the shock. Yes, we did have a recession, but it was short-lived because the foundation of our economy was much stronger. America was not bleeding from huge trade deficits and people had real jobs.

…click on the above link to read the rest of the article…

Will America’s New Nuke Deter War, Or Bring It On?

December 16, 2021

Will America’s New Nuke Deter War, Or Bring It On?

In a bit of irony, a Twitter comment by Jill Hruby Administrator of the National Nuclear Security Administration (NNSA) pointed to a new nuclear bomb as proof America is committed to nuclear deterrence. This is where it is important to remember that deterrence means, the action of discouraging an action or event through instilling doubt or fear of the consequences. See her Twitter post below;

NNSA Administrator

@NNSAHruby

Last week, #NNSA successfully completed the B61-12 First Production Unit @PantexPlant. This is a huge milestone for stockpile modernization and demonstrates our Nation’s commitment to #nuclear deterrence.

The B61-12 Is Light And Accurate

It could be argued that reworking a nuclear bomb to make it easier to justify using it and widening out the opportunities for its use is nothing to brag about. This all falls under the category of, “once it’s out of the bottle it will be hard to put back in”

An article in The National Interest on October 9th, 2018 by Zachary Keck indicates this bomb may be the most dangerous nuclear weapon in America’s arsenal. The combination of accuracy and low-yield make the B61-12 the most usable nuclear bomb in America’s arsenal. It also makes using nuclear weapons thinkable for the first time since the 1940s.

To be clear, the reason it is such a monster is not because of its power. The bomb has a maximum yield of just 50-kilotons, the equivalent of 50,000 tons of TNT. By contrast, the B83 nuclear bomb has a maximum yield of 1.2 megatons which is 24 times greater. The B61-12 may only be able to carry low-yield nukes but is guided by an advanced Boeing tail kit.

Can Anyone Win A Nuclear War?

…click on the above link to read the rest of the article…

Does Russia Threatens Us All By Simply Existing?

December 13, 2021

Does Russia Threatens Us All By Simply Existing?

This article is focused on giving readers a better understanding of the Russian threat. Few of us have had the pleasure of visiting Russia so what we do know about it has generally been filtered through a national security apparatus so entrenched in a cold war mindset they have lost all appearance of objectivity. Those with this bias are always pounding on the drums of fear and demonizing Russia as a major threat to America and our way of life.

Note Russia’s Failure To Appear On List!

Getting away from what shapes American opinion here are some real facts about Russia. For over half a century economic policy was shaped by the Communist Party and like the rest of the USSR, was centrally planned. The state controlled virtually all investment, production, and consumption across the country. The transition towards a market economy in the 1990s was painful. The chart on the right shows even today Russia fails to place in the world’s top ten largest economies.

- Russia is the 9th most populated country in the world with 144.50 million people in 2017.

- In terms of land area, Russia is spread across 9 time zones and is the largest country in the world. Russia shares borders with many countries, including China, Ukraine, North Korea, and Norway.

- The official language is Russian but there are 27 other languages co-official in various regions of the country. It is located in Eurasia (the combined continental landmass of Europe and Asia).

Some sources estimate that Russia contains over 30 percent of the world’s natural resources.

Modest Skyline Downtown Moscow

…click on the above link to read the rest of the article…

Our $29 Trillion Deficit, Interest Rates, Inflation, And Debt

December 2, 2021

Our $29 Trillion Deficit, Interest Rates, Inflation, And Debt

The emergence and acceptance of Modern Monetary Theory has turned our economic system upside down. Skeptics of its substance and sustainability have been brushed aside temporarily but expect the MMT experiment to collapse and end in ruin. To us that believe in old school economics, debt matters and is tied directly to interest rates and inflation. Central banks across the world claim the lack of inflation is the key force driving their QE policy and permitting it to continue, however, the moment inflation begins to take root much of their flexibility will be lost. This translates into governments being forced to pay higher interest rates on their debt.

With America’s national debt now blowing past 29 trillion dollars, it is important to keep the numbers in perspective. Nothing is as sobering as looking at future budgets. Those of us rooted in the tried and true economics relied upon in the past are worried. For years the argument that “This Time Is Different” has flourished but history shows that periods of rapid credit expansion always end the same way and that is in default. This also underlines the reality that any claims Washington makes about the budget deficit being under control is a total lie.

Click (Here) To View National Debt Clock

America is not alone in spending far more than it takes in and running a deficit. This does not make it right or mean that it is sustainable. Much of our so-called economic growth is the result of government spending feeding into the GDP. This has created a false economic script and like a Ponzi scheme, it has a deep relationship to fraud.
…click on the above link to read the rest of the article…

Warmongers Would Let Ukraine Become World War III

December 2, 2021

Warmongers Would Let Ukraine Become World War III

They just won’t let it go. It seems many of the so-called “warmongers” are hellbent on turning Ukraine into a major war whether the countries involved want it or not. History shows what has become known as “proxy wars” create profits for companies manufacturing weapons. The cost, of course, is then pawned off on taxpayers and a public preoccupied with personal concerns. Such talk of war is probably viewed as a blessing by President Biden and a White House that has been battered with bad press.

The proof that Ukraine is unlikely to go quietly into the night is reinforced by a slew of news stories over the last few days. It includes items such as the U.S. Embassy in Ukraine is warning of “unusual Russian military activity” near the nation’s borders and in the annexed peninsula of Crimea or that Canada is now considering larger deployments to Ukraine.

Nothing ramps up the hype like the headline, “Ukraine fears that Russia may be preparing to invade.” Brig. Gen. Kyrylo Budanov, head of Ukraine’s defense intelligence agency, said last weekend. He went on to say that Russia had more than 92,000 troops amassed at the border and could attack as early as the end of January. In reaction, not only is Canada looking at deploying hundreds of additional troops to support the Canadian soldiers already in Ukraine on a training mission, it is considering redeploying some of the CF-18 fighter jets currently based in Romania.

NATO Has Slowly Expanded Towards Russia

I stand with those arguing this has little to do with Russia taking over the world or Ukraine’s national sovereignty. It is about money, energy, and power…

…click on the above link to read the rest of the article…

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