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Banking Crisis, Stage Two

June 11, 2024

Banking Crisis, Stage Two

I’m sure you recall the banking crisis of March to May 2023.

It began with the collapse of the little-known Silvergate Bank on March 8. This was followed the next day by the collapse of the much larger Silicon Valley Bank (SVB) on March 9. SVB had over $120 billion in uninsured deposits.

Bank deposits over $250,000 each are not covered by FDIC insurance. Those depositors stood to lose all their money over the insured amount. This would have led to the collapse of hundreds of startup tech businesses in Silicon Valley that had placed their working capital on deposit at SVB.

There were also much larger businesses such as Cisco and at least one large cryptocurrency exchange that had billions of dollars on deposit there. Those businesses would have taken huge write-downs based on the size of their uninsured deposits.

On March 9, the FDIC said that indeed the excess deposits were uninsured, and depositors would get “receivership certificates” of uncertain value and zero liquidity instead.

By March 11, the FDIC reversed course and said all deposits would be insured. The Federal Reserve intervened and said they would take any U.S. Treasury securities from member banks in exchange for par value in cash even if the bonds were only worth 80% of par (which most were).

The Mother of All Bailouts

That Sunday night they also closed Signature Bank, a New York-based bank with crypto links. The damage wasn’t done. On March 19, the Swiss National Bank forced a merge of UBS and Credit Suisse, one of the largest banks in the world. Credit Suisse was on the edge of insolvency.

Finally, on May 1, First Republic Bank, with over $225 billion in assets, was ordered closed by the government and sold to JPMorgan.

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

Are They TRYING to Start a Nuclear War?

June 9, 2024

Are They TRYING to Start a Nuclear War?

The steady path toward World War III continues. U.S. and NATO support for Ukraine in the war with Russia has been one long failure, but that hasn’t stopped them from escalating the war with new weapons and tactics.

Russia has met the escalation with its own escalation every step of the way. At what point do rational leaders in the West (if there are any left) pause, consider that the war is lost in Ukraine, deescalate and seek a treaty to end the war?

There’s no sign of that yet. In fact, all of the signs point to further escalation, which is a sure path to nuclear war. What good has escalation accomplished?

The West supplied Ukraine with HIMARS precision-guided artillery, but that largely failed because the Russians quickly learned how to jam the GPS guidance systems, so the missiles went off course.

That doesn’t mean the Russians shoot down or jam every HIMARS rocket Ukraine launches. Some will always get through. But overall, their effectiveness has been limited compared with expectations.

The U.S. and NATO also supplied Ukraine with Abrams, Leopard and Challenger tanks and Bradley Fighting Vehicles that have been left burning on the battlefield. They also require intensive maintenance Ukraine can’t necessarily provide, and are often unsuited for the battlefield conditions in Ukraine. Many Ukrainian soldiers have actually expressed a preference for Russian-made equipment over NATO’s.

Not Wonder Weapons

Meanwhile, the Patriot anti-missiles systems cannot shoot down Russian hypersonic missiles and have been destroyed one-by-one at a cost of $1 billion each. F-16s are the next wonder weapon promised. But Russia fields the most sophisticated air defense system in the world. Many planes will be shot down by Russian S-400 anti-aircraft batteries and other systems.

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

The “Old Money” Secret to Wealth

May 23, 2024

The “Old Money” Secret to Wealth

I believe that we’re heading for another liquidity crisis or financial crisis. That doesn’t mean it’ll happen tomorrow, but there are disturbing signs that it might not be too far off.

It doesn’t mean the world’s going to end. But investors who aren’t prepared could see large portions of their portfolios wiped out. It could take years to rebuild them, and many investors just don’t have the time to recoup those losses.

But how do you prepare? You might want to start by looking at how “old money” preserves its wealth. Today I want to explore that.

On a cool evening in the fall of 2012, I joined a private dinner in Rome with a small group of the world’s wealthiest investors.

We dined at Palazzo Colonna, a private palace that’s been owned by one family for 31 generations or 900 years. My dinner companions were mainly Europeans, some Asians and relatively few from the United States.

Amid marble, gold, paintings and palatial architecture, I mused on the meaning of old money compared with the new money crowd that congregated for cocktails near the Connecticut home in which I lived at the time.

Old Money vs. New Money

Old money has proved they know how to preserve wealth over centuries, while the jury is still out on new money busy buying yachts, jets and exotic vacations.

In the United States, the “old money” is generally about 150 years old with fortunes dating to the mid-19th century. Families in this category include the Vanderbilts, Rockefellers and Carnegies.

Some U.S. family fortunes are almost 200 years old. But most of the great wealth today isn’t old at all.

It comes from success in the past 30–50 years including Mark Zuckerberg, Jeff Bezos and Warren Buffett.

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

AI, Gold and Nuclear War

April 17, 2024

AI, Gold and Nuclear War

So-called artificial intelligence (AI) is taking the world by storm. Meanwhile, gold has shot up like a rocket over the past couple of months.

In mid-February, gold was trading at $1,990. Two months later, gold is trading above $2,400 — a $410 gain in just two months.

So here’s a question:

Is there a connection between AI and gold? It seems like an odd question. But as it turns out, the answer is yes. And surprisingly, there has been for decades. It involves the Cold War between the U.S. and the Soviet Union.

In the early 1980s, the KGB was deeply concerned about the possibility of a nuclear first strike by the United States. At the time, Yuri Andropov was head of the KGB.

Andropov’s fear of a nuclear first strike by the U.S. was based in part on the 1980 election of Ronald Reagan and Reagan’s plan to install Pershing II intermediate-range missiles in Europe.

Those missiles could be armed with nuclear warheads and could strike the Soviet Union within minutes of being launched. This put Soviet nuclear forces on a hair-trigger alert. They adopted a “launch on warning” posture.

This means that as soon as credible evidence of a planned first strike was discovered, the Soviet Union would launch its own first strike to avoid destruction of its forces.

The irony was that the U.S. had no actual plans to launch a first strike, but the Soviet Union didn’t know that. Reagan’s speeches about the “evil empire” did nothing to calm Soviet concerns.

AI and Nuclear Readiness

In response, the Soviets developed a primitive (by today’s standards) AI system called VRYAN. That’s a Russian acronym for: sudden nuclear missile attack.

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

Americans Understand Inflation

December 21, 2023

Everyday Americans understand inflation perfectly. But the egghead economists and policymakers who govern their lives don’t.

That may be because inflation is one of the biggest concerns of those who live in the real world, and it may lead to a political earthquake next November in the presidential and congressional elections.

Here’s the reality and here’s the political narrative: Reality is that prices have been going up at the fastest rate in 40 years and they are still going up.

Inflation (on an annualized basis) was 9.1% in June 2022, 4.9% in April 2023, 3.7% in September 2023 and 3.1% in November 2023 (the most recent data available).

It’s true that the rate of inflation is coming down, but prices are still going up. They’re going up at a slower rate but they’re still going up.

Not only that, but past price increases are locked in so new price increases are applied to a higher base. This is killing American consumers.

The average price of a pound of ground beef in the U.S. was $5.11 in September 2023. In October 2023 the price of a pound of ground beef was $5.23. That’s a 2.3% increase on a month-over-month basis, which annualizes to over 25%.

That’s the kind of inflation that real Americans confront every day.

The economists prefer measures of inflation that exclude energy and food prices, what they call “core” inflation. Some eggheads use measures that exclude food, energy and housing costs. They call that “super-core” inflation.

Those measures are academic constructs and bear no relationship to the real world. Try living without gas in your car, food on the table or a place to live.

The ignorance of politicians gets worse when we see Joe Biden come out and say, “Prices are going down,” and retailers should lower their prices and avoid “price gouging.”

Biden is purposely confusing lower rates of inflation (which are still price increases) with lower prices (which are not happening).

…click on the above link to read the rest…

Rickards’ Five 2024 Forecasts

December 17, 2023

I have five forecasts for 2024 to help keep you ahead of the curve in positioning your investment portfolio.

My overall forecast is that 2024 will be more tumultuous and shocking than 2023. That may seem hard to credit.

With two major wars going on, an indicted former president and a demented current president, how can 2024 be more challenging than 2023?

Rest assured; it will be. I explain why below.

An Election of Dire Consequences

It’s a cliche to write that the next presidential election will be the “most important in our lifetimes.” Yet in 2024 that cliche will actually be true.

The divide between the two parties is probably greater than at any time in U.S. political history since the Civil War. The choice could not be more stark and the stakes could not be higher.

That’s why this election is so important.

First off, I don’t think that Joe Biden will be the Democratic nominee for president.

Biden’s problem is not just his age, but the fact that he actually is mentally and physically impaired. He’s simply not fit to be president, and everyone knows it even if Democratic operatives and media sycophants don’t want to mention it. But who will replace Biden?

The most likely replacements are Gavin Newsom, J.B. Pritzker, Gretchen Whitmer and Jennifer Granholm. All four were or are state governors. They’re all about the same ideologically; take your pick. Forget Kamala Harris; she’s simply too much of a liability.

The Republican Side

On the Republican side, there’s not a lot to say. Trump will be the nominee; no one can recall a non-incumbent with such a large lead in the polls.

He’s leading the pack by 55 points or more and is now even running ahead of Joe Biden in recent polls.

…click on the above link to read the rest…

March 9, 2022

October 29, 2023

March 9, 2022

Where were you on March 9, 2022, when President Biden signed the death warrant on American freedom?

On that day, in a hushed ceremony at the White House without the approval of Congress, the states or the American people, Biden signed into law Executive Order 14067.

Buried in his order are a few paragraphs, titled Section 4. The language in Section 4 makes Order 14067 the most treacherous act by a sitting president in the history of our republic.

That’s because Section 4 sets the stage for legal government surveillance of all U.S. citizens, total control over your bank accounts and purchases and the ability to silence all dissenting voices for good.

In this new war on freedom, they aren’t coming for your guns. No, they’re thinking much bigger than that.

They’re coming for your money.

And it’s already started. These efforts are stepping up and taking on a nefarious tone that also involves surveillance and loss of our freedoms under the guise of central bank digital currencies (CBDCs), or Biden Bucks as I call them.

If you had asked me about this two years ago, I would have said the U.S. is taking a rather studious approach to it. It was too important to not be involved in, but the U.S. did not seem to be in any hurry to actually implement it.

There were studies, and I would have said my estimate at the time would have been, “OK, China has it. Europe, maybe another year. The U.S. might be three or four years down the road because the dollar’s too important. They don’t want to race into it. They want to get it right. There are a lot of ways to mess it up.”

But that’s changed under Joe Biden.

…click on the above link to read the rest…

“Shut up — or Else!”

July 16, 2023

“Shut up — or Else!”

Certain establishment types consider my ideas extreme. They accuse me of being a conspiracy theorist or some kind of kook, way outside the boundaries of acceptable consensus.

That’s fine, I expect that. If you threaten powerful interests, you can expect that they’ll try to discredit you.

The fact is people are conditioned to accept whatever the authorities tell them. It’s a powerful urge that actually goes back to evolutionary biology.

If you challenge what the authorities say, you become a threat to group cohesiveness, and, therefore, a threat to group survival.

In that vein, I’ve been warning my readers for over a year about the dangers of central bank digital currencies (CBDCs) that are being rolled out by central banks around the world.

In the U.S., I’ve called them “Biden Bucks.” I’ve warned that they could quite possibly lead to a total surveillance state in which the government can track your every purchase — and regulate the most minute aspects of your life.

Total Control

CBDCs are programmable. They allow central banks (or regulated commercial banks) to monitor your purchases.

In conjunction with artificial intelligence (AI), purchases and other uses of money (charitable contributions, political contributions, travel, etc.) can create a profile that identifies you as an enemy of the people as described by the government.

CBDCs can be used to freeze your account, require you to spend money at the risk of confiscation in the form of a “fiscal penalty” or to impose withholding tax on professionals and independent contractors who are not currently subject to withholding.

Your “Biden Bucks” could also be made to stop working at the gas pump once you’ve purchased a certain amount of gasoline in a week. Or you could be banned from buying a steak at the grocery store if you’ve exceeded your weekly quota of meat consumption.

…click on the above link to read the rest…

World War III: Has It Begun?

January 28, 2023

World War III: Has It Begun?

Has World War III already begun?

That’s a serious question and deserves serious consideration by investors. A wave of analysts and commentators have warned that the war in Ukraine could spin out of control and escalate into World War III.

One variation on that theme is that the war could escalate into a nuclear war with tactical nuclear weapons deployed. Most point a finger at Russia as the party that will launch a nuclear strike out of desperation at a failing campaign in Ukraine.

Actually, the opposite is true.

The Russian campaign is not failing (it has been on hold for several months awaiting the right conditions to launch a winter offensive). You just don’t hear about it in the mainstream media, which is essentially a propaganda outlet for Ukraine.

And the party most likely to use nuclear weapons first is the U.S. in order to save face and destabilize Russia once Ukraine is on the brink of collapse.

Reality Check

Many people have a hard time believing that. They’ve been told that Putin is the devil incarnate and would probably like to destroy the world. We like to think that in modern times we’re sophisticated and above falling prey to propaganda. Unfortunately, it isn’t true.

The fact is the U.S. did wage the only nuclear war in history from Aug. 6–9, 1945 and had a successful outcome. I’m not getting into the morality of it here, one way or the other. I’m just being objective.

Either way, another nuclear war could not be contained and it would be tantamount to World War III. It amounts to the same thing.

…click on the above link to read the rest…

Welcome to 1984

July 11, 2022

Welcome to 1984

I’ve been addressing the war on cash lately, and for good reason. While everyone’s attention is focused on the war in Ukraine, inflation and the Supreme Court, government plans to eliminate cash are accelerating.

For example, central bank digital currencies (CBDCs) are coming even faster than many anticipated. The digital yuan is already here; it was introduced in China last February during the Winter Olympics.

Visitors to the Olympics were required to pay for meals, hotels, transportation, etc., using QR codes on their mobile phones that linked to digital yuan accounts. Nine other countries have already launched CBDCs. Europe is not far behind and is testing the digital euro under the auspices of the European Central Bank.

The U.S. was lagging, but is catching up fast.

The Federal Reserve was studying a possible Fed CBDC at a research facility at MIT. Now the idea has moved from the research stage to preliminary development.

Fed Chair Jay Powell said, “A U.S. CBDC could… potentially help maintain the dollar’s international standing.”

But this has little to do with technology or monetary policy and everything to do with herding you into digital cattle chutes where you can be slaughtered with account freezes, seizures, etc.

NOT Crypto

First off, CBDCs are not cryptocurrencies. The CBDCs are digital in form, are recorded on a ledger (maintained by a central bank or finance ministry and the message traffic is encrypted. Still, the resemblance to cryptos ends there.

The CBDC ledgers do not use blockchain, and CBDCs definitely do not embrace the decentralized issuance model hailed by the crypto crowd. CBDCs will be highly centralized and tightly controlled by central banks.

The CBDC ledger can be maintained in encrypted form by the central bank itself without the need for bank accounts or money market funds…

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

Nowhere to Hide

May 17, 2022

Nowhere to Hide

Investors don’t need to be told about the recent stock market crashes. The Dow Jones index is down 12.5% since early January. The S&P 500 is down 16.1% in the same period. The Nasdaq Composite is down an even more spectacular 26.5% this year. It lost more ground today.

This puts the Nasdaq solidly into a bear market (down 20% or more from an interim peak) while the Dow and S&P 500 are both in correction territory (down 10% or more from an interim peak).

The Dow was up slightly today, but the S&P was down again. On current trends, the S&P 500 may break into bear market territory in a matter of days with the Dow not far behind.

This collapse coming so soon after the market crash of March 2020 may surprise some investors, although this outcome was predicted in my last book The New Great Depression, published last year.

We could get into the reasons for the recent market swoon, like the Fed’s taking away the punch bowl, but the reasons almost don’t matter at this point.

What truly is surprising is that the stock market is not alone in its recent dismal performance.

The Great Crypto Crash

U.S. Treasury bonds, foreign currencies, gold and other commodities have all declined sharply side by side with stocks. There are good reasons for this, including the prospect of a recession that could cause stocks, gold and commodities to fall in sync.

Still, the market carnage doesn’t end there. The biggest collapse among major asset classes is in Bitcoin and other cryptocurrencies.

The price of Bitcoin has fallen over 55% since last November, when Bitcoin peaked at around $69,000. As I write this article, Bitcoin is trading at $29,647.

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

Collapse Is Happening Before Our Eyes

May 5, 2022

Analysts and authors, myself included, have been warning about the collapse of the dollar as the global reserve currency for years. I described this prospect in my first book, Currency Wars (2011), and in several other books in the years since.

This process can take many years. For example, the decline of sterling as the leading global reserve currency played out over 30 years from 1914 (the beginning of World War I) to 1944 (the Bretton Woods conference).

Still, events today are playing out so quickly that the collapse is happening in front of our eyes.

It’s no longer a matter of a major event on the horizon; it’s occurring in real-time. Russia has just linked the ruble to gold at a rate of 5,000 rubles to one gram of gold. China is discussing with Saudi Arabia the prospect of paying for oil in yuan.

Israel is likewise considering taking yuan in exchange for its high-tech exports. China and Russia are creating new payments systems to avoid U.S. sanctions. You get the point.

Foreign Central Banks Aren’t Dumb

Central banks have been net buyers of physical gold since 2010. Countries all over the world are considering dumping dollars for fear that they will be next on the list to have their dollar assets frozen or seized the way the U.S. seized the dollar-denominated assets of the Central Bank of Russia.

That makes sense. What’s the point of holding dollars in your reserve positions if the U.S. can freeze those accounts on a whim? Americans tend to take dollar strength for granted, but that’s a mistake. It’s helpful at times like this to get a foreign perspective.

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

Rickards: Bad News, I’m Afraid

January 22, 2022

Rickards: Bad News, I’m Afraid

The breakdown of global supply chains is well-known by now. Whether it’s finding groceries in your supermarket, buying a new car or buying appliances like dishwashers and refrigerators, goods are scarce. Also, deliveries take forever and choices are limited.

Many people wonder why the problem isn’t going away. Here’s the answer:

The supply chain is a complex dynamic system. When any complex system collapses, you can look for specific causes but that’s usually a waste of time. Systems collapse internally because they are too large and too interconnected and require too many energy inputs to keep going.

Any specific cause is more likely to be a symptom than a true cause. It’s frustrating, but that’s the answer.

Most Americans’ first encounter with the supply chain meltdown was in the spring of 2020 during the first wave of the coronavirus pandemic. Shoppers noticed that items like hand sanitizer and paper goods at Costco and other big-box stores were cleaned out.

It seemed that Americans who were locked down and quarantined at the time were hoarding these products because they had no idea when they would be allowed to venture out again.

The shortages were real, but were limited to specific products. The other aisles at Costco were stocked and so were all the other stores around (at least those that were allowed to remain open).

Now It’s Everything

But it’s not just Costco this time. It’s every supermarket, convenience store and other retail outlet from coast to coast. And it’s not just cleaning products and paper goods. Your local supermarket might have bare shelves for eggs, peanut butter, milk and other staples.

It’s not a case of being stocked out of all goods all the time. Your store is like a box of Cracker Jack – you never know what’s inside.

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

Globalism’s Achilles’ Heel

January 8, 2022

Globalism’s Achilles’ Heel

Supply chain disruptions have not been resolved, and it’s not clear when they will be. You’re seeing the effects of these disruptions at the store in the forms of shortages and higher prices.

Yet the supply chain is a subject that very few are familiar with beyond a superficial acquaintance.

Most people think the supply chain is just part of the global economy. That’s not entirely true. The supply chain is the global economy.

There isn’t a single good or service of any kind that does not arrive through a supply chain. Not one.

If the global supply chain is broken, then the global economy is broken. That increasingly appears to be the case.

The supply chain difficulties will grow worse. Even more troubling is the fact that the remedies will take years and sometimes decades to implement.

The reasons for this have to do with long lead times in implementing onshoring. For example, the U.S. can cut its dependence on Asian semiconductor imports by building its own semiconductor fabrication plans (fabs).

The problem is that these plants take from three–five years to build, and the scale needed is enormous.

There are impediments to supply chain recovery that are not directly related to particular supply chains that nonetheless hurt the process of adaptation and substitution.

For example, there’s already a labor shortage in America. The causes are complicated.

There’s no literal shortage of potential workers, but many workers prefer to stay home because of some combination of government benefits, child-care responsibilities or inadequate pay offered by employers (who can’t afford to pay more themselves because they’ll go out of business).

A lot of this labor shortage centers on lower-wage jobs such as waiters, store clerks, fast-food staff and office assistants. But there will be a labor shortage coming soon in more high-skilled areas such as engineers, pilots, machinists and medical personnel.

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

“Peak Inflation Is Here”- Jim Rickards

December 19, 2021

“Peak Inflation Is Here”- Jim Rickards

Peak Inflation Is Here and Gone

Last week Stansberry Investor’s Daniela Cambone interviewed Jim Rickards and got his take on inflation. We think this is a solid interview and Jim makes some good reasonable explanations as to why inflation has done what it has. Rickards puts much of the blame squarely in two places: Supply chain problems, and Biden administration policies.

When asked: Why did used car prices go up? Rickards responded with ‘No new cars were available due to chip issues. People bought used cars.’

His explanation for energy problems is equally sensible. The push into clean energy was too fast and poorly executed. Smart energy companies took advantage of that, as did Russia’s Putin.

The thesis essentially is that money printed isn’t the cause of inflation. The sanitization of the printing via RRP and bond allocations dampen the inflationary effect. For Rickards, the supply chains and Biden Administration fiscal policies are the culprit.

The only area he did not touch upon was rents. That shoe has yet to drop fully. Will it be as easily explained? The other point he makes is the Fed may be raising rates into a recession. Enjoy.

Jim Rickards: We’ve Reached Peak Inflation; The Real Risk in 2022 and Why Cash Is Critical

“Expect inflation to come down very quickly,” due to incoming rate hikes expected from the Federal Reserve, says NYT best-selling author Jim Rickards.

You could see severe, “tightening into weakness,” with a potential of three rate hikes next year, he predicts with our Daniela Cambone during the premiere of this year’s series, Outlook 2022: The Tipping Point.

In order for gold to gain momentum and rise in price, “the dollar has to get weaker,” he says. Having money on the sidelines is vital, according to Rickards, in order to be nimble into the coming year.

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

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