Loading ...golden thesis
The world currently run on fiat currencies. In a fiat system, the first “credit” ever created is born of “debt”.
Hence, there must be more and more debt to pay the interest on the credit loaned into existence, else there is a liquidity crunch/halt/crash.
Central banks have no other option than to print! ALL fiat currencies will lose ALL their value eventually… ALL!!!
MAJOR holes in the fiat currency system has been shown through breakouts on monthly chart vs gold… in ALL currencies.
I think we are going in the last exponential growth of the fiat currency supply… rendering them ultimately worthless… not relative to each other… but to gold.
Alright, time for you guys to poke holes in my reasoning!
Regards,
Patrick
Thanks Patrick for the latest charts and commentary, lots of great points!
We don’t being it up so much any more, but today seemed like a typical day of the computers running the gold show.
Thanks Patrick, a good reminder post. There is no free lunch.
I’ve hardly ever been correct in my macro analysis within the past 10 years but I’ll just put this out there so I can look back on it in 5 years to see where my head was at.
the fact that over the last two days (and a third possibly tomorrow) where the demand for currency has outstripped supply (in the overnight fed funds rate), indicates current monetary toolbox tightening has reached it’s peak and the true tug-of-war (?literally?) begins (of course more tools may emerge such as a ‘standing’ direct-from-the-Fed ‘repo’ funding). Before I go further with this post – as a backdrop – observe for a second how the USD and EURO has moved in near perfect negative correlation (close to -1) esp. since 2008 – ie. implying that they are in fact 1 ‘currency’ and their fates are inextricably linked (EU and US CB’s do not have their native sovereign country’s interests at heart but rather system survival and their global goals of economic and political control). Given this observation – note that Draghi recently had to whip out a (now less effective) bazooka of monetary policy to keep the wheels on over there (ie that boat is sinking further into negative rates territory).
https://www.washingtonpost.com/business/mario-draghi-reaches-again-for-the-bond-buying-bazooka/2019/09/09/8c7a2fa0-d2cf-11e9-8924-1db7dac797fb_story.html
One one side (of the US Fed policy) you have EU banks pulling rates down – on the other, you have a ‘hot’ economy’ (an idea built on sand but that’s a diff’t post) in the US – low unemployment, low inflation etc. etc. which implies rates should be higher to take the froth off – So it may be that the US FED Reserve is at an inflection point where it must choose between policy that supports domestic economy (higher rates to contain local inflation) or that of the EU’s (lower rates to keep their failed economy afloat). I know this may be a stretch of belief but if the scenario I just drew out is true – I think the US Fed (private banks) will of course side with saving their fellow EU CB’s and will lower rates further – domestic concerns be damned.
BTW – longer term, what happens when all currencies have yields below zero (the USD is the last above it)….. the CB’s may introduce a new world (or at least Western world) currency, but I digress.
Also, Trump and anyone with half a brain (which a lot here think he has), KNOWS based on a 40 year chart where US Fed Fund rates are headed (even if we weren’t supporting EU CB’s) – that is to ZERO.
(observe straight-line-ceiling on Fed funds rate as it approaches zero).
What better strategy than to ‘forecast’ on twitter the inevitable and to be able to say “I told you so” when it happens (the Fed’s current resistance to cutting 50 bips will come into play come election time) – of course there will be finger pointing that ‘tariffs’ caused the collapse but remember tariffs were not the cause of the last 3 times the Fed cut rates just months before a recession. 2020-21 is going to be ugly.
I’m going to enjoy the process of seeing how this results!
Found this relate-able Von Mises thread! https://goldtadise.com/?p=446089