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Posts Tagged ‘Gold and Silver’

Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

Dow hits record as stock market rally extends into 5th week” ran Monday’s AP headline. The same day, CNBC was even more ebullient, proclaiming “After Dow hits a record, analysts believe these stocks will lead the measure to its next milestone.” So what shall I say? The past three months I’ve been writing series talking about the ongoing financial crisis of 2008 and not only are the stock markets refusing to crash, they’re hitting records highs! To make matters worse, Yahoo reports that “Gold Suffers Worst Week in Three Years as Bulls Run for Cover.”

I guess I should just give up writing about financial matters, right?

Or maybe not.

You see, my thesis that the American economy has never recovered from the 2008 financial crisis is not based upon where the Dow or S&P averages close or the price action of gold and silver in a particular week.

As a Scripturalist, that is, as someone who believes that the Bible has a systematic monopoly on truth, I seek to analyze the markets and the overall economy, not by what the day’s headlines report, but by the propositions found in the Word of God.

When looked at in light of the Scriptures, we can see that what is hyped as the greatest economy ever is, in reality, a house built upon sand, which, in the opinion of this author, the coming economic storms will sweep away.

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Financial Crisis
A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

It’s been a couple weeks since my last posting in this series, but there certainly has been no break in the flow of events. In the intervening time since my last entry on 10/20/19, there have been several noteworthy bits of financial news. Of those, the most important was the announcement from the Fed this past Wednesday that they had decided to lower the Fed Funds rate another quarter point. This was the third time the Fed has lowered interest rates in the past three months.

Now any such decision by the Fed is important given the tremendous power of the Fed to push financial markets one way or the other. The big takeaway, however, is what this decision says about the Fed’s assessment of the economy. Despite all the propaganda from the administration saying the economy is doing great, the decision by a the Fed, or any other central bank, to lower interest rates is a tacit admission that the economy is not doing well. If the economy were doing well, the Fed would be raising rates, not reducing them.

When you add to the Fed’s lowering of interest rates the ongoing (permanent?) bailout of the overnight repo market and the restart of quantitative easing (i.e. money printing), it is obvious that the those closest to the situation think that the economy is seriously struggling.

One of the justifications put forward for lowering interest rates and money printing is that there is no price inflation. But even according the Consumer Price Index (CPI), the official measure of price inflation put out by the Bureau of Labor Statistics, the CPI-U (the broadest measure of inflation) rose 1.7% for the period September 2018 to September 2019. But beware of official government statistics! Over the years, the federal government has changed the way it measures inflation. And it should come as no surprise that the change has been in the direction lowering reported inflation.

Economist John Williams runs a website called Shadow Stats where he purports to calculate inflation the old fashioned way. His most recent calculations of the CPI-U tell a very different story from the figures put out by the Bureau of Labor Statistics (BLS). As you can see Williams most recent numbers come in a little higher than those of the BLS. According to Williams, the official method of calculating inflation used prior to 1990 shows inflation running at a more than 5% annual rate. If you look at this calculations with the pre-1980 method, the difference from the current official number is even more striking. The pre-1980 method of calculating inflation indicates that the current inflation rate is almost 10% annually!

If Williams is even close to being right, all this latest round of money printing by the Fed is like dumping gasoline on a raging fire, meaning we can expect to see much higher inflation numbers going forward.

Here’s a critical idea to keep in mind when talking about price inflation: Inflation is always and everywhere a monetary event. By this I mean that inflation is always the fault of money printing by central bankers. You can watch the evening news faithfully for decades on end and you will not hear this. Ditto with the financial channels such as CNBC and Fox Business. They will never tell you the simple reason for price inflation: Central bank money printing.

Why is this? It’s not an accidental oversight. The mainstream press is essentially the propaganda organ of the establishment, and central bank money printing is the financial black magic the establishment uses to increase its wealth and power at the expense of ordinary Americans. The powers that shouldn’t be – Washington politicians of both parties, Wall Street bankers and big shot investors together with a gaggle of academic theorists and news media talking heads – have a great scam going and do not want to let ordinary Americans know how badly their being ripped off and by whom.

To borrow a turn of phrase from Warren Buffett, “If you’ve been playing poker for half an hour at the table and you still don’t know who the patsy is, you’re the patsy.”

Ordinary Americans have been the patsies of the financial elite, of whom Warren Buffett is one, since the founding of the Fed over 100 years ago. The Fed’s inflation games are not only bad policy, they are also sinful in the eyes of God. The Bible unequivocally condemns “divers weights and measures” which God calls an “abomination” (see Proverbs 20:10 and 20:20 for example), which merchants of the day used to rip people off in much the same way central bankers, politicians and their super wealthy clients do today. It’s high time people woke of to this fact. End the Fed!

There’s much more that could be said about inflation and, Lord willing, I shall discuss this topic in greater depth in the future. For now, though, it is enough to know that 1) the cause of price inflation in money printing by the Fed, 2) the current method of measuring price inflation deliberately and significantly understates its true rate and 3) these facts are not reported in mainstream news outlets in order to keep the public in the dark about what is going on.

“So what,” you may ask, “does any of this inflation talk have to do with financial prepping?” Quite a lot, actually. If we understand that a falling dollar is the product of the Fed’s intentionally increasing the money supply too fast, we are positioned to understand ways of protecting ourselves against the ravages of price inflation.

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Financial Crisis

A prudent man foresees evil and hides himself, but the simple pass on and are punished.

    Proverbs 22:3

In a recent article titled “The monetary policy endgame,” Rick Rieder argued that central banks have two ways of creating inflation – inflation in this case being defined as rising consumer prices. The first is to create increased consumer demand through demand stimulus (lower interest rates). Secondly, Rieder argues, central banks can engage in monetary debasement. Continuing with his argument, Rieder contends that he believes central banks will turn to monetary debasement to achieve their stated inflation goals.

So what is monetary debasement? As the Investopedia link puts it, “Debasement refers to lowering the value of a currency, particularly one based on a precious metal, by adding metal of inferior value.”

But even though we don’t have a precious metals based monetary system doesn’t mean that governments can’t debase their currencies. As the Investopedia article on debasement goes on to say, “[D]ebasement [in fiat monetary systems] only requires that the government print more money, or since muc hmoney exists only in digital accounts, create more electronically.”

In light of the coming central bank driven currency debasement, Rieder asks the important question, “How should one position for such an endgame?” Rieder’s answer? “[A]ll of this leads one today to consider assets that can participate in an inherent devaluation of the local currency, which is to say, real estate, and even hard assets that have historic value-relevance, such as gold.”

Rieder’s post is remarkable, not just for what he said, but also for who it is that said it. Rieder is not some tin foil hat wearing gold bug, but is a Chief Investment Officer (CIO) at BlackRock, a New York City based investment management firm that is the world’s largest asset manager with $6.84 trillion in assets under management as of June 2019. Put another way, BlackRock is Wall Street royalty. Further, Rieder’s post appeared on BlackRock’s blog, giving his statements the implicit approval of the firm itself.

Given the decades long propaganda campaign of hatred that has been directed at gold and at those who advocate for the return of gold to the financial system, Rieder’s comments are significant indeed.

There’s a lot to unpack in Rieder’s article, more than what can be discussed in this post. Lord willing, I shall return to his post at some point in the future. But I mention in today mainly to let readers know that mainstream financial analysts are quietly warning that the US dollar – and all other fiat currencies – are in trouble and likely to suffer significant devaluation in the not too distant future.

In light of warnings from Rieder and others, the application of Proverbs 22:3 to our current financial circumstances cannot be overstressed. Here we have a highly placed man at a highly respected financial firm going on record to warn us in advance that the Fed is going to debase the dollar. What is more, he provides for us sound advice on strategies savers can use to protect themselves.

In Scripture, we find several examples of men who were given advanced warning by God of coming disasters, and who, in faith, took action to save themselves and others. In last week’s installment, we looked at the case of Noah. This week, we shall continue our look at Biblical case studies in prepping with a review of Lot’s narrow escape from Sodom.

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.Youre-FiredThe big story this past week? Pretty obviously it was Donald Trump’s decision to reprise his role on the Apprentice, issuing a “Comey, you’re fired” to the now former FBI Director.

As with any decision of this sort, the was a sharp divide along party lines. Some Republicans cheered the news. Democrats, on the other hand, railed against the decision.

Writing in The New Yorker, John Cassidy opined, “At a time like this, it is important to express things plainly. On Tuesday evening, Donald Trump acted like a despot.”

Oh, spare me. The republic will survive.

Generally speaking, the hiring and firing of federal bureaucrats is not a terribly interesting topic. But in Comey’s case, a few words are in order.

For my part, I lost all respect for the man last summer when he failed to recommend charges against a clearly guilty Hillary Clinton in the Servergate scandal.

Then, just a week before the November vote, Comey claimed he was reopening the investigation, only to shut it down just a few days later. This made Comey appear indecisive.

A third failure of judgment on Comey’s part was his decision to launch an investigation into Trump’s dealings with Russia, based, as it was, in part on the debunked “Golden Shower” dossier.

So we have an FBI Director who wouldn’t recommend charges against Hillary Clinton, against whom there was a mountain of evidence suggesting serious wrongdoing during her term as Secretary of State, but who continued to doggedly pursue the case against Donald Trump, a case notable for its complete lack of actual evidence.

So, should Comey have been fired? Yes.He failed the biggest test of his career when he refused to recommend charges against a clearly guilty Hillary Clinton. Thankfully, the American people showed better judgment than he did by refusing to put her in office.

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david-stockman

David Stockman

This time last week it was 75 degrees and sunny. Today? Well, let’s just icy roads and accidents made the morning commute a little more exciting than usual. How can the weather change so much in seven days?!

 

Well at least one thing hasn’t changed over the last week, and that’s the dicey state of the nation’s economy. With the stock market hitting records level, that may seem like an odd thing to say. But the economy is not the same things as the stock market.

In fact, the past several years have seen an almost inverse relationship take hold between the performance of the Dow Jones and S&P indices and important economic indicators. In a normal, rational economy, if corporate earnings decline or unemployment spikes signaling a economic slowdown, the stock market should decline.

But in today’s Keynesian casino markets, bad economic news is good news from the markets perspective. Why is this? It all has to do with the Federal Reserve’s interest rate policy. You see, bad economic news means big money speculators believe the Fed will continue its policy of suppressing interest rates to near zero to stimulate economic growth. On the other hand, if the economy appears to be doing well, the market starts to think the Fed may hike interest rates, making stocks a less attractive opportunity. Thus the stock market goes down.

In short, it’s a stupid economy that rewards fraud and punishes success.

And after over eight years of stupidity such as near zero percent interest rates, we are now faced with simultaneous Fed created bubbles in stocks, bonds and real estate, which will all at some point burst. And that leads me into today’s story…

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ready for oligarchyWell, there were no gorilla shootings in Cincinnati this week. Or for that matter, giraffe, hippopotamus or hyena shootings either. And we can all be thankful for this. I know for my part I just really can’t take another week of listening to animal rights activists talking nonsense. Perhaps the most egregious offender in this regard was a gentleman from Cincinnati, who was quoted in the local paper referring to the departed gorilla as, “a fellow Cincinnatian” and a “400-pound person.”

Nope and nope. Animals are not people. People are not animals. See Genesis 1 for details.

Now then, let’s move onto the scintillating stories from this week.

Oligarchy and the American Jezebel

As the old saying goes, I was shocked but not surprised Monday night, a night when not a single Democratic primary vote was cast, to hear that Hillary Clinton had achieved the necessary delegates to seal the Democratic nomination for president.

It just so happened that scheduled the following day were primaries in California primary and New Jersey, and several other states. In the week leading up to the vote, polls in California indicated that Bernie Sanders and Hilary were neck and neck. And a loss there would have been a YUUUGE embarrassment both to Hillary and her supporters in the Deep State. In fact, a loss in California may very well have been the end of Clinton’s hopes to take the White House. And such things simply cannot be allowed to happen.

And they weren’t.

After Monday’s surprise announcement, Hillary went on to win California by a margin of 55% to 43% over Sanders.

No sooner had the polls closed but the MSM began its hagiography of Mrs. Clinton. And among the worst offenders in this regard, predictably, was CNBC. Their business and financial reporting, the networks raison d’être, is a pathetic mix of stock market cheerleading, Keynesian propaganda, and Federal Reserve worship. I stopped watching years ago. And given the networks ratings in recent years, so has nearly everyone else.

Nevertheless, I do admit to visiting CNBC online several times a day to check the markets. And what did I see there on Wednesday but the headline, “Trump’s going to get demolished by Clinton; Here’s why he needs to drop out now.” Yep. The Donald’s on the wrong side of history, according to the sages at CNBC. Just give up. Go home. It’s over.

I’m not here to flack for Trump, but the man just set a record for the highest vote total EVER in the Republican primaries. Somehow I doubt he’s going to listen to the advice of incompetent journalists at a dying cable network.

But back to Clinton. One thing that is almost never discussed regarding her campaign, even among Christians, is whether it would be Biblical to elect a woman as president. Questions of this sort are never asked by the MSM. Even a survey of blogs, podcasts and YouTube channels will show that almost no one, Christian or not, questions whether a woman could properly fill the role of Commander in Chief of the armed forces. The only question is whether she is qualified intellectually and ideologically to take the helm in the Oval Office.

But at least one Christian author has undertaken to answer that question. Paul Elliott wrote a piece a few years back titled Deborah & Esther: Are They Precedents for a Female President? And his answer to this question would likely shock and offend many, even many in the evangelical community. Elliott concludes,

The Bible tells us clearly that God has ordained male headship, and female submission to that headship, in the home, in the church, and in government…Because this is God’s ordained order, Christians must not seek to put a woman in the place of national rulership, no matter how much we may agree with her ideologically. To do so is, in fact, sin in the eyes of God.

Yes, Hillary is an appalling individual and will make a horrible president if elected. She was a disaster as Secretary of State. She’s an obvious felon. And she will continue Obama’s full-court press to further push the immoral LGBT agenda. In short, she will prove to be an American Jezebel.

But the answer is not for Christians to seek a better qualified woman to run against her. As with all areas of life, we must reason and act according to what Scripture teaches, and not according to the wisdom of this world.

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