Sane People Absolutely Know Better!

June 22, 2018
  • We cannot borrow our way out of debt.

  • We cannot spend our way into prosperity.

  • We cannot tax ourselves into wealth.

We trust sane individuals also understand the following.

  • We can’t fix an excessive debt problem with more debt. (Central bankers disagree…)

  • We can’t support a more expensive military and federal government with a decreasing work force, massive debt and weak economy. (Governments disagree…)

  • Unbacked paper money always returns to its intrinsic value – zero. (Most of the world lives in denial.)

Ayn Rand said two generations ago,

We can ignore reality but we can’t ignore the consequences of ignoring reality.

Violating the above basic truths ignores reality and the consequences of ignoring reality. Read Bill Holter.

Examine the monthly DOW Index since 2003. Risk of a major correction is high. Markets fall after big moves up…

The chart of the DOW shows a levitated market—thanks to multi-decade low interest rates (10 Year Rates bottomed in mid-2016), a massive creation of new debt, stock buybacks, and outright “printing” of unprecedented quantities of dollars, yen, and euros. The DOW rally is nine years old and looks tired.

The bond bull market is probably over. Interest rates are rising! See below.

Silver has bottomed, charted a reverse “head and shoulders” and is moving toward much higher prices as debt expands out-of-control. Investors will seek the safety of hard assets to avoid the counter-party risk of paper assets.

Silver corrected since April 2011 (high $48.58) and bottomed in December 2015 (low $13.61). The silver bull market began in 1993, accelerated after 9-11, peaked in 2011, and continues after correcting 72% from 2011 to late 2015.

The first target is the 2016 high tick of $20.83. Thereafter prices should rise for several years. Silver volatility is large as shown by a 72% correction. The move higher should be more spectacular than the 2009 – 2011 rally.

The insanity of unpayable debt, unregulated derivatives, and outright bond monetization in the US, Europe and Japan should encourage us to question the above basic truths.

What if basic truths are no longer valid?

or

What if elite individuals and cartels CAN ignore the consequences of ignoring reality?

RECONSIDERING BASIC TRUTHS:

We cannot borrow our way out of debt. This is correct even for the political and financial elite. The US government has borrowed and increased official debt an average of 8.8% per year since 1913. Official national debt is $21 trillion and rising in 2018.

Government borrowing has benefitted the elite. Debt increases, and consumer prices, stocks, bonds and taxes rise. The elite smile and the middle class suffer under rising consumer price inflation, ridiculous hospital charges and outrageous health insurance costs.

We cannot spend our way into prosperity. This is true for most individuals, but The-Powers-That-Be (TPTB) spent tax dollars since 1913 and prospered. The banking cartel and military contractors know extra spending increases their prosperity. TPTB spend government revenues and create prosperity for themselves.

We cannot tax ourselves into wealth. The bottom 95% understand we cannot create personal wealth from taxation, but the political and financial elite control the tax laws and create exemptions. They CAN work the tax code and create wealth for themselves. The current U.S. tax code is thousands of pages long and filled with special benefits for corporations and the political and financial elite.

WHAT ABOUT THE AVERAGE PERSON?

  1. Following the recession/crash/money printing extravaganzas since 2008 the bottom 95% have been financially hurt while the elite have prospered.

  2. Congress does little to represent the average person. Approval ratings for congress are approximately 10%, far higher than they deserve, but still LOW.

  3. About 42,000,000 Americans receive “food stamps” (SNAP). If the economy is working, why do 42,000,000 Americans need food stamps? The program costs the government about $68 billion per year. Does the economy generate enough tax revenue that the U.S. government can afford “food stamps” for 15% of the population? Is “Universal Basic Income” next? Is there a limit to taxpayer funded giveaway programs?

  4. The average person understands something is wrong in the economy. His cost of living is increasing, government is intrusive and wages do not keep pace with expenditures. Most fail to see that precious metals are a partial answer.

  5. More craziness, “money printing” and distractions will occur, which is why precious metals are an essential protection from inevitable dollar devaluations.

The consequences of ignoring reality will be:

  1. A stock market correction or crash – perhaps in progress. Unpayable debt, rising interest rates, higher inflation, economic uncertainty, currency wars, trade wars and hot wars will push stock market valuations down from their historic heights toward typical levels. The highs for most stocks have been seen—probably.

  2. The dollar index has crashed before. Print too many dollars and their value declines—standard procedure since 1913.

  3. The silver market spikes higher. The dollar is vulnerable because of massive unpayable debt, excessive “money printing” and the eventual loss of global reserve currency status. Declining silver mining supply, increased industrial demand for silver and expanded investment demand will someday overwhelm the paper “price fixers.” Prices should rise into the next decade.

  4. A gold bull market mania that spreads, like a modern day pandemic, from China to Russia, Europe and North America. Expect much higher prices late in 2018 and continuing into the next decade.

From JPMorgan CEO Jamie Dimon: (Think stock and bond market corrections.)

Interest rates “may go higher and faster than people expect

The Fed may have to “sell more securities

“… as all asset prices adjust to a new and maybe not-so-positive environment …”

“… a risk that volatile and declining markets can lead to market panic.”

Ted Butler believes, with supporting data, that JPMorgan has amassed hundreds of millions of ounces of silver bullion. Dimon’s comments add credence to Butler’s belief. A massive silver bull market will boost the value of the JPMorgan hoard of silver bullion.

We cannot ignore the reality of insane debt creation, new and expanded wars, market manipulations, contrived interest rates and central bank money printing. We should expect:

  1. Congress will solicit checks from generous individuals who wish to purchase favors and support “good government.” (Sarcasm intended.)

  2. More wealth transfers to TPTB.

  3. Increased debt and military spending.

  4. Distractions, false-flag attacks (UK poison and Syrian gas?), blame assigned to Russia, proxy wars, desperate “deep state” actions and distorted information. Bond monetization, managed news and more debt will be needed…

  5. The consequences of ignoring reality can be delayed, but not prevented. There are cliffs ahead.

Buy silver and gold while they are available at discounted prices.

Miles Franklin: 1-800-822-8080.

Why Not Gold: 1-888-966-8465.

Gold Core: 1-302-635-1160.

Gary Christenson

Gary ChristensonGary Christenson is the owner and writer for the popular and contrarian investment site Deviant Investor and the author of the book, “Gold Value and Gold Prices 1971 – 2021.” He is a retired accountant and business manager with 30 years of experience studying markets, investing, and trading. He writes about investing, gold, silver, the economy and central banking.

Palladium, platinum and silver are the most common substitutes for gold that closely retain its desired properties.